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As volumes plunge amid the coronavirus crisis, South Korea’s shipping industry is “heading for disaster”.
Other than cancelled passenger flights, so far there has been limited impact on cargo operations from the outbreak within Korea, and ports and airports function mostly as normal.
But with Korea’s trade so closely linked to China, vast swathes of the shipping sector are suffering from the factory and transport disruption there.
According to HG Jung, commercial director of Korean heavylift carrier Chung Yang Shipping, volumes between the two countries have plummeted.
“In terms of container logistics flow, Incheon port has been the most directly affected,” he told The Loadstar. “Import containers entering China from Incheon dropped by nearly 60%.”
Incheon handles around 3m teu a year, but Korea’s main port, Busan, handles some 21m teu.
Mr Jung said import and export cargo at Busan had fallen more than 10% since the crisis began, but transhipment cargo had “flocked” to the hub.
“Busan port normally has a 60-70% container stack ratio, but it’s reached more than 80% due to the coronavirus. They have secured an alternative storage field in case the situation worsens,” Mr Jung noted.
He claimed the crisis had created the “worst ever” slack season for the shipping industry.
“Four weeks after the Chinese New Year, the whole shipping industry in Korea is heading toward disaster.
“Never before have all the shipping sectors been ‘frozen’ together – just like Princess Elsa waved her dress turning the whole world into ice.”
The shutdown in China has also had a huge impact on Korea’s automotive manufacturers, which have struggled to keep just-in-time supply chains flowing.
“This led Korean OEMs to reduce production in February and is highly likely to affect production in March as well,” one Korean ro-ro carrier exec told The Loadstar.
“This, of course, affects shipping companies like us. In February alone, the volume is expected to drop approximately 35% from the initial production forecast,” she added.
There were already some automotive plant closures in Korea linked to the supply chain disruption, and reports today claim a Hyundai plant in Ulsan, close to the outbreak epicentre in Daegu, has halted production due to a worker testing positive for the virus.
In another development, Korean carrier SM Lines is set to cut its executives’ salaries in response to plummeting revenues, as a direct result of the coronavirus, according to a report in Splash247.
Meanwhile, Korean Air has announced a cut in US routes next month and 50 countries have banned or restricted the entry of travellers from South Korea, indicating additional belly capacity cuts to follow from both Korean and international airlines.
The number of reported virus cases in the country reached 2,337 today, with 13 deaths.