Domestic Transport Service Exports Fall to 11th Place Last Year

From 5th in the World in 2010 to 11th in 2019

[Asia Economy Reporter Hwang Yoon-joo] Amid the difficulties faced by the trade industry due to soaring logistics costs following the COVID-19 pandemic, the creation of a mutually beneficial ecosystem for the development of both shipping companies and cargo owners has been pointed out as urgently needed.

According to the "Current Status and Implications of the Decline in Shipping Service Exports" report released on the 28th by the Korea International Trade Association's International Trade and Commerce Research Institute, the share of South Korea's transportation service exports in the global market fell from 4.7% in 2010 to 2.6% in 2019. During the same period, the ranking of transportation service exports dropped from 5th to 11th worldwide.

The report analyzed, "As the external environment worsened due to factors such as freight rate declines caused by global ship oversupply, global shipping companies actively pursued mergers and acquisitions (M&A) and alliance cooperation to expand their competitiveness. In contrast, domestic shipping companies experienced a decrease in fleet capacity and route share following the Hanjin Shipping incident, deepening the competitiveness gap."

In this situation, with the recent recovery of global cargo volumes leading to a significant increase in freight rates and difficulties in stable service supply on some routes, the trade industry is facing great challenges. The China Containerized Freight Index (CCFI) stood at 949.48 as of September 11, a 3.0% increase from the previous week and significantly higher than the 2019 average of 823.53. As global shipping companies prioritize allocating China-origin cargo to the Americas routes where import volumes are increasing, domestic exporters are even experiencing difficulties securing vessels.

The report emphasized, "To achieve mutual development between the trade and logistics industries, it is essential to first improve the loading rate of national vessels," adding, "Governments in countries such as the United States and China recommend the use of domestic vessels for transporting key strategic materials like crude oil and coal. Our government should also encourage prioritizing national vessels for strategic cargo transport and enhance the effectiveness of the 'Excellent Shipper Certification System' introduced this year by relaxing its criteria." It also suggested lowering the certification standard for forwarding companies, which currently requires annual sales of 10 billion KRW, as one possible solution.

The report continued, "To strengthen the competitiveness of the domestic shipping industry, shipping companies should improve services for cargo owners to increase the use of national vessels," and added, "They should actively expand routes and secure ports in countries like Vietnam, where logistics demand has increased due to the global supply chain restructuring, and enhance digital capabilities to provide services that improve cargo owner convenience."

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