Government Deploys Special Charter Flights for Export Support to Chongqing, China and Jakarta, Indonesia for the First Time Ever

Sung Yunmo, Trade Minister, Holds On-site Export Inspection Meeting
"Enhancing Trade Finance Efficiency and Strengthening Contactless Export Support"
Minister Sung: "Extraordinary Resolve Needed... Join Supply Chain Restructuring by Leveraging 'K-Quarantine' for Investment and Reshoring"

[Asia Economy, Reporter Moon Chaeseok] For the first time ever, the government is deploying special chartered flights to support exports by Korean companies. As the COVID-19 pandemic has led to a shortage of air cargo transport supply compared to demand, the government has decided to identify and focus support on regions where assistance is urgently needed.

On April 29, the Ministry of Trade, Industry and Energy announced that, in cooperation with the Korea International Trade Association, it would urgently arrange and operate two special chartered flights to Chongqing, China, and Jakarta, Indonesia. On the same morning, Minister Sung Yunmo visited Terminal 1 of Incheon International Airport to observe the charter flight operations and held an "Export Situation On-site Inspection Meeting" attended by export support agencies, import-export companies, and logistics firms.

According to the Ministry, the suspension of international passenger flights due to the spread of COVID-19 has reduced the supply of belly cargo (15-20 tons of cargo loaded in the remaining space after checked baggage on passenger aircraft), causing an imbalance between supply and demand. This has increased difficulties for companies in securing air cargo space and managing logistics costs. In response, the Ministry, led by the Korea International Trade Association and in cooperation with the Korea Chamber of Commerce and Industry, KOTRA, and others, conducted a survey of import-export companies last month to assess air cargo demand. Based on the results, Chongqing and Jakarta were selected as priority regions for special chartered flights, as demand for air cargo transport in both areas exceeds supply.

The Ministry and the Korea International Trade Association designated international freight forwarders to coordinate the logistics, ensuring smooth cargo transport for exporters. The round-trip charter flight to Chongqing, managed by CJ Logistics, will carry about 30 tons of exports and imports, including semiconductors, for 10 import-export companies. The cost for shipping from Incheon to Chongqing is 3,000 won per kilogram, and from Chongqing to Incheon is 1,700 won per kilogram, with only 75% of the market freight rate applied. According to industry sources, most of the companies benefiting from the Chongqing cargo shipment are partner vendors, but large corporations with operations in Chongqing are also included.

The one-way charter flight to Jakarta, managed by K-Logis, will transport 16 tons of goods for eight export companies, including diagnostic kits, air purifiers, textiles, and protective suits. Here too, only 75% of the market freight rate is charged, at 3,000 won per kilogram. K-Logis is a logistics platform company that has supported joint logistics projects with the Korea International Trade Association (KITA). Four companies-Seegene, Osang Healthcare, SD Biosensor, and Sison Biomaterials-have obtained Emergency Use Authorization (EUA) for COVID-19 diagnostic kits from the U.S. Food and Drug Administration (FDA). Previously, on April 25, Seegene announced plans to provide diagnostic kits for 15,000 people to Indonesia in partnership with Shinhan Financial Group.

Minister Sung stated, "The emergency air cargo transport using idle passenger aircraft is an exemplary case that has eased logistics bottlenecks, which are the lifeline of export and import processes, helping our companies maintain customer relationships and business contracts." He added, "Going forward, the government will do its utmost to ensure that Korean companies can continue their economic activities without interruption, including considering additional charter flights in response to the ongoing spread of COVID-19 and entry restrictions by various countries." The Ministry is also considering increasing flights to regions such as the United States and Europe, where supply-demand imbalances are also occurring.

Minister Sung also held the on-site export situation inspection meeting that day. With the government effectively acknowledging that exports are likely to record negative growth this month, it was determined that urgent on-site support is necessary. Previously, on April 27, Deputy Prime Minister and Minister of Economy and Finance Hong Namki stated at the Foreign Economic Ministers' Meeting, "From the 1st to the 20th of this month, our exports decreased by 26.9% compared to the same period last year, showing that the impact of COVID-19 is becoming a reality."

At the meeting, representatives of relevant organizations such as the Korea Semiconductor Industry Association, as well as import-export and logistics companies, appealed for the government to thoroughly monitor the implementation of measures on-site and provide support that companies can tangibly feel. The government responded that it would work closely with support agencies and companies to discover and expand additional success cases.

Specific measures to strengthen on-site export support were also announced. First, the government declared it would enhance trade finance qualitatively. As announced at the 4th Emergency Economic Meeting on April 8, it will introduce and expand measures such as extending the maturity of trade insurance and guarantees, providing discounts on guarantee and insurance premiums, and guaranteeing early cash conversion of export receivables. Trade finance execution will be monitored daily. Most notably, the public sector will launch the world's first "online direct insurance," allowing companies to enroll without submitting separate documents.

To respond to the untact (contactless) economy era, the government will strengthen online export support, including sample logistics, interpretation, and consulting, to help these efforts lead to actual contracts. Focusing on new export industries such as 5G, IT, services, medical devices, and food, export vouchers of up to 100 million won per company will be provided. The government also plans to foster strong small and medium-sized exporters by offering package support for market research, certification, promotion, and corporate establishment in related sectors.

Logistics support will also be enhanced. By expanding global import-export logistics information for 100,000 people daily, including cargo aircraft, trucks, and shipping, the government aims to preemptively prevent export disruptions. For air transport, measures include expanding the list of items eligible for customs exemptions, covering 50% of increased air freight costs, and continuing to increase cargo routes using cargo planes and idle passenger aircraft. Additional support will be provided for shipping and logistics normalization, such as purchasing corporate bonds from small and medium shipping companies, supporting mergers and acquisitions (M&A) among domestic shipping companies, and increasing liquidity in ship financing. The public-private "Emergency Logistics Task Force," which has been operating since February, will be expanded into the "Import-Export Logistics Task Force" to more swiftly resolve difficulties in all areas of import-export logistics, including air, sea, and inland transport, customs clearance, and storage.

Minister Sung emphasized, "Now is the time for an extraordinary determination, without relying on luck, as in the saying 'If you are prepared to die, you will live; if you try to live, you will die.' I urge companies to leverage the elevated national brand from 'K-Quarantine' to make bold efforts in restructuring supply chains, including proactive investment, job creation, and promoting reshoring."

He added, "The government will spare no support, including tax, finance, R&D, workforce, and regulatory easing, so that we can overcome the current crisis and achieve even greater growth as a 'K-Economy.'"

This content was produced with the assistance of AI translation services.