THE DEVELOPMENT OF SEA TRANSPORT IN SOUTH KOREA

The transformation of South Korea from one of the poorest countries in the world in the 1950s to an industrial power and a member of OECD was exceptionally fast. The policy promoting the import of raw materials and the latest technologies enabled Korea to join the group of the most rapidly growing economies in the world in 2004. Such an imposing growth rate was the result of booming industrial production, trade expansion to Asian, American and European markets and a liberal economic policy. The Korean economy is the most foreigntrade dependent country of all OECD members, with sea transport playing a predominant role. This article analyses basic Korean macroeconomic indicators within 2002-2018, with particular emphasis on the GDP. It discusses sea transport figures, including the cargo handling capacity of Korean ports, as well as port and logistics operations and the throughput of Busan, the largest South Korean and one of the largest seaport in the world. Additionally, this article shows innovation and ecology focus in the port of Busan, and primary directions of the state policy in the field of environmentally friendly growth.


INTRODUCTION
Next to Taiwan, Singapore, Malesia and Thailand, South Korea is considered as one of the newly industrialised countries. These countries have a relatively developed public sector, reduced income disparities and high labour productivity. All above-mentioned countries noted rapid economic growth due to their offensive export policy and specialisation in manufacturing of highly processed industrial goods, which require the latest technologies.
The transformation of South Korea from one of the poorest countries in the world in the 1950s to an industrial power and a member of OECD was exceptionally fast (South Korea is a member of various international organisations, such as UN, G-20, Association of Southeast Asian Nations and World Trade Organization). The policy promoting the import of raw materials and the latest technologies enabled Korea to join the group of the most rapidly growing economies in the world in 2004. Such an imposing growth rate was the result of booming industrial production, trade expansion to the Asian, American and European markets and a liberal economic policy 2 . In 2018, South Korea was the seventh largest exporter and 11 th largest economy in the world 3 .
The Korean shipbuilding industry, competing with that of China and Japan, significantly contributes to the growth of the South Korean economy. In the 1970s and 1980s, South Korea became the lead producer of ships, including supertankers and oil rigs 4 . The country has maintained this status until today.
Such a fast economic growth needs to be matched with large capacity handling seaports. Busan, the largest South Korean transhipment port of south-east Asia and the fifth busiest container port in the world 5 , boasts of its outstanding results in this area.

SOUTH KOREAN ECONOMY
The development strategy of South Korea, a country that inherited industry, infrastructure and bureaucracy from Japan after the Japanese occupation, followed the footsteps of the same country. Therefore, after economic difficulties, the country started a phase of rapid economic growth as late as 1963 6 . Still, in the 1960s, the GDP per capita in South Korea was comparable to that of poorer countries in Africa and Asia. However, it grew from 6% of the OECD average in 1970 to 89% in 2017 7 .
In 2002-2008, the GDP was stable (with 4.65% average growth), whereas the lowest level was noted in 2009 (0.7%) as a result of a drop in export due to the global economic crisis. Nevertheless, due to direct stimulation measures implemented by the Korean government and strong domestic consumption, which compensated major reduction of exports, the Korean economy avoided recession contrary to the majority of industrialised economies, and the country noted positive economic growth in two consecutive years into the crisis. In 2010, the GDP growth was 6.5%, until 2018 when the economic growth slightly slowed down (with average annual growth of 3% Of all OECD countries, the Korean economy is the most dependent on foreign trade, which accounts for over 80% of its GDP, whereas goods and services exported from South Korea account for 43.1% of the total Korean production. The most important trade partner for South Korea is China. In 2018, China's import of Korean goods (chiefly electronic components) was 26.8% of the Korean exports. An equally important trade partner was the United States (12.1%), Vietnam (8%), Hong Kong (7.6%) and Japan (5.1%). As regards the continental distribution of Korean exports, Asia accounts for two thirds (67%) in terms of the value, North America 14.9%, and Europe 11.4% (including Germany 1.5%) 9 . The most valuable outbound shipments include electronic chips, refined oil products (oils), cars and spare parts and accessories. The strengths of the Korean economy include its competitive factors. GDP spending on research and development (R&D) has been growing as well as the manufacturing of hi-tech products, which are the main export goods. Globally recognised Korean companies include Samsung, Hyundai, LG and Kia Motors.

SOUTH KOREAN SEA TRANSPORT
Sea transport plays an important role in South Korean trade, especially as it has a land border with North Korea only. Across its territorial waters, South Korea borders Japan in the east and south and China in the west. Since the country is separated from the Asian mainland, Korean ports are tremendously important in export and import 10 .
South Korea has a large number of various shipping companies. At the same time, the prolonged stagnation on the container transport market and heavy competition translated into a crisis for South Korean shipping companies. In 2017, Hanjin Shipping, the seventh largest container transport company in the world, went bankrupt. Therefore, the Korea Shipping Partnership, a coalition of 14 South Korean container transport companies, was formed to strengthen the domestic sea shipping sector and regain trust among previous foreign trade partners. The alliance was aimed at enhancing the competitiveness of the domestic containershipping sector, among others, by opening new shipping lines, cooperation in developing the fleet, provision of joint services at international terminals and consultations on the reduction of operating costs.
In the 1970s and 1980s, South Korea had become the leading global manufacturer of ships, including supertankers and oil rigs. The main shipbuilding company in Korea is Hyundai, which in the middle of 1970s built the Ulsan Shipyard. Today, the shipyard operates ten dry docks with nine Goliath cranes. This enables the production of virtually any type and size of ship. Until 2018, the shipyard built over 2119 ships for 324 ship owners from 52 187. countries 11 . In 2017, Daewoo Shipbuilding secured a contract worth 4.8 bn USD for 15 ice class arctic tankers to transport LNG from the Russian Jamal LNG Terminal. The government of South Korea developed a program worth 1.9 bn USD to support shipbuilding companies in winning more projects, in particular for LNG carriers 12 . The 2018 order by Hyundai Merchant Marine provides for 20 mega-container vessels (twelve of 23 thou. TEU and eight of 14 thou. TEU) to be built by Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries and Samsung Heavy Industries. Moreover, Korean shipyards stand much chance to win one of the largest contracts ever for about 60 LNG carriers for Qatar 13 .
The said bankruptcy of Hanjin Shipping, which dramatically reduced sales figures in the Korean shipping sector, forced the government to focus on strengthening the shipbuilding industry. Specific steps include a three-year plan of building 200 ships by Hyundai Merchant Marine, included 140 bulk carriers and 60 container carriers 14 . Moreover, the government undertook to adjust ships to stringent environmental regulations adopted by the International Maritime Organization (IMO) pertaining to the reduction of sulfur oxides (SOx) emission from ships. Begining from 2020, the global sulfur cap is going to be 0.5% m/m.
In 2017, the Republic of Korea had 1907 ships, including 89 container carriers, 394 general cargo vessels, 201 tankers and 1123 other ships 15 .
In 2017, the total cargo handling capacity of Korean ports was 1164 m tons, which accounted for 1. 6  Six Korean major ports are located on the coast, including the largest port of Busan. Other large ports include Gunsan (Kunsan), Gwangyang, Incheon, Masan, Mokpo and Ulsan.
In total, in 2017, South Korean ports handled 1.57 bn tons of cargo. Compared to the previous year, it counted for an increase of 4.1%. The largest increase was noted in the transport of vehicles (14.4%), lignite (11.6%) and machinery (8.3%), whereas in the handling of sand and steel, the sector noted a decrease of 35.9 and 12.8%, respectively. At the same time, container handling increased by 1.7% to 1.09 bn tons, whereas the container transport increased by 5.4% to 27.42 bn TEU.
In 2017, ports of Busan, Gwangyang and Incheon noted an increase in cargo handling by 10.5, 3.1 and 2.4%, respectively, chiefly due to the growing export of vehicles and import of coal and machinery. The contribution of those ports to the total container traffic in Korean ports is shown in Fig. 1

PORT AND LOGISTICS ACTIVITY IN THE PORT OF BUSAN
The largest Korean port of Busan is situated at the estuary of the Naktong River. In 2016, it was the largest cargo port in South-East Asia and the fifth busiest container port in the world 18 , and in 2017, it was the sixth largest port regarding container handling (Tab. 4). The length of the coastline of the port is 26.8 km. Thus, enabling the mooring of 169 ships at the same time, including passenger and oil terminals, and handles 91 m tons annually 19  It also includes five container terminals and three passenger terminals. The port infrastructure is complemented by well-equipped logistics centres.
The North Port handles both passengers and cargo, and its capacity is extended by the Gamcheon Port (ship technology). In the South Port is located the Busan Cooperative Fish Market, the largest fish processing hub in Korea, dealing with 30% of the total sea catch. It operates processing plants and cold storage facilities necessary to support fish product retail. Located in the west is the Dadaepo Port, which previously handled ships scheduled for maintenance and passenger vessels, and supports coastal fishing. Although the port meets all requirements of an environmentally friendly port, it will be transformed into an ecological port in the future.
The Since August 2012, the Busan Port International Ship Chandling Center has been operating in the port of Busan. A complex of five-level buildings of over 33 thou. m 2 house, most modern warehouses and offices. The centre supports airports, seaports and rail hubs providing comprehensive administration, logistics and port services necessary to promote efficient shipments.
In 1997, to improve the attractiveness of port services and guarantee speedy and efficient cargo handling, the decision to develop a new technologically advanced mega-port of Busan New Port (BPA) was made. The first stage of the port development was implemented by 2006, and its completion is scheduled for 2020.
The deep-sea Busan New Port (draft in excess of 17 m) is situated west of the old port on the Island of Gaduk. It is furnished with modern technological equipment and infrastructure, including innovative automated systems (for example, latest berth-side cranes, UAVs, automated gantry cranes, real-time monitoring systems) capable of handling vessels of 19 thou. TEU. The current 23 berthing facilities for container carriers (target is 45) are suitable for handling 10 m TEU annually 20 .  In the Busan New Port -Distripark (Fig. 4), an integrated logistics complex still under construction, companies will be able to provide logistics, distribution and shipping services to international businesses, as well as companies based in the Free Economic Zone of Busan-Jinhae. Distripark has been designated as a free trade zone where foreign logistics businesses can enjoy affordable rent and tax exemptions. The total logistics operation area of 8.5 km 2 is 193. expected to support processing, storage, sorting, labelling, testing, packaging and warehousing of goods shortly before their delivery to customers, as well as disassembly/assembly services for automotive components and door-to-door service. Distripark has access to all modes of transport, including seaports, airports, rail and road. The completion of the project is scheduled for 2030 21 . The Busan New Port uses the latest technologies and facilities. For example, at jetty 5, due to the vertical automation project and latest operating equipment, stevedoring equipment in each section can operate independently which translates into high productivity. The number of trucks entering the port is limited to reduce congestion and risk of accidents, as well as the CO2 emission. The jetty 5 operation system is shown in Fig. 5. The figure includes 1) loading/unloading of containers to/from a ship using a container crane, 2) transfer of cargo to the bertha frame bridge vehicle transports containers from the ship side (inner wall) to the container yard at the waterfront, 3) port servicescontainer yard operation is fully automated, including an automatic gantry crane and transport of containers from the container bay to the seaside (automatic loading section) or the ground side (external truck operation), 4) crossing the gatewhen a truck approaches the gate, the RFID system checks its ID data. At the same time, the monitoring system at the gate identifies the container. When the container passes the gate, the system designates a working area and directs the driver to the relevant section.
BPA also plans to facilitate the flow of cargo between the old and new ports (a distance of 25 km) and it is now implementing an inter-terminal transfer (ITT) platform to optimise truck operation between the two facilities, as well as to reduce overall cost 22 . Since the measures are a part of a long-term strategy, BPA is going to consider subsidising certain costs incurred by shipping companies.

CAPACITY OF BUSAN SEAPORT
The port of Busan handles nearly 40% of the total cargo volume transported by sea, 80% containers and 42% domestic fish catch and fish products. The port handles 130 ships per day. The number of containers handled in the port has been gradually growing. In 2017, the port handled 20.5 m TEU, which accounted for 42% increase compared with 2005 and 5% compared with 2016.
In 2017, the port of Busan handled 5,022,321 TEU in import, 5,143,952 TEU in export and 10,225,417 TEU in transhipment (T/S). The total 2017 container handling in the port was 20,493,475 TEU (Table 6).

Tab. 6 Containers throughput in the port of Busan in import, export and T/S in 2004-2017 (in TEU)
Year

INNOVATION AND ENVIRONMENTAL APPROACH IN PORT OF BUSAN
The ever increasing sizes of vessels and growing volumes of cargo in ports necessitated innovation. In order to preserve competitiveness, new technologies are introduced globally, such as combined data exchange platforms, cloud services and mobile devices 23 . Furthermore, the port of Busan is modernising its infrastructure in line with the latest trends to catch up with global leaders, in particular, Chinese ports that dominate in the region.
In 2019, the port plans to introduce the IoT platform together with KL-NET 24 . KL-Net supports electronic data exchange (EDI) in logistics, integration of systems, IT advisory and logistics solutions for the maritime industry in South Korea 25 . The system supports, among others, electronic exchange of the entry/leave declaration, cargo declaration, as well as reservation, bill of lading, transport and shipment. After the introduction of the system, IoT sensors in containers will enable real-time information exchange, including location, ambient temperature and humidity of cargo.
The port of Busan uses the Tandem-40' system that enables the simultaneous handling of two 40' or four 20' containers. Modern quayside cranes can load up to 8 levels of containers on a ship (11 pcs) and 10 levels (1 pcs) in the case of standard containers. It is also possible to stack 24 rows (width of container stacking). The tandem system can handle from 35 to 40 containers, whereas regular cranes handle from 25 to 30 containers 26 . Cargo handling is supported by 38 unmanned automatic electric cranes (ATC) in the Hyundai Busan Newport Terminal.
The Port of Busan is interested in using the blockchain technology 27 that helps to reduce cost related to paper freight documentation and customs payments. Such a decentralised and distributed database of transactions is accessible over the internet and can be used for recording individual transactions, payments and accounting records. The blockchain technology does not require the operation of central computers and does not have a centralised data storage. At the same time, the coding based on encryption algorithms makes it resistant to cyberattacks. The blockchain technology is already used to protect data of containers, tracing and tracking of cargo in Antwerp and Rotterdam 28 .
In line with the Framework Act on Low Carbon, Green Growth, adopted by the Korean government in 2010, the port of Busan promotes "green management of port operations" 29 . Diesel engines in a number of machines and equipment have been replaced with electric ones which significantly reduced the emission of greenhouse gases. With the aim of improving energy efficiency, roofs of warehouses and gates are furnished with PV panels, and office facilities in the New Port of Busan also use geothermal and solar energy. Moreover, ships of higher Environmental Ship Index 30 may enjoy exemptions or reduced rates of port fees.
In 2018, the Port of Busan entered into a cooperation contract with Korea Gas Corporation (KOGAS) to develop a bunkering system in the port. Both companies undertook to develop a feasibility study for the LNG bunkering method to supply LNG to ships entering the port of Busan. Under the project, the parties are going to examine LNG bunkering systems and various business issues, and in 2019, a floating LNG bunkering terminal would be built. A gradual shift to LNG propulsion in the national fleet is expected to significantly reduce the emission of solid particles from ships. According to the governmental agency, the emission from ships of total sulfur oxides and solid particles account for 73 and 51% 31 , respectively, in the city of Busan

SUMMARY
The multiple-year government intervention and investment in modern technologies made South Korea one of the most developed economies in the region. The government focuses on the development of the industry and speedy implementation of new technologies in existing and new facilities to expedite economic growth, boost production of goods, especially those to be exported to foreign markets, and develop competitive advantages. Not without significance was the financial aid for the South Korean economy granted by the United States (in 1946-1978, the United States offered about 60 bn USD in grants and loans). Yet another important factor was the financial crisis of 1997, triggered by the bankruptcy of six out of the thirty largest industrial conglomerates (chaebol). Then, the Korean government received a loan of 58 bn USD from the International Monetary Fund. The loan was granted with conditions that Korea tightens its fiscal and monetary policy and engage in far-reaching 27 https://medium.com/@nakanishi.g1106/south-korean-blockchain-week-in-busan-lucid-crypto-and-moduletoken-f605f2d5de8c 28 https://bcg.com/publications/2018/to-get-smart-ports-go-digital.aspx 29 https://www.hpnt.co.kr/homepage/eng/webpage/ter_pos.jsp 30 GreenPort, Environmental Stewardship at Busan; https://www.greenport.com/news101/asia/environmentalstewardship-at-busan 31 GreenPort, Port of Busan Bunkering Agreement; https://www.greenport.com/news101/lng/port-of-busanbunkering-agreement market reforms in sectors of finance and corporations, as well as the labour market policy. Additionally, South Korea agreed to open its economy to foreign goods and investors 32 .
The South Korean maritime policy has been shaped by three major factors, namely, the geopolitical situation, shortage of natural resources and the socio-economic program. The latter led to the creation of new jobs in the 1980s, the establishment of the pension system and improvement of the living standard. Therefore, the role of Korean ports in the national economy is particularly important, since they account for 99% of inbound and outbound goods 33 .
The concentrated activity enhanced the position of the port of Busan and turned it to one of the most important logistics centres in South-East Asia. One of its advantages is the strategic location on the crossroads from North-East China, Japan and Russia, within the main transport corridor to Europe and America. The port of Busan enjoys excellent natural conditions, such as sheltering by nearby mountains and islands, considerably limited ebbs and three main sea routes in the vicinity.
According to the mid-term and long-term strategic plans of the Port of Busan, the quality of port services should improve to reach 30 m TEU by 2025. The modernisation and extension of the port, implementation of modern cargo handling technologies and the building of a broad logistics network to establish a mega-hub is to attract global companies and enhance the creation of new jobs. Activities planned are accompanied by incentives to establish one's business in the port, such as tax and customs exemptions and business consulting 34 .
Korea is at the forefront of green growth initiatives. The 2009-2050 National Strategy for Green Growth and the five-year plan (2009-2013) established a comprehensive state policy framework in Korea, promoting environmentally friendly growth both short and long-term. In the longer-term perspective, the National Strategy for Green Growth is designed to promote new initiatives to improve the status of the natural environment and living standards for citizens, as well as active participation in international climate change programs.