President Moon Jae-in quickly congratulated President-elect Joe Biden last week following his projected victory over Donald Trump in the 2020 General Election. In his November
Rising Shipping Rates Are Expected to Stay High for Korean Exporters
The Coronavirus pandemic has unleashed yet another unintended consequence that is beginning to hit the international trade markets: the rising cost of global shipping. As a result, Korean companies that are heavily reliant on exports have been warned to expect higher shipping costs, and to explore ways of managing those increases amid a “prolonged surge” in ocean freight charges.
A recent report by the Institute for International Trade projects that “Ocean freight rates are rising and could continue for a long time against the backdrop of unstable supply and demand for empty containers and a rise in demand due to revenge consumption.”
One of the report’s findings is that cases of the coronavirus among dockworkers and truck drivers, as well as the “complicated structure of international logistics” has resulted in both pileups at shipping ports and a slow return of empty containers. The report notes that progress made to improve those delays suffered a setback from the grounding of the mega-container ship Ever Given in the Suez Canal in April, causing significant back-ups in the movement of containers around the world.
While new orders for containers have increased to address the shortfalls, researchers say that shipping capacity is unlikely to recover in the short-term. Adding to the problem is the combination of an unstable supply and demand for shipping containers coupled with a surging demand in goods due to “revenge consumption.”
The Korea International Trade Association, meanwhile, is tell its members to work find ways to reduce customs duties and logistics fees as a way to achieve a competitive pricing edge.
As a result of the logistical challenges, shipping rates are continuing on a steady climb, up more than 4 percent in April, and up more than 21 percent year-over-year. A recent report by Xeneta’s Shipping Index Public Indices report for the long-term contract market finds that prices escalated across all major global trade corridors in April, with no immediate relief for shippers in sight.