 Welcome back to a special edition of ThinkTech. Here we're talking about ThinkTech Asia this morning, the 11 o'clock block, with a very important and distinguished person, and that is Jeonsu Jong. He's a professor at Sogang University in South Korea. Welcome to the show, Dr. Jong. Thank you for having me. Great to have you're an expert in maritime affairs, and you are an emeritus professor at Sogang. You're a chair of the Korean Maritime University in Korea. You're the executive vice president of Sogang University, you have been. You've been involved in policymaking as an advisor to various Korean government agencies, including the Ministry of Maritime Affairs, that's big, the Ministry of Foreign Affairs, that's big, and the Federation of Korean Industrialists. So you are the intersection of where the industry meets the government. Yes, correct. And you're an economist, you're chairman of the commissioners of Busan Port Authority, and you're a chief advisor, you have been chief advisor to the Ministry of Maritime Affairs, you have been the chairman of the restructuring shipbuilding and shipping industries advisory committee at the Korea Export-Import Bank. I want to talk to you about that. And currently you're a board member of the Hyundai Shipping Company, and a senior advisor to the Ministry of Maritime Affairs. Just a couple more. You're the chairman of the advisory committee of the Korea Maritime Institute, and you're a board member of the Federation of Korea Ocean Organizations, and you have done extensive research, numerous publications. Your specialty is international logistics, shipping management, port management, and international trade. What did I miss? Thank you for your good introduction, I still have many caps. It still makes me very busy. Yeah, well you're a hard worker and you've had a lifetime of distinguished service to Korea and the Korean shipping industry, and it's very important that we talk to you because in Korea, shipping is a very important affair. Yes. You're an industrial nation, you produce every kind of industrial product, and well, and your products are world competitive, so you have got to ship them out of Korea and to the rest of the world. Yes, correct. It's a critical feature in the way Korea works right now, and of course it's economy. So there's been a problem with container shipping out of South Korea. What is the problem? Well, in fact, you see, not particularly in Korea, the world shipping industry in great difficulty now. Traditionally, the shipping industry has maintained stage trend of boom and recession, and as economy changes, however, since the financial crisis in 2009, and shipping industry has been declining, still they are in difficulty. Why is that? Well, there's mixed reasons, you see. One is overtonaging because right after the financial crisis and one particular shipping company, the biggest guy in the shipping industry called Musk Line, the Danish shipping line, and they introduced the mega ships, large sized container vessels. Of course, they have their reason and logic why they introduced such mega vessels. Used to be less than 10,000 TEU. TEU means the box size, the typical box size, and 10,000 TEU, less than 10,000 TEU. Vessels were normal at that time, but Musk introduced 18,000 TEU vessels. Almost twice as big. Yes, because the logic behind this one is they can lower the cost per unit. Sure, economies of scale. Yes, it's less fuel cost, and environment-friendly vessels, and the efficiency is greater than any other vessel that exists in that time. But Musk is bigger than any Korean shipping line. Oh yes, definitely. So is Korea trying to catch up? Are you trying to build 18,000 units? Yes, that's a good point, you see. Before we did any action, all the big shipping lines followed the steps. Everyone introduced the bigger mega vessels. So suddenly, overtonaged. So Korea is concerned, and still we're in great difficulty financially. So Hanjin shipping, that time the biggest shipping line in Korea, they went bankrupt. Hyundai. Hyundai. Hyundai survived. It makes the cars. Yes. It's a mega company. Oh, a mega company. Now it's separated from the Hyundai group because of financial crisis, and lots of government money put into that to rescue the Hyundai shipping. That is the reason they are separate from the group, and they are more like government companies now. Well, you know, we have to point out that shipping is critical to the national economy. That's right. Shipping is a strategic industry. That's right. Without shipping, the economy would fall apart in any country. And so it's really important that the government be involved with Hyundai shipping and help shipping in general in Korea. Yes. As a result, because Hyundai is the only company we have at the moment, you see. As you mentioned, it's strategically important. So government puts lots of money, taxpayers' money in fact, you see. Yeah. And we are building new ship mega vessels and the biggest container vessel and 2, yes, 2,400, no, no, 24,000 TU vessels and 20 vessels at once, you see. That's bigger than Merisk. Oh, yes. That's the point, you see. Yeah. Bigger means lower cost per unit. Yeah. Yeah. So we are building 12, 24,000 the unit's TU vessels and furthermore, eight more, 14,000 the TU vessels, that's the size that can pass the newly expanded Panama Canal. So they can serve east coast of America. Yeah, yeah. So in both ways, we are rebuilding our national fleet. So I want to stop for a moment and talk about shipbuilding and for that matter, containerbuilding. Is that in Busan? Is that where it's done? Because Korean shipbuilding is known around the world. Yes. And in our program, we have many times talked about the Jones Act and the Jones Act requires a ship to be built in the U.S. to qualify for the inter-coastal trade. Yes. And the big competitor, which you can buy a ship, you can build a ship for half of what it costs in New Orleans. You can do it in Korea. So Korea is a big competitor for American shipbuilding and the Jones Act really stops that and makes it an unfair, not an even playing field. So the question is, how is Korean shipbuilding doing? It is probably the best, most efficient, most competitive shipping industry in the world. How's it doing? Well, as the shipping industry is declining, obviously, it gives great impact on shipbuilding industry as well. There's no demand, you see. But fortunately, they could get their business from the offshore industry. And because oil prices are high enough, and they need it, new source of the oil. That's the reason they heavily invested in the ocean. Mechanical. Yes. And for that reason, the shipbuilding industry could sustain to some extent. But nowadays, say, since three or four years ago, they have been in great difficulty as well. But as I mentioned, Korean government is supporting the shipping industry. And subsequently, the demand can be created for the shipbuilding industry, you see. Based on that, and now because of later, I'm going to mention about new change of environment, because of the new regulation imposed by IMO, International My Time Organization. That's a Korean agency, United Nations agency. It's on fuel. I'm not on everything. In shipping, and port, et cetera, on ocean matters. And they are going to introduce new regulation. And they're limiting the emission of the gas from the ships. So you have to use high-quality sulfur oil. That's right. Low-sulfur. Low-sulfur. The fuel. So it's a compulsory from next year. And then, good thing, good point is, old and obsolete vessels, they cannot survive. Because they have to buy expensive low-fuel oil. Or they have to retrofit scrubbers. That's on both facilities to purify the bunker. Huge cost. They cannot pass the cost on to the shippers who are shipping with them. So those old vessels, they are destined to be phased out of the market. And then, new balance can be reached between supply and demand. And shipping industry can survive, you see. Oh, very important, very important for Korea. Probably important for other countries too that do a lot of shipping with these new regulations. Now, we have the tariffs. President Trump's tariffs. I guess they affect Korea in part, but they mostly affect China. And I wonder how they affect Korean shipping. Because if you have less trade because of higher tariffs, there's less business for Korean shipping, no? The funny thing is, because of that, the risk. And all of a sudden, from the last quarter of last quarter of last year, there's a sudden surge of trade volume. Because they won't ship out before. The custom tax increase, they say. So nowadays, there's a boom in period. It's very interesting. A reverse twist. Yes, that's right. Nobody knows what happens. I also wanted to ask you about the South China Sea. Not because you're directly involved in geopolitics, you're an economist, but if the South China Sea is more constrained by China, and I expect it will be, there's very little the U.S. can do to stop that. Very little the U.S. is doing to stop that. Now the Chinese are going to have control. They're going to constrain. Who knows what they're going to do with all the traffic to pass through the South China Sea. Yes. Which is tons and tons of traffic going everywhere. It is a major sea lane. So the question is, how does that affect Korean shipping? It's just south, right? Along west of Japan, just south. How is it going to affect Korean shipping? Well, obviously, we expect a great impact thing if anything goes wrong in that particular area. Because in Korea nowadays, our trade volume, in terms of money, exceeding one trillion dollars, say, in and out. But we are, Korea's virtually island, because still, north to the north, there's the hostile North Korea, still existing. We are trying to persuade them to come to the, you see, with some peace agreement anyway. The U.S. is playing great role nowadays, you see, to make it possible. We'll see. But anyway, yeah. So that trade routes, everything goes to the European countries. Is that right? Yes. You take them on Korean ships all the way to Europe through the Panama Canal with this new equipment. That's right. And all the resources like oil, and iron ore, et cetera, they all go through that channel, you see. It's extremely important. What I get is that, Korea is an industrial nation, producing, manufacturing, many things. Yes. However, Korean shipping doesn't necessarily rely on shipping industrial products from Korea to the world. It's also shipping resources and products from country A to country B, which has nothing to do with Korea. It's just that Korea has a very good shipping industry. Is that right about that? That's right. Yes. Especially, you see, liner, container business concerns, the Korean cargo originated from Korea is only 19 percent. And the other close to 80 percent, over 80 percent, we are through the closing trade we transport all the countries, the cargo, you see. And also, our trading company, they are very active and they are very strong traditionally. So, they are doing their good jobs, you see. And by shipping would be a trading company? We have affiliated affiliated. Affiliated, we're a trading company. Yeah, it's an Asian model, isn't it? Trading companies, like out of Hong Kong and all that, do everything with everybody everywhere. Yes. So, what about your primary trade and shipping partners? I mean, for example, are you doing any trade at all with North Korea? Any trade? Yes. That's by law, you see. We are not supposed to do any trading yet. Yes. Yes. So, nothing. But, if there is a peace agreement, if there's a denouement with North Korea, then you will have trade, am I right? Oh, yes, definitely, yes. And what kind of trade would that be? You'd be delivering manufactured goods from South Korea to North Korea. Well, in the North, there are abundant raw resources, minerals, etc. And very well-skilled and good-prospect ship labor is there. So, we have technology, we have money, and if we combine together, we may create some idealistic model of new economic development. Yes, this is actually when people think of the possibility of reunification, they think of it as a land reunification and a people reunification, but actually, shipping would be commerce trade. That's right. Would be a big part of reunification. Yeah, that's right. They think. Also, we are planning to build up the ports there, including container terminals in the North, you see. In near future, if everything goes all right, you see. And then, obviously, that the ports and container terminals we are planning to build and including our current strong Korean fleet may make great contribution to the development of economy in North Korea. And you, Dr. John, would be directly involved in that, wouldn't you? You are the perfect person. Thank you. To be in that whole effort. History is waiting for you, Dr. John. Thank you very much. Okay, we take a short break. Yes. When we come back, I'd like to go through your slideshow, a few pictures. And I'd like to ask you about one very important and, namely, the ports of Korea and how the infrastructure works and how you build efficient and, you know, serviceable infrastructure and all those ports. Yes. Not only Busan, but everywhere. We'll be right back after this short break. Oh, yes. Thank you. My name is Emmy Ortega Anderson, inviting you to join us every Tuesday here on Pinoy Power, Hawaii. With Think Tech, Hawaii, we come to your home at 12 noon every Tuesday. We invite you to listen, watch for our mission of empowerment. We aim to enrich, enlighten, educate, entertain, and we hope to empower. Again, Maraming, Salamat Po, Mabuhay, and Aloha. Aloha. This is Winston Welch. I am your host of Out and About where every other week, Mondays at 3, we explore a variety of topics in our city, state, nation, and world and events, organizations, the people that fuel them. It's a really interesting show. We welcome you to tune in and we welcome your suggestions for shows. You got a lot of them out there and we have an awesome studio here where we can get your ideas out as well. So I look forward to you tuning in every other week where we've got some great guests and great topics. You're going to learn a lot. You're going to come away inspired like I do. So I'll see you every other week here at 3 o'clock on Monday afternoon. Aloha. Okay. We're here with Dr. Junsu Jang and I'm not going to repeat his credentials because that would take too long but suffice to say he is a leading expert in academia and in government and in industry and Korea on maritime affairs and shipping. And we have a short slide show to bring this live to you. So let's show some pictures and Dr. Junsu, would you describe what's there? Yes. This one is the container vessels. That one is conventional route but it has on-board gears crane for discharging and loading. And so they can serve those ports not they don't have specialized container terminers. But yes. Okay. And see the next one? This is typical container terminal and everything nowadays the fully auto automation is introduced and this one is the semi-automation the... Those cranes are state-of-the-art. Yes. And what port is that? That one is Busan port. Busan port? Yes. Okay. Let's go to the next one. This is the hinterland those warehouses and container depots and the container yard, etc. There are actual activities handling containers take place. Now we're looking now this picture shows you the port. Yes. This is not the surrounding neighborhood those are all port facilities. Yeah, all port facilities. That's huge. Yeah, of course it is. I'm excited for that. Okay, let's go to the next one. What's that? This one is the bulk ships and they use an iron ore or the cores, etc. How many feet is that? That one is usually they can load 300,000 tons of the iron ore or cores, etc. Is that a relatively new ship? Yes, a brand new ship. Brand new ship? Yes. My goodness gracious. And that's all oceans, all seas. Yeah, all seas. Everywhere. Yeah, everywhere. Yes. All right, next. This one is the you remember, still, the early 1980s there's an excellent village tragedy took place and they contaminated the whole coastline of Alaska and the northern part of California and since then, you see, new law implemented and strongly regulated all ships should be built double hard. Yes, of course. So one skin actually turned off still inside another skin remain. So it prevents the oil spirits. Yes. So it's compulsory nowadays. Every tanker has two tiers. Two layers of them. Two layers. Yes. So that's a section of ship we're looking at at the right. Yes. That is huge. That must be what? Hundreds of feet from the top to the bottom. Oh, yes. Yes. And you are able to, in a big shipyard, you're able to move that around and insert it into the center of a ship. Yes. So shipbuilding is such a big deal. That's right. It's complicated. It's expensive, but it has enormous rewards for the owners, hopefully, for the country. And for geopolitical purposes, it's very important to any country. And you have been able to achieve a shipbuilding industry, which is really excellent. So when did that start? Were you involved in the development of the shipbuilding industry in Korea, Dr. John? Not that early, but later on. But anyways, when they started it, and if you visit Daewoo, the shipbuilding yard, and they employ more than 60,000 people. 60,000. They have a university, two universities in there. Justice shipbuilding. Yes. Universities and high schools and the elementary school for their, the kids of employees and huge, the complexity. That's fabulous, because that teaches generations to come. That's right. And it ensures the primacy of the industry. Does Korea also build cruise ships? I know these are industrial ships, cargo ships. Crew ship yet, you see. Still more applied by European shipbuilders, you see. And they have strong barriers. Regulatory barriers. And they, not yet, you see. That doesn't mean that European cruise ships don't visit ports in Korea. They visit the ports of Korea. Of course they do, yes. It's a great destination. Let's go to the next picture. This one is an interesting one. This is pure car carrier. And they are transporting cars, you see. And from Japan and Korea, yes, Korean cars. Yes, mainly Korean cars. But I can give you the very interesting story. In old days, 1970s, 1980s, that time, China was less industrialized. And obviously they imported many cars, especially from Germany. And Mercedes-Benz for their VIPs, et cetera, I say. But whenever they discharged those vickers at the Chinese ports, they have to use the Chinese laborers. And that time, in 1970s, 1998, not many good drivers in China, I say. And obviously so-called self-claimed driver, they were employed for that. Sure. So the damn duration, whenever they, those cars were discharged, two digits, you see. So they had to return those damaged cars to Germany again. It cost a lot, you see. And the company named Nozak, the region company. And when they transported the cars to the Chinese port, when they discharged, rather than using the Chinese drivers, they invited all Chinese drivers to their vessels. Saloon and cafeteria to entertain them with good German beers and show them good attractive videos, you see. And from the saloon boy to the captain, they drove the cars out, you see. They received special training on in their DNA. They're striving in DNA there. So the damn ratio down to lower than 1.1%. So Chinese government was so delighted to and they awarded them exclusive right to transport all vehicles. So once the Nozak had more than 50% of the market share in the transporting cars, that's their success story. So whenever I give this story to my students, I told them, whenever you are in difficulty, don't be frustrated. Once they're backwards and look at the thing from different angle, and then you can find the solution. There's always an opportunity. Yes, there's always opportunity, yes. I think that was our last slide. So we got one more. Let's look at one more slide. Ah, yes. That's my favorite slide. So these are the ports of North Korea, South Korea. Yes. And you can see that they are on both sides, both east and west coasts. And they run right up to the DMZ, actually, pretty close to the DMZ. And of course, as you mentioned, Busan is on the southern tip, which gives it access to all of Asia, southeast Asia, Australia and so forth. So this array of ports makes Korea equipped to trade with everyone everywhere, yeah. Are they all big ports, or are some of them smaller? Yes, Busan is the biggest one. In fact, there's the fifth-largest port in the world. Very active and very busy. And because of that, the other ports less active. But of course, usually now the provincial government is truly encouraging their local port to be more active. So for instance, Kwangyang, that's the west side, and Incheon port. That's on the west side also. Incheon is near the DMZ, yeah. Yes, exactly. So if things go well with North Korea, and Incheon will be the another active port, they say. Yes, yes. They'll take the best advantage of there. That would be fantastic. That would be made to order, all ready to go. How about on the east side? Is there a big port like that on the east side? Because I have experienced one case where the American ship went into the rocks on the east side of Korea. Because the oceans and the shoreline are dangerous. The rocks, the currents, and all that dangerous. Is it easier to transit on the west side than the east side? Is the coastline dangerous as an experience? Not dangerous coastline. The east coast is much deep draft, you see. Any port has that. Or deep draft on the east side. Subtran draft. No problem there. But because the still, and so far, most of the transport containers at the Vladivostok, Vladivostok, that's the Russian port. Yeah, Vladivostok. Yeah, that's the one. And from there, there's the Trans-Siberian railroad. They transport the container. So Korea has its own one belt, one road arrangement, huh? Yes, sort of. All of Russia from Vladivostok west. So I wanted to talk about ports and what we can learn. I mean, you've been building ports, managing ports, supervising ports and carriers for many years. And you know how it has been so successful in Korea. And there must be lessons that you can share with us. Because we're in a kind of geopolitical position in Hawaii where halfway through, and we have a certain limited consumer market. But, you know, we have one big port here in Honolulu, maybe some smaller ones elsewhere. But what is your perception of how we are doing in terms of developing our ports? What can we do better to develop our ports to attract international shipping? Well, in fact, now the new trend there is and so far, and the port itself has got a power to but they never materialize to exercise. And if they just drag it by shipping industry, whatever they are shipping industry does, they just follow. But that's wrong, you see. For instance, they say the ship is getting bigger and bigger and the ports are forced to accommodate. So... It's not a good fit. Yeah, they invest lots of money to build up, expand for the expansion of the port. And we built the intent line structure to accommodate such a large volume. It's one short period. And that's not the thing. So now the new trend is ports get together and we need to have collective voice to reflect our interest rather than... So we should be more proactive about the change of shipping industry. We must give some influence on their change, something like that. And on the other side and port side, we call smart port. What is that? That's new technology introduced into the port. The port is very traditional and very conservative industry. So they don't change much, you see. But now, proactively, we must accommodate new technology. And we must create value-added and should pass on to the customers, the shippers. And we must attract the shippers to our port. But in Hawaii, you don't have that kind of competition locally. However, new trend is... new technology should be introduced into the port management and then they expedite the transfer of the cargo containers and how to create value-added and pass on to our customers, to our shippers. That's the main concern nowadays into the port. It's a market and you have to attract your customers. Everything... people, they take it for granted, you see. Yes. They must change. So one question underlying that is in Hawaii, we keep on hearing Hawaii is a relatively small economy, relatively small port. And these big ships can easily fly over Hawaii, bypass Hawaii, not need to come here. How can Hawaii make itself relevant in these international routes? Well, there's good point and bad point. Bad point, it will pollute. Contamination, you see, from the ships. Yeah. But now anyway, from now on, even the IMO is planned to implement new environmental regulation. Yes. Until 2050, even COT emissions should be halved. So, more environmental friendly the shipping industry will be realized. So, it's good idea now how to create value-edit in Hawaii. Once you import foreign products and put some cosmetic things, and then create value-edit, you see. Assembly. Yes, assembly. Assembly of products and components from shipped in elsewhere. And then we ship them again back to the mainland or somewhere else, yeah. We could do that. It would be a whole new economy, wouldn't it? Yes. We don't do it now, but it could happen. So, if I gave you 10 billion American dollars, Dr. John, would that be enough to upgrade our ports and our technology? Do you think that would work? I think 10 billion dollars is sufficient for Hawaii because it's a relatively small port. Yeah. And so, I think, see, that's a good idea, you see. Yeah. But I don't think you would give me. 5 billion work? Yeah, I think you could. Yeah, I'm out of breath. If I'm not made from the rent on the wall, I'm out of breath. Seems like this is more important. That's right, that's right. Thank you, Dr. John. Great to have you here. Thanks for having me. I'm John. Great to have you here. Thank you very much. Goodnight.