Busan Port Authority stated that it selected the Dongwon New Port Container Terminal Consortium to operate the West Container Terminal at Busan New Port and held a provisional lease contract signing ceremony on September 29.
For the ceremony, BPA CEO Nam Ki-chan and members of the Dongwon Consortium, including CEO Park Sung-soon of the Dongwon Pusan Container Terminal, executives of Hanjin in charge of the work, and employees of each company.
BPA selected the Dongwon Consortium as a preferred bidder through competitive open bidding on August 20 and has been negotiating on the details of the provisional lease contract with the Consortium. The Authority has delayed the preferred negotiation period once for verifying the volume attraction plan, as proposed by the Ministry of Oceans and Fisheries, and to consult with shipping labor unions.
A BPA official said, “In the first bidding held in the first half of 2020, the transfer of the North Port’s volume was an issue and prolonged the negotiation process. However, the preferred bidder proposed to transfer 100% of the volume handled at the North Port (approximately 1 million TEU) to the New Port. This shortened the negotiation period as the issue of volume transfer was addressed.”
The Dongwon Consortium will operate a terminal of 6 berths, integrating phases 2-5 and 2-6 and a feeder terminal, for 30 years from July 2023, when the operation of phase 2-5 begins. It will provide state-of-the-art loading services using automated equipment (9 container cranes and 46 transfer cranes) that BPA plans to set up.
The Dongwon Pusan Container Terminal, a member of the Consortium, plans to transfer the volume and workforce from the North Port Singamman Terminal to the New Port. This will minimize excessive competition created by having multiple terminal operators at the New Port. In addition, if systems, such as the cargo handling fee approval system and volume-linked lease system, are established in the future, the cargo handling market in the New Port is expected to become more stable.
In addition, Hanjin, the largest shareholder of the adjacent Terminal 3 at the New Port, is expected to lay the foundation for the integrated terminal operation between Terminal 3 and the West Container Terminal through equity participation.
BPA plans to actively implement government policies on the Busan North Port and New Port through the conclusion of this provisional lease contract.
* (North Port) Relocating container-exclusive terminals to the outside of the Busan Harbor Bridge and gradually transferring the container terminal function to the New Port.
** (New Port) Minimizing the transshipment at different terminals and integrating operation of terminals to respond to the growing alliance size.
In the existing contract, the operator could not transfer the operating right or stake for five years from the use date. However, to resolve industry concern on inability to secure stable cargo volumes due to the non-participation of shipping companies, BPA and the preferred bidder decided to allow shipping companies to participate in the share in the future, and such a change was reflected in the provisional lease contract.
CEO Nam Ki-chan said, “We tried our best to implement the request of the Ministry of Oceans and Fisheries as much as possible, such as additional verification of volume creation, review on legal feasibility, and consultation with shipping labor unions. The provisional lease contract with the preferred bidder is the best solution considering it is in line with the government policy of gradual transfer of container terminal function to the New Port. It will also stabilize port workers’ jobs, lay the foundation for integrated terminal operation, address the excessive foreign capital issue in the New Port terminals, and secure the financial soundness of the construction. In regards to transferring workforce to North Port, we will continue to work so that port workers’ jobs are stabilized.”
BPA established the Busan New Port West Container Terminal Preparation Council with the Dongwon Consortium so that the container Terminal can open as scheduled in July 2023.
