Support for Export Logistics Amid Soaring Ocean Freight Rates... Government Expands Shipping Capacity and Deploys Temporary Vessels for SMEs

Meeting with Logistics Industry Hosted by Vice Minister of Trade Negotiations, Ministry of Industry and Vice Minister of Oceans and Fisheries

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kwon Haeyoung] As global container freight rates hit record highs due to the ongoing maritime logistics crisis caused by the spread of COVID-19 variants, the government has urgently reviewed this year’s import-export logistics situation and begun preparing support measures.

On the 5th, the government held a logistics industry meeting at the Korea Trade Insurance Corporation with representatives from the trade, logistics, and shipping sectors to discuss these measures. Yeo Hangoo, Director-General for Trade Negotiations at the Ministry of Trade, Industry and Energy, and Eom Gidu, Vice Minister of Oceans and Fisheries, co-chaired the meeting.

The meeting was held amid the continuous surge in maritime freight rates caused by the ongoing logistics crisis due to the spread of COVID-19. The Shanghai Containerized Freight Index (SCFI), a representative global container ship freight index, surpassed the 5,000 mark for the first time last month.

The government plans to focus on ▲ expanding vessel deployment ▲ strengthening logistics cost support ▲ expanding logistics infrastructure to resolve difficulties in import-export logistics.

First, the weekly dedicated shipping capacity for small and medium-sized shippers will be expanded from 550 TEU (1 TEU equals one 20-foot container) last year to 900 TEU starting January this year. Specifically, 680 TEU will be allocated to regular vessels on the U.S. West Coast route, 50 TEU each to the U.S. East Coast and Europe, and 120 TEU to Southeast Asia. Support will be provided until April, with plans to extend the support period depending on domestic and international conditions. Additionally, at least four temporary vessels will be deployed monthly.

Logistics cost support for companies facing increased logistics difficulties due to rising freight rates will also be expanded from 26.6 billion KRW last year to 32 billion KRW this year. Special loans amounting to 150 billion KRW will be provided to logistics-affected companies in the first half of the year.

Furthermore, to secure affordable cargo storage locations for export companies, new overseas joint logistics centers will open in the first half of the year at three locations: Rotterdam Port in the Netherlands, Barcelona Port in Spain, and Probolinggo Port in Indonesia.

In addition, the government will promote ▲ the extension of support projects for overseas transportation of small and medium-sized shippers’ cargo by POSCO, Hyundai Glovis, and Korean Air through this year, expanding cooperation between large and small transporters ▲ the creation of a Korea-style freight index to facilitate shipping companies and shippers in signing transport contracts and activating long-term contracts, thereby fostering a win-win logistics ecosystem between shippers and carriers.

Yeo Hangoo, Director-General for Trade Negotiations, said, "Last year, the government, industry, shipping companies, shippers, large corporations, and SMEs worked together to do their best in responding to logistics risks. This year, we will closely communicate with the industry and mobilize all possible policy measures to strengthen import-export logistics support so that we can surpass last year’s record-high trade volume and solidify South Korea’s status as a trade powerhouse."

Vice Minister Eom Gidu emphasized, "Thanks to the efforts of domestic shipping companies for Korean export companies over the past year, our country was able to achieve its highest export performance. We will continue to implement support measures until the logistics situation improves, and I hope that the experience of overcoming this export logistics situation will serve as an opportunity to strengthen win-win cooperation between domestic shipping companies and export companies."

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