Needing New Approach to Logistics Hub Plan Korea needs to be more proactive in developing its ports if it wants to stay competitive in the intense global logistics race, especially as China roars ahead, a senior executive of the world's leading port developer and operator said yesterday. Lee Choong-wan, head of Hutchison Port Holdings' Seoul operations, noted that the Korean government has proposed numerous plans and projects to use the area near two of the country's major port areas -- Busan and Gwangyang. But the results have not been significant, Lee said. "In the longer run, Korea may lose its competitiveness, because China's logistics industry is growing at a tremendous speed," Lee said in an interview with The Korea Herald. The Korean government designated Busan-Jinhae, Gwangyang and Incheon as the key regions necessary for developing the country into a Northeast Asian logistics hub. But the government's efforts to date have been futile, prompting a call for more action by industries. They blame an inefficient operating system at the ports compared with those offered at the rapidly expanding Chinese ports. Failure to recognize the need for more investment to bring the harbors up to par with standards necessary for attracting foreign investors is another reason. Lee stressed that the Chinese government tends to cooperate with private businesses to develop and operate their container port terminals efficiently and productively. This includes the surrounding infrastructure, such as roads and port construction plans. "The one simple thing that we have to think about is whether we have made the hinterlands attractive to foreign investors," Lee said. Hutchison in Korea operates its own terminals in Busan and Gwangyang. But the logistics giant has been struggling to break even at the Gwangyang port, Lee said. "Gwangyang is a problem for all its port operators. Since we began operating there four or five years ago, we have not seen any major big developments in filling up those hinterlands. I want to remind the government that we have to start now," he emphasized. Busan, Korea's second-largest city located at the southern tip connecting Asia, Siberia and Europe, is also its largest port and the world's fifth-busiest port. It contributes 80 percent of national cargo transports. But its pace of growth is lagging behind its Chinese competitors in terms of volume of cargo transport. Busan handled 11.84 million 20-footequivalent containers last year, up 3 percent from a year earlier. In contrast, Shanghai, the world's number three port, has expanded its cargo operations nearly 25 percent to 18 million. China also has Hong Kong, the world's number two cargo destination. Singapore ranked number one last year. Shenzhen, another Chinese region, ranked fourth. Korea still hopes to become a regional logistics center, boasting that its strategic location can help link the Eurasian continent and the economies in the Pacific Rim. But as the Chinese government proactively expands its facilities and supports developing ports along its strategically located coastlines, Busan is losing appeal. The Chinese government's aggressive plan to develop Shanghai's ports even threatens to take over Hong Kong's position. This would further threaten the role of Busan and Singapore as transshipment centers. China's status as the world's largest manufacturing market also poses a threat. A lot of Chinese-made products used to stop in Busan on their way to the United States and Japan. "A strong local economy is an essential component to growing a regional port like Busan. But think about it. Korean manufacturing companies are leaving for other countries with low production costs," said Lee. "In that sense, Korean ports are facing a kind of limitation. And although the country's export volume is growing, most of the growth is being carried in airplanes, like semiconductors." To Lee, developing logistics centers and the hinterlands could do wonders for Korea. "Cargo from those hinterlands can use the berths nearby, which can really invigorate the activities of our ports." Some experts have criticized the Korean government for its ignorant approach to managing the ports, arguing that the government has been more preoccupied with building more berths instead of fostering a viable environment for attracting cargo and providing incentives to foreign investors. Lee said counting the number of berths is useless when Korea is losing cargo traffic to China. "Building roads and filling up hinterlands still remain as a government role. In that sense, I believe that we work together," he stressed, reinforcing that the Korean government needs to focus on boosting efficiency as China aggressively invests in expanding its ports and logistics network.