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Seoul demands carriers tackle rising freight costs

Carriers offer shippers extra loaders as the South Korean government pressures carriers to reduce soaring rates and improve services

HMM, the country’s largest carrier, had already extended its extra loader service to February 2021 after meeting with shipper organisations in late September. But further pressure from government has seen SM Line Corporation, South Korea’s only other Transpacific carrier, launching an “extra loader” service too, deploying a 3,000TEU vessel for one sailing each in December and January 2021.

The South Korean government has urged the country’s container carriers to collaborate to resolve the shortage of shipping capacity for local exporters. The Minister for Oceans and Fisheries, Moon Seong-hyeok, chaired an emergency meeting with the presidents of all 14 South Korean liner operators on 11 November 2020.

Moon reminded the liner operators’ presidents that the shipping industry is supported by the current government, and South Korean exporters need to establish a win-win solution.

He noted that while South Korean liner operators tried to co-operate through forming the Korea Shipping Partnership in 2017, market dynamics have changed.

The minister said, “It’s time for South Korean carriers to find a new collaborative model, as Asian liner operators are struggling to compete against larger shipping groups.”

Freight rates on various trade lanes have soared as container carriers trimmed capacity amid economic uncertainties wrought by Covid-19. Transpacific rates, especially, have hit levels not seen since 2009, causing the governments of South Korea, China and the US, to step in.

As of 6 November, Asia-US West Coast rates averaged US$3,871/FEU and Asia-US East Coast rates averaged US$4,665/FEU. The situation has been exacerbated by a container shortage, caused by the slow return of empty containers from North America to Asia, due to congestion and delays at US ports.

Martina Li
Asia Correspondent

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