A seminar organised by Korea International Trade Association on 30 January heard that South Korean exporters and forwarders are inclined to substitute air and rail freight for sea freight, as they expect the Red Sea crisis to last until at least mid-2024. The crisis has caused container freight costs to increase by 44% from December 2023.
During the seminar, Seo Don-seok, team leader at forwarding group Samsung SDS’ digital platform Cello Square said, “Transportation times are increasing and there are potential risks, so reinsurance companies have recently announced that it is difficult to compensate for cargo insurance. Shippers’ burdens are increasing every day.
“If this persists, forwarders will shift to air freight, prioritising high-value products. It’s very likely that as a result, air freight will go up.”
Seo suggested that cargo bound for the US and Mexico should be railed or trucked via Long Beach.
He said, “Rail is the cheapest, but transhipment by sea takes more time, taking two to three weeks. While it takes about seven to 10 days to use a single truck, a team truck driven by two drivers arrives in about three days and is the fastest, but is more expensive.”
Meanwhile, sea freight rates to Europe have risen to the point of being on par with rail freight.
The diversions round the Cape of Good Hope have also made it difficult to secure shipping slots. Other forwarders said that it is also taking a long time for empty containers
For more information: container-news.com