Double Whammy
A rapid drop in exchange rate as well as the receivership of Hanjin Shipping is casting a dark shadow over South Korean companies’ performance forecasts for the latter half of this year. “With transport costs accounting for approximately 15% of South Korean manufacturers’ operating profits, continuation of logistics-related problems could negatively affect their fundamentals,” said an industry source.
These days, export freight charges are on a rapid increase. For example, the Shanghai Container Freight Index (SCFI) reached 763.06 in the first week of this month, up 27.9% from a week ago. The indices related to the Western United States, the Eastern United States and Europe soared by 51.4%, 45% and 37.8% during the same period, respectively. The freight charges applied to export to Latin America have risen from US$3,000 or so to US$5,000 per container, too. Samsung Electronics and LG Electronics, which used to use mainly Hanjin Shipping ships for export purposes, are transshipping their products to Hyundai Merchant Marine vessels while paying about 50% more than before.
Besides, the won-dollar exchange rate fell 15.2 won on September 7 to close at 1,090 won per U.S. dollar. Under the circumstances, electronics manufacturers are recording an operating loss of at least hundreds of billions of won as is the case with those in other industries.