Busan’s AI port ambitions: Will it rival Singapore’s Tuas mega port?

BUSAN – South Korea’s Busan port is aiming to be a fully automated, artificial intelligence-driven smart port at about the same time that Singapore’s Tuas mega port will be completed around 2040.

When both ports are completed, they will each have 66 berths capable of handling the next generation of ultra-large container vessels.

There are other similarities already – both are major transhipment ports, with Busan currently the world’s second-busiest transhipment port after Singapore, coming in at 14 million twenty-foot equivalent units (TEUs) to Singapore’s 40 million TEUs.

Transhipment refers to the transfer of cargo between vessels at an intermediate port before it reaches the final destination.

After completion, Busan port will double its current container handling capacity to nearly 40 million TEUs, while the new Tuas port is expected to have a handling capacity of 65 million TEUs, making it the world’s largest fully automated seaport.

But despite parallels in the push to scale up and automate port operations, Busan is not setting itself out to compete with Singapore’s mega port. Rather, the South Korean port’s direct competitors are the world’s largest and third-largest port respectively – China’s Shanghai and Ningbo-Zhoushan ports.

Observers say Busan and Singapore occupy fundamentally different competitive positions – shaped not only by geography and shipping routes, but also by exposure to geopolitical risks weighing on cargo flows.

Busan is South Korea’s largest port and accounts for about 80 per cent of the country’s total container cargo.

As part of the southern city’s ambitions, the Busan Port Authority (BPA) announced in February an investment plan totalling 892.1 billion won (S$770 million) through 2030 to modernise port operations, of which 435 billion won is specifically targeted at AI-driven transformation. 

The plan is also part of South Korea’s larger push to become one of the world’s top three AI powers, alongside the United States and China by 2030. 

Busan’s first fully automated port pier, operated by Dongwon Global Terminal Busan, was launched in April 2024 and can handle 4.5 million TEUs annually, contributing to a 30 per cent increase in logistics efficiency and productivity. 

Unlike Tuas mega port that was built entirely from scratch and can deploy full-scale automation, Busan’s approach combines expansion with new construction, which makes end-to-end automation more difficult to achieve, BPA’s director of public relations, Mr Kim Ho-seok, told The Straits Times in an interview on April 14. 

He added that Busan and Singapore serve primarily different shipping traffic and are therefore not direct competitors. 

While Singapore dominates intercontinental transhipment flows, Busan aggregates and redistributes cargo within North-east Asia.

“Busan port is the last port for transpacific routes heading primarily from Asia to the Americas. So it serves as a key consolidating point for cargo from the surrounding areas to be shipped to the next destination. Singapore is the last port linking Asia and Europe, so while it performs the same function, just think of it as a different fishing ground,” said Mr Kim.

Busan’s heavy reliance on China-origin transhipment cargo leaves it more vulnerable to geopolitical shocks, says Sungkyul University’s Associate Professor Jeon Jun-woo, a global logistics expert.

Port competitiveness hinges on cargo volume, but the potential decline in US-China trade as a result of an ongoing tariff war – compounded by the slowdown in Japan-China trade because of political tensions – limits the potential in transhipment cargo growth for Busan, he told ST. 

“In the absence of a strong and growing cargo base, infrastructure expansion alone is unlikely to meaningfully narrow the competitiveness gap with Singapore,” said Prof Jeon.

He added that for Busan, the most immediate competitive pressure comes from major Chinese ports such as Shanghai, Ningbo-Zhoushan and Qingdao.

“As these ports continue to improve in operational efficiency and cost-competitiveness, there is a possibility that shipping lines may increasingly rely on them as primary hubs, potentially repositioning Busan as a feeder port rather than a central hub,” said Prof Jeon.

And while Busan’s proximity to the Arctic shipping corridor poses a geographical advantage over Singapore, Prof Jeon said it is still premature to assess whether it would eventually increase Busan’s port competitiveness. The Arctic shipping route, also known as the Northern Sea Route, is a shorter but ice-dependent corridor along Russia’s Arctic coast linking North-east Asia and Europe. 

While already navigable on a seasonal basis, it is only expected to become commercially viable around the year 2040 as ice conditions ease and supporting infrastructure develops.

“The Arctic route’s primary applications are likely to remain in areas such as energy transportation, military use, and fisheries. Significant uncertainties persist, including extreme weather conditions, high insurance costs, and operational risks, all of which limit its near-term scalability for large-scale container shipping,” said Prof Jeon.

Meanwhile, Busan and other South Korean ports face pressure from Chinese ports and Singapore.

Despite South Korea’s technological lead, its ports face stiff competition from Chinese ports in terms of pricing, and Singapore in terms of integrated port operations, said Mr Jung Dong-won, director of smart shipping and logistics at South Korea’s Ministry of Oceans and Fisheries, at a briefing for foreign media on April 14.

“We are struggling quite a bit due to the price issue as Chinese companies have the advantage of occupying a larger share of the global market for port equipment such as cranes,” he said.