Ministry of Industry Holds 4th Public-Private Joint 'Export-Import Logistics Task Force' Meeting
Shanghai Shipping Index Rises 44% from 920 in May to 1321 in September
Expanded Tailored Support by Logistics Type Including Air and Sea Transport
Two National Shipping Vessels Urgently Deployed on Trans-Pacific Routes by End of October
[Asia Economy Reporter Moon Chaeseok] As maritime and air freight prices soar, increasing difficulties for companies, the government announced plans to establish a 'logistics fulfillment' support system that charges fees to tenant companies and ships products from logistics centers.
The Ministry of Trade, Industry and Energy held the 4th 'Export-Import Logistics Task Force' meeting at the Korea International Trade Association at 3 p.m. on the 28th, chaired by Na Seung-sik, Director General of Trade and Investment at the Ministry of Trade, Industry and Energy, to announce this plan.
The meeting was attended by related ministries including the Ministry of Oceans and Fisheries, Ministry of Land, Infrastructure and Transport, Ministry of SMEs and Startups, as well as related organizations such as the Korea International Trade Association, Korea Shipowners' Association, Korea Air Transport Association, and Small and Medium Business Corporation.
Maritime and Air Freight Rates Surge... Growing Concerns for Companies
According to the Ministry of Trade, Industry and Energy, air freight rates have turned upward this month. Freight rates at LA airport surged from 3,200 KRW per kg (January-February) to 13,733 KRW (April-June), then dropped to 6,600 KRW (last month), and have risen again to the 12,000 KRW range this month.
Maritime freight rates have increased even more sharply. The Shanghai Containerized Freight Index (SCFI), a representative global maritime shipping market indicator, rose from 920 in May, 1001 in June, 1034 in July, 1107 in August, to 1321 last month. The figure last month was 44% higher compared to May.
This meeting was held to understand the current status and difficulties faced by exporters, maritime transport, and air transport sectors in export-import logistics, and to discuss support measures by related ministries.
Establishing an Amazon-style 'Logistics Fulfillment' System
On the 16th, employees are busy working at Brandy Dongdaemun Fulfillment Center in Jung-gu, Seoul. Photo by Mo Honam munonam@
First, the Ministry of Trade, Industry and Energy plans to establish an overseas local logistics support system based on Amazon's fulfillment model. Amazon's fulfillment service charges fees to various sellers on its platform, stores their products in logistics centers, and handles shipping on their behalf.
Using export data by company from KOTRA's overseas joint logistics centers, optimal pre-stock quantities will be delivered to each hub in advance. This will enable companies to respond immediately to local demand.
Next month, the 3rd 'Expanded Trade Strategy Coordination Meeting' will be held under the Prime Minister's chairmanship, where a joint 'Export Digital Transformation Plan' by related ministries will be announced. The plan will include digitalization and advancement of trade support systems and expansion of domestic and international logistics support systems.
Fines up to 10 Million KRW for Unfair Shipping Contracts Between Shipowners and Cargo Owners
The Ministry of Oceans and Fisheries will strengthen management and supervision of shipping contracts between shipowners and cargo owners to prevent unfair freight charges. Strict penalties under maritime laws, including fines up to 10 million KRW for contract violations, will be enforced.
In early next month, the ministry plans to hold meetings with domestic port call shipping companies and related industries to communicate on-site and continuously pursue support measures desired by companies.
Additionally, in response to the surge in demand on the trans-Pacific route and rising maritime freight rates, two temporary vessels will be urgently deployed based on the results of a shipowner-cargo owner meeting held on the 24th of last month.
Removing Seats from Idle Passenger Planes and Converting Them into Cargo Aircraft
Korean Air deployed the Boeing 777-300ER model, which completed modification work for cargo transportation on the 8th of last month, on a cargo route for the first time. (Image source=Yonhap News)
The Ministry of Land, Infrastructure and Transport will prepare measures to increase the utilization of idle passenger aircraft for cargo transport. When applications for modifications such as seat removal and cargo loading on cabin floors are submitted, approval will be granted after suitability checks and procedures.
Specifically, modifications will be allowed to remove 42 business class seats and 227 economy class seats, as well as in-flight electrical wiring, and to install floor placards in the cabin.
Additional idle passenger aircraft will be converted into cargo planes to increase cargo transport capacity and support stabilization of air freight rates.
Up to 5 Million KRW Support per Company for Overseas Shipping Costs within 30%
The Ministry of SMEs and Startups is supporting up to 30% of the increased overseas shipping costs caused by rising air freight rates, with a maximum of 5 million KRW per company. Approximately 6 billion KRW has been provided to about 2,000 exporting SMEs.
Director Na stated, "To sustain the export recovery trend, including last month's positive export growth, we must resolve companies' export-import logistics difficulties so that our companies' products reach final consumers smoothly and predictably."
He emphasized, "Especially regarding recent on-site difficulties such as rising maritime freight rates and lack of shipping space, it is essential to accurately grasp the situation and promptly address the support companies need through cooperation between related ministries and the public and private sectors."
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