An Analysis of the Competitive Structure of Grain Terminals on South Korea’s West Coast = 한국 서해안 지역 곡물터미널의 경쟁 구조 분석

다국어 초록 (Multilingual Abstract)

South Korea faces a combination of reduced arable land availability due to the natural landscape of the Peninsula, a worsening of the international supply chain instability, changes in modern consumption patterns, and a large population. This cocktail is the perfect recipe to water down the country’s efforts towards grain self-sufficiency. For countries with low grain self- sufficiency rates, grain is not only a commodity but also a strategic good that can directly impact citizens' lives and national stability. In the Korean case, an inevitable deep reliance on international import sources is thus exhibited. Moreover, shipping routes for such sensitive cargo as grain must be properly selected, not only due to the perishable nature of these items but also due to the additional costs associated with congestion, delays, bottlenecks, and route-related tariffs imposed by shipping companies. This highlights the key role of a reliable grain-dedicated logistics infrastructure in securing a country’s economic and demographic stability. Owing to the fact that more than half of the Korean population resides in the Seoul metropolitan area, the efficient management of the grain cargo arriving in this region, referred to as the west coast, is essential. Therefore, attending to the peninsula’s land constraints and population density distribution, the terminals operating on the West Coast of South Korea are placed within a relatively condensed layout. After the opening of the first grain handling terminal at the port of Incheon, other ports of the area hopped on the opportunity of seizing grain flow, and thus, creating a competitive scenario. This study examined the grain-handling values of the grain terminals operating at the ports of Incheon, Pyeongtaek·Dangjin, and Gunsan with the purpose of establishing a clearer view of the competitive structure and concentration patterns of the grain-handling environment in the West Coast region of South Korea. A combined approach was attempted by introducing: 1) The Herfindahl-Hirschman Index (HHI) to measure the degree of concentration by analyzing the alterations in the market shares of the terminals in terms of volume; 2) the shift-share analysis to examine the market position evolution concerning grain throughput of each grain terminal over time, and 3) the Boston Consulting Group (BCG) Matrix to evaluate the growth potential and relative market share of each targeted port in terms of handling volume of grain cargo. The HHI values revealed a steady upward trend, from 0.174 in 2014 to 0.222 in 2023, with small but consistent increases during the period. Results indicate that grain terminals transitioned to a more concentrated market structure, with grain handled volumes becoming less evenly distributed. This gradual upward trend in market concentration reflects a decline in competitive intensity as a few key terminals expanded their dominance. This sustained level of concentration may be attributed to infrastructural enhancement. Additionally, the moderate pace of HHI growth may be linked to the simultaneous development of multiple terminals, which helps avoid isolated volume spikes and prevents sharp fluctuations in the concentration index. The Shift-share analysis highlighted that although all terminals showed Spositive share effect values, the negative scores from the shift effect analysis indicated that most grain terminals operating at Incheon Port have underperformed relative to the overall market. These results suggest that despite having the opportunity to grow alongside the market, the actual distribution of gains was uneven, and the Incheon terminals failed to capture their proportional share of growth. On the other hand, the terminal at Pyeongtaek·Dangjin Port exhibited a traffic loss pattern until the last year of the study period, when it reversed, resulting in a positive cumulative shift effect value, coupled with a positive share effect result, denoting latent growth potential due to favorable market conditions. The terminal at the Gunsan port exhibited an outstandingly positive shift and share effect values, attracting the most grain volume. Finally, the BCG matrix, illustrating the end of the study period, depicted slow growth in a contracting market. The Sun Kwang terminal at Gunsan Port, between the star and cash cow quadrants, was found to be dominating the market, while the Taeyoung Grain Terminal at Pyeongtaek·Dangjin Port, situated in the star quadrant, is starting to absorb a significant portion of the grain handling volume at the expense of the other terminals. Given the market growth share of the terminals, the situation presented for the year 2023 indicates a rather oligopolistic market environment. Daehan Silo at Incheon Port, fluctuated at the border between the dog and the question mark quadrant, and was found to be losing competitiveness despite handling a considerable share of grain cargo. The rest of the terminals, all located in Incheon Port, repeatedly shifted between the question mark and the dog quadrant, indicating that most of the terminal portfolio struggled in low-growth markets as well as underperformed in relative market share. The industrial implications of this study are significant, being of utmost importance to private and public entities within the Korean government, particularly in relation to modeling construction or upgrading plans for the studied grain terminals. The findings of the present study can inform decision-making strategies regarding national grain terminals on the West Coast, as well as provide valuable insights into information not easily accessible to foreign investors. As observed across the different methodologies, the same result is obtained: the grain cargo is leaving the port of Incheon and is taking a new direction towards the ports of Gunsan and Pyeongtaek·Dangjin. Multiple interconnected factors drive the decline in cargo volume at the five grain terminals of Incheon Port. Key among these are ongoing redevelopment efforts and the relocation of port functions at Incheon Inner Port, coupled with a strategic shift by major manufacturers to transfer their production facilities to alternative regions. Incheon Port presents intense competition and structural constraints that hinder the docking of large vessels due to the complex procedures for vessel entry and exit through locks within the inner port. On the other hand, the Dangjing port is acting to secure and enhance its status as a national grain hub by establishing a new grain terminal project by 2030. Furthermore, from a political perspective, it is beneficial to diversify import sources within the Korean context to mitigate potential disruptions resulting from excessive reliance on a limited number of grain-producing nations. Recent examples have arisen, such as the instability of Ukrainian grain export after the start of the war. Countries like Singapore, which exhibit a similar heavy dependence on food imports, have effectively tackled their Global Food Security Index through the implementation of source diversification.

Keywords: Korean West Coast, Grain Terminal, HHI, Shift- Share Analysis, BCG.

목차 (Table of Contents)

• ABSTRACT i
• CHAPTER 1. INTRODUCTION 1
• 1.1. Introduction. 1
• 1.2. Thesis Structure 4
• CHAPTER 2. CURRENT STATUS OF NATIONAL
• GRAIN FLOWS AND PORT INFRASTRUCTURE 6
• 2.1. Grain Imports Volumes and Trends 10
• 2.1.1. Rice imports 10
• 2.1.2. Wheat imports 11
• 2.1.3. Soybean imports 12
• 2.1.4. Corn imports 14
• 2.1.5. Grain Shipping Routes 15
• 2.2. Distribution Status of Imported Grains in the West Coast
• Region 21
• 2.3. Status of the Grain Terminal Facilities on the West Coast 35
• 2.3.1. Incheon Port 35
• 2.3.2. Gunsan Port 46
• 2.3.3. Pyeongtaek-Dangjin Port 50
• CHAPTER 3. LITERATURE REVIEW 55
• 3.1. Literature on Overseas Grain Terminals 56
• 3.2. Literature on Korean Grain Terminals 58
• 3.3. Literature on the Selected Research Methodology 62
• 3.4. Novelty and purpose of the study 63
• CHAPTER 4. RESEARCH METHODOLOGY 65
• 4.1. Herfindahl-Hirschman Index (HHI) 66
• 4.2. Shift-Share Analysis 67
• 4.3. BCG Matrix 69
• CHAPTER 5. EMPIRICAL ANALYSIS 74
• 5.1. Herfindahl-Hirschman Index (HHI) Results 76
• 5.2. Shift-Share Analysis Results 80
• 5.3. BCG Matrix Analysis Results 88
• CHAPTER 6. CONCLUSION 100
• 6.1. Conclusion 100
• 6.2. Implications and Limitations 102
• References 108
• 국문초록 122