Korean exporters fear spike in freight rates and shipping bypass with normalcy in Shanghai ports

[Photo by Yonhap]

South Korean traders and shippers worry strengthening in shipping rates and renewed bottleneck as ports of Shanghai are normalized after months-long lockdown.

During the lockdown, the container terminals of Shanghai port and nearby Ningbo port have been occupied by nearly 100 percent, and the inventories are expected to be poured out soon at once.

“The peak season of the marine shipping industry starts in the mid to late June. Handling of the freight inventories stuck in the Shanghai and Ningbo terminals could lead to a rise in shipping rates,” warned an industry official.

A bottleneck in the marine shipping could translate into rate increases, an inevitable hit to Korean exporters.

Shippers bypassed Busan last year when container freight rates bound for Los Angeles leaving Shanghai were charged 50 percent higher than the cost from Busan.

Global marine shipping rates have been on a rise for recent two weeks.

The Shanghai Containerized Freight Index (SCFI), widely cited metric on market freight quotations, peaked at 5,109.60 early this year and eased for 17 consecutive weeks. The comprehensive index however rose 14.86 to 4,162.69 on May 20 and 12.66 to 4,175.35 on May 27.

If the global logistics faces congestion again as the industry expects, Korea’s exports to China will be hit hard. The Korea-China route takes up 33 percent of all freights coming in to and out of Korea.

Some however say there’s less possibility of logistics congestion due to economic slowdown in China following the two months-long lockdown. Major factories in Shanghai were plugged off since the end of March, and production of most items plunged in March and April.

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