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South Korea Freight Transport Report Q4 2009
Market |
Logistics |
Report Type |
Market Research |
Country |
South Korea |
Published |
26 August 2009 |
Number of Pages |
67 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
South Korea Freight Transport: overall freight carried will grow by a reduced annual average of 2.4% in 2009- 2013
The leading South Korean shipping and logistics company, Daewoo Logistics, was at the beginning of July reported to be in receivership. According to the Financial Times (FT), Daewoo filed for bankruptcy at Seoul's Central District. The failed sale of the company to South Korean steel producer Posco is reported to have left Daewoo unable to overcome rising financial losses with the downturn in the global shipping industry. Meanwhile, its expansion into resource development - overseas farming and mining in developing states - is thought to have hit the company hard after a farming deal with the Madagascan government to develop land for corn production collapsed in March.
After considering the country’s wider trade prospects, our newly released South Korea Freight Transport Report concludes that overall freight carried will grow by a reduced annual average of 2.4% in 2009- 2013. Despite the current financial turmoil, our five-year perspective is that the country will continue to have a dynamic trade-oriented economy, increasingly geared to opportunities in China. At some point in the future, the opening up of a rail link through North Korea will boost land-based freight routes.
However, intra-Korean relations have become tense recently and we expect many starts and stops. South Korean shipping companies are facing a squeeze on margins. On the road haulage front the current national development plan calls for the construction of seven new north-south expressways and nine eastwest ones, part of the government’s commitment to ensure that it should not take more than half a day to move people or goods between any two points in the country. Bearing the economic slowdown in mind, we foresee that road haulage tonnage will increase by an average of 2.8% per annum in 2009-2013. Cargo traffic on rail, on the other hand, has dwindled in recent years, given that capacity has not expanded and the share of passenger traffic has increased. We expect rail freight tonnage to grow at an average rate of 1.5% during the forecast period. With high jet fuel prices and tough global market conditions taking their toll, airfreight tonnage will grow by around 2.9% a year.
The report has given South Korea a score of 50.2 (out of a potential maximum of 100) in our freight ratings index. The country’s strong points are long-term political risk and transport infrastructure growth, with good scores for long-term economic risk and the regulatory environment.
The total value of transport and communications GDP will rise to US$140.4bn in nominal terms by 2013, representing 9.7% of South Korea’s GDP. The transport and communications sector employed 1.36mn people, or 6.0% of the labour force, in 2008. We see those figures rising to 1.39mn and 6.1% by 2013.
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