Thursday, March 20, 2008

Korean Canal Project - part 1

The inland waterway system in Korea, the biggest vision of South Korea President elected, Lee Myung Bak brings a high conflict of interest among the public. Most of the people concern toward the environment problem since the river is a potential resources to provide water.

Many organization tried to against this brilliant idea, that was implemented in several developed country, such as USA, some European, and China as well. Many logisticians think that this is a better way to save environment from the gas and oil problem.

Let see from the beneficial perspective of using the waterway transportation system. We assume that Seoul-Busan will take 500 km in distance. Some researcher in Netherland (Goederenvervoer in Netherland, Ministerie van V&W) had researched that costs per tonkm is shown as in the next table. Let assume that all big vehicle will carry the container. There will be 0.04 Euro different. A 160 TEU ship may brings a lot of containers that equals to 120 trucks.
We can simply said that there will be a cost reducing about 120 x 0.04 Euro x 500 = 2.400 Euro for each shipping.

Busan port handled 1.3 million containers in 2007. (source: Dynamic Busan monthly newsletter). Let assume that 1 truck could carry 1 container. Therefore, we may multiply 1.3 million container with 0.04 Euro and 500km distance, that is equal to 26.000.000 Euro. (1 Euro = 1500 won: 2008). So, the Korean can save about 39 billion won in transportation cost if they use the inland waterway system.

This simple enumeration is just considering the naive transportation cost related with distance. We have to consider other aspect, such as reducing the gas emission regarding the usage of variety of trucks, safety factor of using waterway system, etc.

Today, I just bring some data related to the beneficial of developing the canal project in Korea. However, the government should do research in more detail regarding other environment problems may exist of doing this big project.