Ocean Freight Charges Rising Rapidly
The profitability of South Korean exporters is deteriorating with the won-dollar exchange rate dropping and ocean freight charges rising rapidly.
The Shanghai Containerized Freight Index (SCFI) rose by 134.57 points to 1,664.56 last week alone. It is the highest since records began in October 2009. Likewise, the freight charge applied to the seaway to the United States hit an all-time high of US$3,871 per FEU.
Both Samsung Electronics and LG Electronics are having a hard time sending their products to the United States before the year-end peak season. LG Chem is sending electric vehicle batteries to Europe by train after having failed to get a ship. Foreign shipping companies are canceling their contracts to demand additional charges. In the meantime, the won-dollar exchange rate fell 7.8 won to 1,120.4 won per U.S. dollar on Nov. 6. It is said that the rate would reach 1,050 won or less per U.S. dollar next year.
In South Korea, a total of 12 very large container carriers were built this year. All of those are currently in operation between South Korea and Europe. Ships to the United States are still hardly available. “California has no port available to a 24,000 TEU carrier,” HMM explained, adding, “Besides, the Panama Canal cannot be used by those exceeding 16,000 TEU.” Although HMM has rescheduled its vessel operations to send more containers to the United States, the demand is still overwhelming. It is scheduled to receive eight 16,000 TEU vessels next year, and then its capacity will increase to 900,000 TEU.
The ships are being built by Hyundai Heavy Industries. “Three out of the eight can be built within this year and delivered earlier than scheduled,” it said. “Actual employment of the vessels is possible after talks with the other THE Alliance members and we are trying to make it happen as early as possible,” HMM explained.