The Incheon Port Authority (www.icpa.or.kr, President Lee Kyung-Gyu) announced on the 6th that it has established strengthened management measures to eradicate illegal subleasing activities in the Incheon Port hinterland zone, following recent cases of such violations.

IPA noted that with declining volume of bulk cargo at terminals and reduced revenue among companies located in the hinterland complex, some tenants may be tempted to illegally sublease remaining land and warehouse space to boost their income.

Illegal subleasing refers to the act of re-leasing public hinterland facilities, originally provided at low rates compared to private land, to third parties at significantly higher rates. This undermines the public nature of the zone and disrupts port order.

Moreover, instead of contributing to cargo volume growth, which is the primary objective of tenancy in the hinterland zone, tenant companies can become more focused on real estate subleasing profits, ultimately reducing the operational efficiency of the zone.

As a response, the Incheon Port Authority has implemented comprehensive measures to eradicate such practices.

First, any entity found to be engaging in illegal subleasing will be reported immediately to the investigative authorities. Under the Port Act, both the original tenant and the sublessee may face penalties: up to one year in prison or fines of up to KRW 10 million for the original tenant, and up to three years in prison or fines of up to KRW 30 million for the sublessee.

Second, regular inspections, which were previously conducted annually, will now be carried out quarterly. Joint inspections with relevant agencies will also be implemented to enhance effectiveness, and the number of unscheduled inspections will also be increased.

Third, IPA will strengthen penalties by applying disadvantages when reviewing contract extensions at the end of lease terms. This includes restricting qualification for future bids in the hinterland zone and imposing compensation for damages under existing lease agreements.

Kim Sang-ki, Vice President of Operations at Incheon Port Authority, stated, “The hinterland zone is a national infrastructure asset created to support public logistics functions and enhance Korea’s logistics competitiveness. We will do everything in our power to eliminate illegal subleasing, which compromises both the public purpose and operational efficiency of the zone.”