The port of Inchon is going through continuous decrease in cargo traffic. The container traffic handled in the first half recorded 956.449TEUs, which is down nearly 1.0% compared with the same period last year. If the situation went on, Inchon Port Authority(IPA) wouldn't be able to achieve their goal of leaping to the world's top 50 ports this year.

Although Inchon's container traffic in 2011 hit an all-time high with 1,983,000TEUs, up 4.2% compared to the previous year, it didn't pass 2 million TEU barrier. On the contrary to last year's increasing trend, the situation at present looks critical. IPA's marketing activities didn't do much in connection with minus growth rate in the first half.

The container traffic this year shows 148,642TEUs in Jan(▽15.75% compared with the previous month), 130,512TEUs in Feb(▽12.2%), 173,292TEUs in Mar(△33.62%), 166,209TEUs in Apr(▽4.22%), 172,197TEUs in May(△3.09%) and 165,597TEUs in Jun(▽3.83%). The total comes to 956,449TEUs, which decreased by 1.11% compared to the record of the same period last year(969,151TEUs).

Seriously affected by China's sluggish economy

IPA concludes that Inchon's traffic fall results from China's economic slowdown triggered by global recession. If we look into the containers traded with China, 576,904TEUs were handled from Jan to Jun. a decrease by 1.72% compared with 587,019TEUs of the same period last year.

China's economy turned for the better after the financial crisis in 2008, however, it started to grow at a slower pace beginning in the second quarter of 2010 and hasn't recovered yet. China is undergoing sharp fall in both export and import volume and even hit by tiny negative issues. Such economic impact in China is leading to the fall in traffic in the port of Inchon.

Is IPA's strategic marketing campaign feasible?

The port of Inchon recently celebrated 7th anniversary. Mr. Kim Chun Sun, a CEO of IPA, said regarding the traffic decrease "We have arranged some action plans and strategy to attract cargoes through intensive marketing activities. We will also try to elevate overall competitiveness by improving logistics environments and easing customer's inconveniences so that it can help out achieve target traffic."

He continued "Another efforts to boost competitiveness apart from marketing will be pushed forward. We will also have to rectify some problems in port charges and operational matters so that the cargoes wouldn't relocate to other ports owing to insufficient facilities and services."

The marketing activity he mentioned implies that IPA is going to carry out aggressive marketing campaign towards 6 target enterprises during the second half. The target companies include GM Korea, Hyundai Mobis, auto part manufacturer, shippers of big export volume to China and so on.

Looking at the above mentioned enterprises more specifically, auto related firms including GM Korea have a bias towards the port of Pyeongtaek. Many of them hope to move into Pyeongtaek once it has additional opening of a hinterland. The port of Pyeongtaek is developing into a specialized port as it is ranked 1st among Korean ports in terms of export/import of automobiles.

It is also an inconsistent idea to target the China-dependent enterprises. Even if geographical advantages of being adjacent to China were considered, the port of Inchon might face traffic fall supposing China's economy gets into a hard landing. Sticking to China-oriented marketing campaign will probably bring about the success of just a short period of time.

Then would Inchon be able to continue to develop provided the port is outfitted with new port facilities, international passenger terminals and hinterlands? Hardly anyone can give a definite answer to this question.

The opening of 6 container berths(1-1 phase) in the New Port, which was scheduled to be completed within 2012, has been delayed to July 2014. Being equipped with 15 container cranes in 22 rows, annual handling capacity of 2.4 million TEUs at the new berths is expected to help alleviate shortage of facilities in the port of Inchon.

Nonetheless, some of the shipping lines are cutting down the handling traffic compared with the last year, which signals deviation from the port of Inchon. A staff in the shipping line commented "It's a very delicate problem to change a service region from our position and it will be even more difficult to get back after change."