[Featured Stock] Taewoong Logistics, Leading 3PL Focused on Petrochemical Product Transport... Surges Alongside Shipping Companies' Rally

[Asia Economy Reporter Hyungsoo Park] As the Suez Canal is blocked due to an accident, causing expected logistics chaos and soaring freight rates, the stock price of Taewoong Logistics is also moving.

At 10:52 a.m. on the 26th, Taewoong Logistics was trading at 6,010 KRW, up 7.9% from the previous day.

On the 23rd (local time), a container ship named "Ever Given" stopped at the northern part of the Suez Canal in Egypt, which connects the Mediterranean Sea and the Red Sea. The vessel, departing from China and heading to the port of Rotterdam in the Netherlands, stopped in the Suez Canal, and the following ships also halted navigation. This accident is expected to cause logistics chaos and a surge in freight rates.

Choi Go-woon, a researcher at Korea Investment & Securities, said, "Freight market conditions are very sensitive to supply uncertainty, so if this situation is not resolved in the short term, freight rates will soar," adding, "Also, since the route to Europe has been blocked, it could cause an even bigger logistics crisis than now."

Taewoong Logistics engages in logistics multimodal transportation brokerage and comprehensive logistics services. It is a 3PL company that has grown focusing on maritime transportation of petrochemical products, with major clients including large corporations such as Lotte Chemical, SK General Chemical, and Kumho Petrochemical.

Lee Min-hee, a researcher at IBK Investment & Securities, explained, "Regardless of the price market conditions of petrochemical products, the cargo volume has been steadily increasing every year," and added, "Based on securing stable shippers and shipping capacity, which are key competitive factors, as well as freight competitiveness, the company has maintained continuous business relationships with large corporations for the past 20 years."

As of last year, sales composition by business division is divided into international logistics 67%, CIS logistics 16%, project logistics 13%, and others 4%.

The researcher evaluated, "With the steady increase in petrochemical cargo volume, international logistics sales growth has continued, and favorable growth in CIS logistics sales has resulted in solid external growth."

As a new business, it started liquid petrochemical product transportation services. Usually, logistics companies lease ISO tanks, but Taewoong Logistics has purchased 50 tanks directly to improve profitability. Taewoong Logistics acquired GLS Korea for 6.8 billion KRW and entered the special logistics business.

However, the surge in freight rates could lead to cost burdens.

The researcher analyzed, "When freight rates soar, price pass-through to shippers is insufficient while cost ratios increase, so profitability is negatively affected in the short term, but there is a sales increase effect," adding, "When the freight index stabilizes or gradually declines, it is expected to rather improve profitability."