News / South Korea and Vietnam governments intercede for SME shippers

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The governments of South Korea and Vietnam are intervening to insure domestic exporters have sufficient container shipping capacity as more tonnage is absorbed by the Red Sea crisis.

South Korea’s Ministry of Oceans and Fisheries (MOF) said today it had called on mainline operators to reserve slots for local small and medium enterprises (SMEs) which are finding it hard to obtain export slots for Europe.

The threat of Houthi rebels attacking ships in the Red Sea region has caused at least 80% of ships on Asia-Europe trades to detour around the Cape of Good Hope, adding 10-15 days to sailing times.

The MOF said mainline operators would reserve 400 teu for SME exporters on each Asia-Europe voyage, while another 1,040 teu would be set aside for long-term contracts, in order to mitigate runaway freight rates.

The Shanghai Containerised Freight Index (SCFI) on Friday showed signs of a correction in Asia-Europe rates as Chinese New Year (10 February) nears, with ex-China rates down by $200-$300 on the previous week. However, rates remain substantially higher year on year.

SMEs should apply for slots through the Korea SMEs and Startups Agency’s GoBizKorea portal, while those that want to sign long-term contracts will do so through the Korea International Trade Association.

The South Korean government took similar measures when Covid-19 caused logistical bottlenecks in 2021-2022.

Minister for oceans and fisheries Kang Do-hyung said: “We’re continuing to provide support to ensure there are no disruptions in outbound and inbound logistics. We have an emergency response for all possible scenarios.”

Meanwhile, Vietnam’s Ministry of Transport yesterday instructed the Vietnam Maritime Administration to help exporters by negotiating with liner operators to increase connections between Vietnam, Europe and the US.

The maritime administration estimated that long-haul rates from Vietnam had gone up 60% since December. Rates per 40ft are about $2,650 for Vietnam-US west coast, $3,900 for Vietnam-US east coast and $2,400 for Vietnam-Europe.

During a seminar on 11 January, Korea Maritime Institute head Hwang Soo-jin predicted that this year’s average SCFI would be between 900 and 1,100 points, up from 800-1,050 estimated in November.

However, Mr Hwang added that if the Red Sea crisis was prolonged, further increases could be capped by the record 2.9m teu of newbuilding deliveries this year.