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China has implemented retaliatory measures against South Korea since Seoul decided to deploy a Terminal High Attitude Area Defense (THAAD) system from the U.S., including import bans and non-tariff barriers. As a consequence, container movement between the economies has been sluggish, while freight rates for moving containers on the trade route have been weak as well.
In the first half (January-June) of this year, container trade between South Korea and China was favorable, increasing 6.1% year on year to 1.423 million TEUs in total. Containers from South Korea surged 10% in the first quarter (January-March), but in the second quarter (April-June), they turned negative, falling 6%, as China’s retaliations against South Korea were beginning to have impacts. China maintained its retaliations in the second half (July-December), making containers from South Korea to China fall 8.5% in July and keeping them from going up in August. Container traffic was still dull in September on the route, although it had been projected that many containers would be carried between the nations before the anniversary of national founding in China and the Chuseok harvest festival in South Korea, both of which fell on early October this year. It is believed that freight rates for services from South Korea to China have fallen to US$20 per TEU.
Containers from China to South Korea, meanwhile, were brisk in the first half, soaring 11.2% from a year earlier, and in July as well, growing 5.1%. The Shanghai Containerized Freight Index (SCFI) for services from Shanghai to Busan decreased to the $160-per-TEU level in April to June, declined further to the $140 level so in July and even more to the $130 level in August. The index once returned the $140-per-TEU level early in September, but it went down again to the $130 level last week. It is projected that freight rates will continue to fluctuate at very low levels, as South Korea and China will both have a long autumn holiday season next week.
