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Container movement between South Korea and China remained brisk after the Lunar New Year holidays. In the first quarter (January-March), containers from South Korea to China increased 9.89% year on year to 284,887 TEUs. However, they began to decrease notably earlier this month, as China has committed several acts of retaliation since South Korea decided to adopt the U.S.’ Terminal High Attitude Area Defense (THAAD) anti-ballistic missile system last year. It is feared the plunge in container traffic on the trade route will interrupt the ongoing recovery of freight rates.
According to a report on containers traded between the two Asian economies from January to March, local cargo from South Korea to China was robust, surging 10.99% to 267,603 TEUs. In contrast, feeder cargo was not as massive, just growing a mild 3.72%. As for containers from China to South Korea, local cargo soared 11.99% to 393,433 TEUs, but feeder cargo fell 0.73% to 23,902 TEUs.
Since the turn of April, however, sales of South Korean cars have diminished considerably in China. As such, exports from South Korea to China of complete knockdowns (CKDs) and chemicals have also declined significantly, said the report, which had been complied by the Yellow Sea Liners’ Committee (YSLC).
Freight rates were not sluggish in the first quarter, either. From South Korea to China, rate hikes took a hold in the market, helping spot freight rates remain at US50 per TEU. From China to South Korea, meanwhile, the Shanghai Containerized Freight Index (SCFI) exceeded $160 per TEU at the end of March, rising by more than $60 per TEU from the beginning of the year.
On the trade route from China to South Korea, shipping lines reduced the terminal handling charges (THCs) they impose at ports in China on April 1 at the behest of Beijing by $15 per TEU to $20 per TEU. The THC increases are anticipated to have more impacts on freight rates for short-sea services than those for oceangoing services, as THCs account for larger parts of the former.
