By the initiation of license system for loading and unloading business in port followed by the enactment of The Law of Port Transportation Business in 1964, full-fledged management has started for loading and unloading business in ports. The license system that required an authorization of government was abolished in late 1990, and it was fully changed to registration system to lessen restrictions, and to add more competition between the private service providers in 1997. By this relaxation of regulation, the number of loading and unloading service providers registered to Ministry of Land, Transport and Maritime Affairs was increased from 214 of 1999 to 369 of 2009, showing about 72.4% of growth in number.
Though, excessive competition and freight dumping of today are driving the loading and unloading companies' situation difficult. Also, automation and mechanization of port is changing the business from manpower-centric industry to equipment-centric industry. An assessment is required to determine whether the loading and unloading service market is competitive or oligopolistic one for the relaxation of standards of loading and unloading service providers by the Korea Fair Trade Commission. In addition, a closer look to the financial soundness of loading and unloading companies is needed. Therefore, this study will investigate the structure of loading and unloading service market in the port and its market performance by using industrial organization theory.
In this study, Hirschman-Herfindahl index is used to check the market structure of each port. In this process, total income and all-around cost margin of major loading and unloading service providers in Busan port were considers as their market performance, and examined the relationship between the market structure and market performance.
The result of this study shows that the market structure in Busan port loading and unloading service providers' is going more competitive from its current semi-oligopolistic status, while its concentrativeness index is going down, accelerating present situation. As like the market structure, market behavior, and market performance of industrial organization theory, the more concentrativeness index goes down, the more loading and unloading service providers' profit margin also goes down that gives us an expectation that harder competition will worsen the profit margin of these companies. Certainly the cargo traffic of Busan port is steadily increasing except the period of 2009 financial crisis but as the cargo traffic raises, the number of unload service providers also increases resulting in more intense competition. In other words, intensified competition leads to lower tariff of terminal operators to acquire more cargo traffic from the ship owners. It increases total cargo traffic handled, but actually decreases the profit margin of these companies. Common cargo unloading companies' competition is not severe like the container ones, but it is treading in container unloading companies' step, lowering their tariff. Above all, this study shows that the registration standards for unloading service provider is still open for lowering it, comes to lower and lower profit margin of unloading service provider with more intense competition.