South Korean airlines suffered a sharp decline in cargo transportation in 2019, as they did in passenger traffic, due to worsening relations between South Korea and Japan.
Korean airlines shipped 3.9 million tons of cargo in 2019, down 12 percent from 4.44 million tons in 2018. It marked the first decline in three years. Korean Air recorded 1.46 million tons, 15 percent less than 1.72 million tons in 2018, and Asiana Airlines had 840,000 tons, down 14 percent from 980,000 tons in the previous year.
Domestic airlines’ decrease in cargo volume is a result of U.S.-China trade dispute and reduced global demand. The air cargo market has been sluggish since late 2018 due to the global economic slowdown and the U.S.-China trade war. On top of this, the freight business has fallen into a bad situation due to falling domestic IT exports. IT products, including semiconductors, smartphones, and displays account for the largest portion of Korean airlines' cargo revenue. Last year, however, semiconductor exports plummeted 26 percent year on year, and exports of displays and wireless communication devices also dropped 17 percent and 18 percent, respectively.
Airlines are restructuring their freight business to reduce losses. Korean Air suspended cargo sales and transportation and terminal operations at three domestic airports, including Daegu, in October 2019, while Asiana Airlines also suspended cargo transportation at the three airports and sought to pull out of the domestic cargo business.
Some market watchers say that airlines' global shipments will rebound this year as air cargo shipments have shown signs of recovery since the fourth quarter of 2019.