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South Korean liner alliance in dispute with Busan Port Authority

Korea Shipping Partnership (KSP), a quasi-alliance of South Korea’s liner and feeder operators, are seeking arbitration with regard to Busan Port Authority’s request that the carriers bear additional costs of KRW4.6 billion (US$3.76 million) for operating the multi-purpose terminal in Busan New Port for the past year.

KSP said on 1 June 2020 that it had requested mediation from the Korea Commercial Arbitration Board.

While additional equipment was installed at the terminal, cargo volumes were below expectations after the Subic Bay yard of Hanjin Heavy Industries & Construction went into court protection. The carriers acknowledged that additional costs arose as a result but are disputing the amount. Arbitration was sought after earlier discussions between KSP and BPA failed to reach a resolution.

The signing of the agreement establishing the Korea Shipping Partnership.

Although all South Korean liner and feeder operators are KSP members, the multi-purpose terminal was used only by Korea Marine Transport Company (KMTC) Line, Sinokor Merchant Marine, Namsung Shipping, Pan Continental Shipping, Dongjin Shipping, CK Line and Heung-A Line.

KSP was formed at the behest of the Ministry of Oceans and Fisheries in 2017, in an attempt to revive the country’s struggling shipping industry following Hanjin Shipping’s collapse. Concerned at what it saw as a saturated market, especially for feeder operations, the MOF sought to eliminate duplicated routes.

The arbitrator’s involvement means that the issue of accountability for the costs of operating the terminal is likely to be clarified. The adequacy of the operating cost calculated by the BPA is expected to emerge as a key issue in the mediation.

IMAGE: Photo of KSP inauguration ceremony (credit Korea Shipowners’ Association)

Martina Li
Asia Correspondent

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