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South Korea Freight Transport Report Q1 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: February 2008 Product Code: R302-2080 Description In July the London Metal Exchange (LME) said it had approved Incheon Port as an official delivery pointfor trade contracts involving copper, nickel, aluminium, and aluminium alloy. South Korea already hadLME-approved warehouses in the ports of Gwangyang and Pusan. The recognition of Incheon’simportance is seen as welcome move in the light of the country’s current emphasis on port development.In 2006, South Korea announced plans to modernise its port facilities and streamline their operations inan effort to attract more foreign shipping lines and become the main logistics hub for North East Asia.Much of the focus is on capturing more China- and Japan-related freight business. In early February 2007the authorities said they were looking to seal co-operation links with four strategic Chinese ports, as wellas with the port of Niigata in Japan. On the other hand, actual trade volumes flowing through new ports atPusan and Daesan has been disappointing. On balance, BMI is expecting moderate to strong shippinggrowth in South Korea. Our newly-released South Korea Freight Transport Report concludes that despitea slightly less dynamic performance by exports and the downturn of the shipping cycle, freight carried bysea will grow by an annual average of 6.4% in 2007-2011.The background is that the country will continue to have a dynamic trade-oriented economy, increasinglygeared to opportunities in China, and significantly reliant on water-borne transport. At some point in thefuture, the opening up of a rail link through North Korea will boost land-based freight routes. The latestpartial thaw in North-South relations points to future progress for this project, but we expect many startsand stops. In the meantime, South Korean shipping companies are reasonably healthy, despite a squeezeon margins. Hyundai Merchant Marine (HMM) was the country’s top shipping line in terms of grosstonnage in 2005, with 35 vessels amounting to 2.55mn gross tonnes. South Korea’s second-largestcompany by gross tonnage was Hanjin Shipping, with 48 ships totalling 2.33mn gross tonnes, followedby SK Shipping’s 1.53mn gross tonnes and STX Pan Ocean’s 1.48mn gross tonnes. Shipping’s good prospects are mirrored by other transport modes. BMI expects total freight carried,measured in million tonnes-km (mntkm), to grow by an annual average of 6.9% in 2007-2011. In roadhaulage, the current national development plan calls for the construction of seven new north-southexpressways and nine east-west ones, part of the government’s commitment to ensure that it will take notmore than half a day to move people or goods between any two points in the country. Bearing thesecapacity increases in mind, we foresee that road haulage tonnage will increase by an average of 7.7% perannum in 2007-2011, and remain the fastest-growing cargo mode. Cargo traffic on rail on the other hand,has dwindled in recent years, given that capacity has not expanded and the share of passenger traffic hasincreased. We expect rail freight tonnage to grow at an average rate of 2.4% during the forecast period.Airfreight tonnage will grow by around 7.2% per annum. Table of Contents
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