Small Korean exporters worry about missing export boom with record shipping rates
Sea and air shipping rates hit record highs in May, a boon for carriers, but dismay for small Korean exporters as they could miss out on the global trade boon in the wake of the pandemic crisis.
Air freight rates from Hong Kong to North America based on the TAC index hit $ 8.70 per kilogram in May, breaking the previous record of $ 8.48 per kilogram in April.
Air freight rates fell from $ 3.14 per kilogram in January of last year to $ 7.73 per kilogram in May and to $ 7.5 in December.
After softening to $ 5.48 in March, rates continued to rise throughout the second quarter.
Korean full-service carriers Korean Air Lines Co. and Asiana Airlines Inc. have been expanding their cargo fleets since last year to meet growing cargo demand.
Korean Air’s revenue from cargo operations jumped 108% in the first quarter from a year earlier, and Asiana Airlines’ revenue jumped 83%. Freight volume during the January-March period reached 2.4 billion freight tonne-kilometers (FTK), up 3% from the previous year.
Low-cost carriers focused more on passenger transport activities have seen their freight volume remain at 30% of the pre-Covid-19 level. LCCs that do not own cargo planes carried products into the valley cargo space inside passenger carriers. But passenger and cargo affairs remained sluggish, with international flights suspended due to Covid-19.
Ocean freight rates also hit a new record last Friday.
The Shanghai Containerized Freight Index (SCFI), a widely cited measure of market freight quotation, rose 117.31 points to 3,613.07 on Friday from the previous week. This is not only the highest since compilation of related data began in October 2009, but it almost quadruples that of 925.50 on the same day last year.
Soaring shipping rates are toughening up small and medium-sized businesses that can only afford to sign short-term contracts for freight on top of the higher fuel costs.
Korean Air increased fuel surcharges for international cargo from 0 in January and February to 100 won ($ 0.09) per kilogram from March to reflect rising international oil prices.
The cost of air fuel hit $ 73.85 per barrel on May 28, up 108.9% from the same period a year ago.
The Korean government on Monday pledged 20 billion won under a special loan program to small and medium-sized exporters to help their maritime conundrum.
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]