Ports and airports across South Korea are experiencing an influx of export cargo demand with exports turning positive for the first time in 13 months since October 2022. The shipping industry, responsible for 99 percent of the country’s imports and exports, is expecting a further increase in demand for containers from exporters with the arrival of the peak season and lower freight rates.

According to the Ministry of Oceans and Fisheries on Wednesday, container export volumes at 31 ports nationwide, excluding transshipment cargoes, was 748,527 twenty-foot equivalent units (TEUs) in September 2023, a 21 percent surge from a year ago. This marked the beginning of a rebound in container export volumes, which had fallen to 692,404 TEUs in August from 721,493 TEUs in July. The Busan Port, the country’s largest container cargo-handling port, also saw a 20 percent year-on-year jump in export volumes to 461,919 TEUs in September. Incheon Port also saw a 22.1 percent increase in container export volumes over the same period.

The shipping industry expects the cargo volume to increase further. The industry’s peak season, the third quarter of the year, draws export shipments ahead of the year-end and New Year holidays, and the impact is likely to drive up volumes.

Lower container freight rates are another contributing factor to the increase in exports by sea. The Shanghai Container Freight Index (SCFI), a freight rate benchmark for global ocean shipping lanes, was 1012.6 on October 27 after falling below the 1000 mark since September, but it is a sharp drop from September 2022, when it was above 2000. “During the Covid-19 pandemic, the freight cost per 40-feet container was $10,000, but it has been falling steadily to $3,000,” according to an exporter at Incheon Port. “We are able to use containers at lower freight rates.”

Exports by air also appear to be soaring upwards. While the global freight market suffered from a prolonged supply and demand imbalance in the third quarter that resulted in lower volumes and lower freight rates, the fourth quarter is expected to bring both increased demand and higher freight rates during the traditional peak season.

Some analysts also see that global air cargo demand has bottomed out and rebounded since August 2023. At Incheon International Airport Corp., the third-quarter international cargo volume was 698,213 tons, up 1.2 percent from 689,998 tons a year earlier.

But some analysts say it is premature to expect a sustained upturn in Korea’s exports driven by the recovery in cargo volumes. “Many cases of improvement are witnessed in exports, but we need to wait and see if it has hit bottom as the market has been worsening for a long time,” according to Sung Tae-yoon, a professor at Yonsei University’s Department of Economics.

By Jung Jin-wook, Choi Hyun-jae, Cho Yun-hee, and Choi Jieun

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