Fare Support for 8 Routes in 5 Countries Including Vietnam
The Korea International Trade Association (KITA) is launching a sea freight support program for Southeast Asia routes to reduce the logistics cost burden on small and medium-sized export companies. This initiative aims to alleviate the difficulties faced by companies as freight rates have increased about fivefold compared to the beginning of the year.
Lee In-ho, Executive Vice Chairman of the Korea International Trade Association, is delivering a luncheon speech at the VIP luncheon event of the 10th Korean Peninsula Future Symposium held on June 28 at the Dynasty Hall of the Shilla Hotel in Jung-gu, Seoul. [Photo by Yonhap News]
On the 27th, KITA announced that it has prepared a sea freight support program for Southeast Asia routes in collaboration with seven domestic shipping companies, including LX Pantos, Korea Marine Transport, and Nam Sung Shipping. The program plans to provide dedicated weekly space of approximately 300 TEU (1 TEU = 20-foot container) on eight routes across five countries?Vietnam (Ho Chi Minh City, Haiphong), Thailand (Bangkok, Laem Chabang), Malaysia (Port Klang), Singapore, and India (Chennai, Nhava Sheva)?at rates lower than the market price. Support will also be provided to minimize other costs such as service fees.
While sea freight rates on trans-Pacific and Europe routes have surged due to the prolonged Red Sea situation and increased push-out cargo from China, freight rates on Southeast Asia routes have also risen. Rates increased from $318 (approximately 423,000 KRW) in January to $1,482 (approximately 1,970,000 KRW) this month, a rise of about 4.7 times. This increase rate is higher than the 2.6 times and 2.1 times rise on the North American West Coast and Northern Europe routes, respectively, during the same period.
The difficulty in securing vessel space is also intensifying. Global shipping companies continue to deploy newly built vessels on the high-margin trans-Pacific and Europe routes. Even vessels previously assigned to Southeast Asia routes have been shifted to trans-Pacific and Europe routes, causing a sharp decline in vessel supply for Southeast Asia. As a result, while freight rates for trans-Pacific and Europe routes have recently stabilized, rates for Southeast Asia routes remain high.
Lee In-ho, KITA’s Executive Vice Chairman, said, "Through this support program, we hope to ease the logistics cost burden on our export companies struggling with rising sea freight rates, even if only slightly. We will do our best to actively support small and medium-sized export companies that find it difficult to respond to logistics instability and contribute to expanding exports."
KITA will recruit participating companies from the 28th until the 6th of next month. Selected companies will be able to receive benefits until the end of the year. For more details, please check the announcements on the Korea International Trade Association website.
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