"Marine Logistics Costs to Rise Further"…Government to Deploy 7 New Container Ships

[Image source=Yonhap News]

As maritime logistics costs have surged recently, increasing the burden on export companies, the government has decided to deploy seven large new container ships in the second half of the year. Support for logistics costs for export companies will also be strengthened.

On the 14th, the government announced that it discussed the "Impact of Rising Maritime Freight Rates on Import and Export Logistics and Countermeasures" at the 42nd Economic Relations Vice Ministers' Meeting. After reviewing the impact on import and export logistics, the government found that direct effects such as export cargo loading have been limited so far, but delays caused by rerouting around the Cape of Good Hope and the rising maritime freight rates have increased the burden on export companies.

Since the end of last year, the Yemen Houthi rebels, supported by Iran, have been attacking ships passing through the Red Sea, causing shipping companies to reduce the number of voyages or reroute around the Cape of Good Hope at the southern tip of Africa instead of using the Red Sea route. As a result, the supply of shipping space (the cargo space on ships) has decreased, and freight rates have continued to rise.

To prepare for the shortage of shipping space, the government plans to urgently deploy three temporary vessels (totaling 9,000 TEU; 1 TEU equals one 20-foot container) through the national shipping company HMM to regions with high cargo demand, including the U.S. West and East Coasts and the Middle East, during June and July. Additionally, seven large new container ships (totaling 70,000 TEU) will be deployed on major routes in the second half of the year, and dedicated shipping space of about 1,685 TEU per voyage will be supplied exclusively for small and medium-sized enterprises.

To reduce the freight burden on export companies, the government will expedite the disbursement of 20.2 billion KRW in export vouchers in the second half of the year and will consider additional freight support measures based on future freight rate trends. Furthermore, to prepare for delays in payment settlements, the government will expand the scope and timing of support such as preferential export credit guarantee limits (1.5 times) and prompt insurance payouts. An additional shared container yard with a capacity of 700 TEU, offering rates lower than the market, will be established near the new Busan Port terminal.

The government will continue to operate an emergency response team for import and export logistics led by the Vice Minister of Oceans and Fisheries, and an export emergency countermeasure team led by the Director-General of Trade and Investment at the Ministry of Trade, Industry and Energy. A government official stated, "Since the recent trend of rising freight rates is likely to continue for some time, we will swiftly and thoroughly implement these measures, including dedicated shipping space support for national shipping companies, through cooperation among related ministries. We will do our best to respond promptly to logistics risks to sustain the favorable export momentum."

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