Some SMEs Driven to Suspend Exporting
Soaring shipping rates are wreaking havoc on Korean exporters. Amid a worsening logistics crisis that began in the middle of 2020, the gap between one-year long-term freight rates and spot prices has widened to eight-fold.
The Shanghai Container Freight Index (SCFI), a barometer of logistics costs, also more than tripled in a year. The index reached 3,703.93 on June 11, hitting an all-time high for the fifth consecutive week. The figure represented a 3.65-fold increase from a year ago (1,015.33).
As a result, the rates on the European routes (US$6,335), which are mainly used by Korean exporters, broke through the US$6,000 barrier, renewing its all-time high.
Soaring maritime logistics costs are weakening companies' profitability. In particular, small and medium-sized enterprises are having great difficulties. Some companies are reportedly considering suspending exports.
Large companies are struggling with delays in their delivery. Product orders are pouring in as COVID-19 vaccination rates are rising around the world and consumption is picking up. However, as it is difficult to find a ship to import and export parts, exporters can hardly promise to supply products to customers just in time.
As a result, some exporters are looking for alternatives such as transcontinental railways and air transport.