Logistics hub for Northeast Asia

On March 29, 2001, Asiana Airlines flight OZ 3423 flying from Bangkok landed at Incheon International Airport, becoming the first commercial flight to do so and bringing closer the vision of Incheon becoming a major hub airport for Northeast Asia.

Incheon International Airport was built as a first-class facility that compares favorably with any existing airport in the world. Its features include the largest passenger terminal in Asia, state-of-the-art information and communications systems, and the airport expressway linking Yeongjong Island, where the airport is located, to Seoul. In the first phase, airport facilities were built to handle expected demand over the next decade. A second phase was completed in June 2008.

Despite steady growth in passenger traffic in the early days, the airport received only average consumer approval ratings due to the indifferent attitude of the workforce and cumbersome immigration procedures. The Incheon International Airport Corporation responded by adopting a customer-oriented management system and strove to find ways to improve cooperation among the parties involved in the airport’s operation, which number more than 550 agencies and businesses and more than 30,000 employees. As a result of these efforts, it was selected by the Airports Council International (ACI) as the best airport in the world for four consecutive years (2006-2009). In addition, Incheon International Airport started posting net profits in 2004, four years ahead of schedule.

Table 5-6. Incheon International Airport’s ranking in the ACI evaluation (2009)

In terms of port operations, the country aims to become a logistics hub for Northeast Asia with the twin-hub port plan based on the container ports in Busan and Gwangyang. Busan New Port, for which construction began in 1995, opened six berths in 2006 and 12 more in 2010. It is scheduled to have 30 berths by 2015. The Port of Gwangyang built its container terminal, which has 16 berths, 12 of them able to handle 4,000 TEU-class ships and four berths for 2,000 TEU-class ships. The port was opened in three phases between 1998 and 2007. Eight additional berths for 4,000 TEU-class ships are planned to be built. The twin-hub ports are focusing on attracting trans-shipment business for cargo originating in the region, including the west coast of Japan, which will help to achieve its goal of becoming a mega-hub port for Northeast Asia and serve as the starting point for the Eurasian Railroad.

In order to become a regional logistics hub, the country needs to develop adjacent large-scale logistics complexes that can cope with changes in global logistics networks, attract the logistics operations of multinational companies, and be able to operate logistics businesses to meet global standards.

Turning port areas into free trade zones is a worldwide trend adopted by many developing countries. Joining this trend will help the country compete with ports in more advanced countries and put it in an advantageous position to attract the logistics headquarters of multinational businesses and leading global logistics businesses.

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.