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Soaring freight rates set to weigh down exporters

Industry 11:27 November 08, 2020

SEOUL, Nov. 8 (Yonhap) -- South Korean exporters are expected to suffer from sky-high freight rates throughout next year, as global trade is set to rise down the road amid the pandemic, industry watchers said Sunday.

The Shanghai Containerized Freight Index, a barometer of global freight rates, came to a new high of 1,664.56 on Friday, according to industry sources. The previous record was 1,583.18 posted in July 2010.

Industry watchers say exporters are anticipated to face heavy shipping costs throughout next year, as major shipping firms have reduced their business amid the COVID-19 pandemic, while the economic recovery of the United States and China has again pushed up demand.

Soaring freight rates set to weigh down exporters - 1

Demand for shipping services will also rise over the remaining 2020 on stronger sales of consumer products ahead of Christmas and other promotional events by retailers.

Experts say the price of air shipping services may rise further next year as well if flights are mobilized to deliver anticipated COVID-19 vaccines.

Despite the heavier burden for exporters, industry watchers say local air carriers and shipping firms are expected to benefit from the rising costs.

HMM Co., South Korea's biggest shipping company by sales, turned to the black in the April-June period, marking the first time it posted profits in 21 quarters. The shipper is widely anticipated to have reported a record-high operating income in the third quarter as well.

Korean Air Lines Co., South Korea's biggest carrier, also managed to post an operating profit of 76 billion won (US$67.7 million) in the third quarter as it began to carry cargo via passenger jets.

colin@yna.co.kr
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