Wednesday, March 04, 2009
Empty Containers Clog South Korea�s Busan Port as Trade Slumps
Wednesday, 04 March 2009
South Korea’s biggest port is running out of room to store shipping containers, said Park Jung Ho, an official at one of Busan’s nine operators. The bigger concern is that the boxes are almost all empty. Container trade at Busan, the world’s fifth-largest port, has fallen about 40 percent in recent months, said Park, at Busan International Terminal Co. Even by stacking boxes five deep and leasing a nearby lot, he barely has room for the 31,700 containers that have piled up on his wharves.
“We are spending half of what we earn from our main business for storage space,” said Park who is responsible for placement of equipment and containers for the company.
Empty containers, idled dockworkers and laid-up vessels have become a hallmark of ports from Singapore to Rotterdam that six months ago were straining to meet the flow of electronics, toys, cars and equipment. For Busan, surrounded by the world’s five biggest shipyards, the outlook is even bleaker after the glut of vessels caused a record decline in global orders for new ships in January.
Singapore, the world’s biggest container port, handled 1.97 million 20-foot containers in January, 20 percent less than a year earlier. In Shanghai, the second-largest, traffic was down 19 percent, while Hong Kong, the No. 3, suffered a 23 percent drop. Busan handled 894,172 20-foot standard containers in January, the fewest since February 2005, the Busan Port Authority said on its Web site.
Silent Phones
“Things have really started to get bad -- laborers spend their entire day waiting for a call from the docks that they have a job,” said Kim Sang Cheul, a dockworker at Busan. “People spend all day staring at their phone as if staring at it can make it ring. You’re lucky if you get a call.”
Kim said most workers’ earnings have fallen by half and some were taking home less than 1 million won ($672) a month.
The dockworkers’ troubles may herald a similar fate for employees at the shipyards in Gyeongsang Province, where Busan is located, including Hyundai Heavy Industries Co., Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co.
While global shipyards are still working through contracts placed since 2006, new orders have plummeted in the past four months.
“It’s pretty tough now,” said Lee Jong Chul, vice president of STX Group, owner of the world’s fifth-largest shipyard. “There have been requests for cancellations, but we persuaded owners to revise orders to a different vessel type or contract terms.”
97 Percent Drop
A total of 153.6 million deadweight tons were ordered last year worldwide, 43 percent less than in 2007, Clarkson Plc, the world’s largest shipbroker, said in its monthly shipbuilding report. In January, 0.4 million tons were ordered, a 97 percent decline from the same month a year earlier, London-based Clarkson said.
At the port, Cho Kwang Lae, deputy general manager for the Busan Port Terminal Union, spends his days meeting with importers and forwarding companies to try to find work for the 7,800 dockworkers at Busan.
“There were some laborers who worked only three days in a month,” said Cho. “The problem is this is going to get worse not better.”
On a recent Wednesday morning, 15 of 18 loading cranes on one pier were sitting idle because no vessels were docked. Less than six months ago, the 50-meter-tall blue-and-orange gantries could barely keep up, said Kim.
Working Nonstop
“The cranes were working nonstop and vessels would arrive in ports as soon as one left almost fully loaded.” he said.
Ships that do dock carry only 30 percent of their capacity, said Ryoo Chi Ho at a local shipping company. “There are no vessels arriving or leaving the port fully loaded these days.”
The Howe Robinson Container Index, which tracks weekly charter rates for container vessels, fell to 407.7 on Feb. 25, the lowest since at least 2000.
The effects of slumping trade could be seen across the city of 3.7 million people, which hosts Asia’s biggest annual film festival and is bidding to hold the 2020 summer Olympics.
Empty trailers and trucks were parked in every available space outside the port gates. A two-lane road off the main street near one of the terminals was lined with the vehicles, barely leaving room for a single car to pass.
“You hear about at least one manufacturer going bust every day,” said Chung Kyong Bo, an auto dealer in the city. “Hardly anybody buys or sells cars these days. And there are fears that the worst hasn’t hit us yet.”
Discount Apartments
In the upmarket beachside district of Haeundae, placards in bold, red words advertise new apartments at discounted prices. Shop windows around Kyungsung University are pasted with signs offering reductions on clothes, shoes and jewelry.
“There are fewer patients now at my husband’s dental clinic, and those who come want cheap jobs done on their teeth,” said Lim Jong Soon, a 36-year-old housewife. “Now instead of eating out at weekends, we eat at home.”
Like the ships in the port, the city’s cabs are also finding it harder to get business. Night clubs close six hours earlier than before because they’re empty, said Lee So Il, a 66- year-old taxi driver.
“During the good times, it was so easy to pick up customers in the early morning hours around the clubs,” said Lee. “These days, it’s hard to see where the taxi lines end.”
Source: Bloomberg
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