"Shipping Companies Above Doctors, Judges, and Prosecutors" [Correspondent Column]

[Image source=Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] "Above doctors, judges, and prosecutors, there are shipping companies." This was a remark made by the head of a Korean company's New York branch whom I met recently. He said there was no better expression to describe the current shipping logistics situation and that this phrase came from someone in the shipping industry.

Hearing this, I could truly feel how the status of shipping company officials has soared to a 'golden value' due to the recent logistics crisis.

An official from a public enterprise also said they put special effort into meeting with shipping company officials to support exports in related domestic industries. In the past, the public enterprise would have been the 'gap' (dominant party) over the shipping companies.

Since the global financial crisis in 2008, the shipping industry, which had fallen into a slump, is now enjoying the greatest boom since the founding of Korea. Leading Korean container shipping company HMM, along with the world's number one Danish Maersk, second-ranked Swiss MSC, third-ranked Chinese COSCO, and fourth-ranked French CMA CGM, are overwhelmed by the flood of money.

Conversely, export and import companies are burning with anxiety. Amid supply chain collapses caused by the COVID-19 pandemic, bottlenecks in port logistics have led to transportation disruptions and the need to bear enormously soaring costs. A head of a major domestic conglomerate's branch mentioned at a local ground agent meeting that the skyrocketing logistics costs are unbearable and that they might have to resort to air transport instead, which became a hot topic.

Shipping logistics costs have been strictly governed by the logic of the capital market. Since 2008, amid a decline in international trade and an oversupply of ships, shipping logistics costs were set below cost. It was a market thoroughly dominated by buyers. Shipping companies were pushed into a subordinate position.

When asked if the container freight rates from China to the U.S. West Coast, which were in the thousands of dollars before COVID-19, soaring to $20,000 was excessive, one official said, "Please consider the previously low transportation costs below cost." They explained that this is an opportunity after more than ten years of overcoming crises.

However, it is difficult to expect that the shipping companies' status will last forever. The current situation is extremely exceptional. It should be called a 'gray rhino' created by COVID-19. It is clear that the shipping companies' position will shrink over time. The status of shipping company officials, who had transcended the human realm into a divine realm, will return to the human realm.

Signs of change are already being observed. According to the maritime research company Drewry, German Hapag-Lloyd and French CMA CGM froze their freight rates last September. Hapag-Lloyd stated that the rates were frozen because they had reached their peak, and CMA CGM said they prioritized long-term relationships with customers given the unprecedented situation. This means that shipping companies themselves feel the burden of their changed status.

Without coexisting with customers, the future of shipping companies can be overturned at any time. Situations inevitably turn around.

Crew members aboard container ships on ocean voyages are inevitably lonely. It is the fate of 'madoroseu' (sailors). They load cargo produced by customers onto ships and brave rough waves and strong winds to carry it to other continents, enduring with pride as the backbone connecting the global economy and logistics.

It is only natural to provide appropriate compensation for their efforts. In a way, we may have undervalued the sacrifices of madoroseu until now.

The day when madoroseu, who have ascended to the divine realm, come down to the human realm and share a glass of soju with cargo owners may be the day the global economy normalizes.