Competition Level Between Shanghai Port and Busan Port

Shanghai Port Is located In the front edge of the Yawning River Delta and It becomes the first busiest container port In the world whereas Bushman Port which Is located In the southern part of the Korean peninsula ranked the fifth. Both ports handle approximately 90% of the total container throughput, and they are also the major hubs of the seaborne transportation in the world (World Port Source AAA, World Port Source Bibb).This essay will discuss the level of competition between Bushman Port and Shanghai Port, and identify the external factors that should be considered by both ports' management in developing their strategic development plans. Level of competition The late growth of China on a global scale in recent years has affected on both Bushman Port and Shanghai Port In several levels of competition. There are three key competitions between them which are geographical positioning, transshipment capableness and low comparative costs.In terms of geographical positioning, Bushman Port has become an appropriate choice due to Its location between Japan and China. It has mm water depth and planning to Increase up to mm In 2020, and Its world class infrastructure allows the calling of mega large vessels. Furthermore, Bushman Port has 41 container berths and systematic connections for global logistics corporations to help save costs and time, so it can act as a feeder hub aiming for small ports for a majority of North-East Asian transshipment carriers.For example, inland transport in Northern China will be expensive and inconvenient, thus exporters or importers choose to transport their shipments to Bushman Port first then Shanghai Port (BAA 013). On the other hand, China created Shanghai as a finance shipping hub because Shanghai Is a port city. It became an international maritime capital because It focused on economic Instead of political logic (BAA 2013). Similarly, both Shanghai Port and Bushman Port are part of the mall trunk line functioning as hub port for relative countries, but Shanghai Port has the ambition to challenge Bushman Port as the main hub port of Northeast Asia.This Is because the growth of container volume In China ports has been fuelled by the decision of many multinational companies to locate production of a whole range of consumer goods from their domestic plants, mainly in USA and Europe, to China where production costs are much cheaper (Park, Anderson & Choc 2006). However, the inconsistent weather of China has benefited South Korea. For instance, ports in China are forced to close for up to two weeks of each calendar year due to fog and stormy weather.Moreover, Shanghai Port could not compete with Bushman Port deep water harbor, causing It failed to attract mega huge vessels from big corporation to call (Shepherd 2011). Regarding to reinstatement capabilities, Shepherd (2011) stated that the newly extended feeder network of Bushman Port connects with over sixty others ports In China, five In Russia, and thirty In Japan, making Its as the chosen destination for huge vessels and to transshipment cargo. Conversely, the development of Hangs New Port which is traffic and establishing transshipment capabilities comparing to its old Wigwagging container terminal.Moreover, Shanghai Port is improving its customs clearance procedure and cargo handling system to attract more transshipment cargo (McKinney 2011). Consequently, both ports have similar transshipment capabilities which are also the main competitiveness between them. Towards low comparative costs, in order to attract more transshipment cargo, Bushman Port promoted ‘Free Trade Zone', reducing port tariffs, and exempting 100% of Transshipment Entrance Fee since 2003 as the marketing strategies to attract foreign investment and compete with Shanghai Port (Park, Anderson and Choc 2006). For example, the exemption of the $2. 0 for 1 TEE entrance fee could reduce the $2,200 fee for a vessel carrying 1,000 TIES, and it also provides exclusive berths for coastal shipping companies and offers volume incentives to secure more cargo volumes (BAA 2013). On the other hand, Shanghai Port utilized a Volume Incentive System for shipping companies when the transportation volume is increased by more than 20% compared with the previous year. In addition, the Shanghai Port has also been trying to improve competitiveness by discounting port tariff in the Hangs New Port, and plan to establish logistics Free Trade Zone in the hinterland (Park, Anderson and Choc 2006).External factors in developing strategic plans There are several external factors that should be considered by Bushman Port and Shanghai Port in developing their strategies development plans. The first factor is the government involvement. According to Lee, Lee, Gang & Lee (201 1), port management had changed rapidly in recent years due to the structural changes in international trade and sea transport, so government plays an important role to cope with the changes of envi ronment.The establishment of co-petition and global network between competitors will generate positive impact on efficiency and access of the port management strategies with the special government support (Shepherd 2011). In addition, government can encourage shipping companies to form alliances where they can connect their transport system hence improving services. Moreover, the supplementary government supports with positive impact on efficiency, credibility, and competitiveness of the port management strategies could lead Bushman Port to have greater impact function as a Northeast Sais's hub-Port (McKinney 2011).Additionally, the advancement of government policies are followed by the changes made in the environment of port management. How government involves in port management will impact on the port's future developing of plans. In Shanghai, the central government had not implicated in the ownership of ports, but had got involved in an oversight role for strategic planning. For example, local authority had rights to undertake the ports planning, but still all plans had to be approved by central government (Xx 2007). This cooperation between government and port management will lead to improvement of international trade.Furthermore, comply with the Port Laws, it can encourage foreign investment as to build an attractive business environment in Shanghai Port, presenting Shanghai Port as an International Shipping Centre (SC) (McKinney 2011). Secondly, the growth of ports in the world had been affected due to the global economic downturn in 2012. Negative economic growth will not only put current projects at risks, but also the future project. This will the government to have less revenues and resources (Waters 2012). Therefore, the government should step in and take control of the situation.Government needs to prepare the country to become a low cost and high productivity place to invest which then attracts foreign investments, helping the country to generate profits. For example, government could implement strategies, such as education and direct investment (FED) to promote the local economy for future development of ports (Port Technology 2013). The investment in human capital or education can produce workers with better knowledge, and the productivity will increase when workers have more capabilities.Moreover, governments can send port employees to countries like Singapore and Hong Kong to familiarize with their operating system as they are the world most efficient ports. This will improve the port technology and productivity whilst workers return. Furthermore, economic growth can be achieved with the redevelopment of Bushman North Port and the nearer completion of Bushman New Port had as it will create whereas Shanghai Port can also benefited from the increase of national strength in China (Xx 2007). Another factor is the inland transport system.A well developed port should also include efficient inland transport. This is because mul tinational shipping company will normally choose port with speedy and productivity connection between the port and inland transportation to faster deliver cargoes to their customers (ROR, Lanai & Maim 2007). Therefore, both South Korea and China government should increase attention and funding towards the improvement of inland transport system within the port, such as railway network which connect to major cities in the countries.Moreover, the investments in rail and road access could help Bushman Port and Shanghai Port to remain as the major container hubs in the world, and create a swift, simple and cheap choice of transportation to transfer cargo within the countries as well as produce more Jobs for the locals (Shepherd 2011). In addition, governments could also focus on congestion robber especially in the city to allow trucks to transport goods more rapidly. For example, encouraging trucks to operate in certain hours and taking a detour road can help to save time and cost (Lee 2 013).As a result, good connection of inland transport could help Bushman Port and Shanghai Port reduces the problem of congestion, and also allows cargoes could smoothly move through the port. Apart from the previous mentioned factors, environmental pollution is another key external factor that Bushman Port and Shanghai Port have to consider in developing their strategic development Lana. There are several causes of the port environmental pollution. For instance, diesel engines at ports, trucks, trains, and cargo handling equipment, creating a lot of air pollution that has affected the health of port workers, and residents living in the communities.In addition, major ports especially Shanghai operating around residential areas or city, causing both workers and residents to face extraordinarily high health risks which related to air pollution. According from the human epidemiological and California studies, diesel exhaust increases risks of cancer, and approximately 70% of the cancer risk is caused by air pollution (NRC 2004). Furthermore, the dredging berth and deepening access channels of Shanghai Port and Bushman Port in order to accommodate large vessels in the future are causing water pollution.It not only damages the water quality, marine life and ecosystems, traffic Jams, and could be loud, ugly and brightly lit at night. These effects also pose negative health effects to human. For instance, noise pollution has been linked to hearing impairment, high blood pressure, lack of sleep, performance reduction, and even aggression behavior. Bright lights at night and the flashing lights of straddle carries and forklifts could influence surrounding residents, leading stress and irritation (NRC 2004).Consequently, Bushman Port and Shanghai Port have to do their best to avoid, to prevent, to control, and to measure the environmental pollution which caused by several port operations, with the ultimate aim to become a green port. Conclusion In conclusion, Bushman Po rt and Shanghai Port have their own respective advantages to compete with each other in several aspects in order to gain competitive advantages in the marine industry. However, there are several external factors that Bushman Port and Shanghai Port have to take into consideration while developing their strategic development plans in order to avoid the disadvantages to them.