The tightening of South Korean containers makes exporters expensive winners for Reuters

By Cynthia Kim

BUSAN (Reuters) – Unable to get a loophole in a Le Sang-hoon container ship, Busan is considering using fishing trawlers that it wants to fix in the South Korean port to increase orders to export car engine oil it sells to Russia.

“China is the black hole in this shipping crisis, all carriers are headed there,” said Lee, owner of Dongkwang International Co. in Busan, which earns about $ 20 billion a year ($ 17.60 billion).

“These fishing vessels out there may have an answer for us because we already have a month’s delay. That is, if we fix the shipping problems,” Lee said, pointing to the empty fishing trays visible from the Busan office.

Reserves (NASDAQ 🙂 are the world’s seventh largest exporter of trawlers in the world to try to overcome the severe bottlenecks caused by the pandemic, especially the shortage of shipping containers.

Thousands of exporters like Dongkwang are struggling to move through Busan, the world’s 7th busiest container port, where terminals handle more than 59,000 containers a day to process about 75% of shipments to the country.

While global carriers are racing to deliver everything from furniture to toys to U.S. and European consumers, they prioritize a much larger load range in the Chinese factory belt waiting to be picked up more than once in Busan. This leaves fewer ships in the Korean port and scaring them away in China, according to cargo managers at the Busan terminal.

“As many factories leave China (ships) that are mostly fully operational, there is little room for shipping left in Busan,” said Lee Eung-hyuk, marketing director of the Busan Port Authority.

Some don’t stop at Busan at all. The number of container vessels in the port fell by almost 10% until May this year, although exports rose by 23.4% a year earlier, according to data from the port authority, and Asia’s recovery in the fourth largest economy has been very unbalanced.

On a real-time map of the world’s major ships, HMM Co, the country’s largest container carrier, is in a controlled tower with red dots and most of them show its alliance fleet around China and Singapore, not Korea.

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Although the tightness of shipments caused by the pandemic is a global problem, congestion at a transportation hub like Busan has worsened small Korean exporters.

In Yantian, one of China’s most populous ports, when it was partially closed in June to control virus cases, some cargo was diverted to neighboring ports, such as Busan, delaying delays and periodic delays.

“It’s a transportation hub with a lot of departures and departures. We have to send 30 containers a month, but we’ve only got between 70% and 80% security,” Lee told Dongkwang International, adding that his company has recently raised prices. du. due to higher shipping costs.

Carriers sometimes refuse to make reservations, or force customers to accept much higher spot rates, according to Lee.

Pain is less well-known on popular routes often used by small businesses, with shipping rates from Busan to Vladivostok rising faster than on the West Coast of the US, for example.

Dongkwang currently pays $ 2,200 per unit worth twenty feet of travel (TEU), six times more than a year earlier.

For larger industries like Samsung (KS 🙂 and LG in South Korea, shipping is less serious, as carriers prioritize customer orders with deep pockets and a higher volume of goods to be shipped.

To provide relief, the government has helped fund HMM orders for more containers and the money has been distributed to help affected small and medium-sized exporters.

The congestion of the terminal in the New Port of Busan is clearly visible.

At one of the five new terminals, cargo containers filled with cargo were piled up at their vertical limits.

Transport vessels carrying thousands of containers were being unloaded using automatic cranes, which use artificial intelligence to find space for steel boxes.

Every 10 seconds, a truck carrying a 20- or 40-foot container passes through the door, taking them to warehouses that seem to explode at the seams.

“When port closures or other hiccups occur, it doesn’t mean a bypass of ships, it gets a huge accumulation of cargo to take the ship to the middle of the world,” a rural official said. “metal mountains” in the port.

In the retail market, businesses are declining production volume or raising prices, or both.

In June, Hankook Tire & Technology Co. The main tire manufacturer in South Korea said it would suspend operations at major local plants for three days due to a shortage of shipping space.

“Prices in Germany and other European countries are expected to rise in price by 3-5% in July, and something similar is being considered in the US market in August,” a Hankook official said.

Consumers at the bottleneck have also been affected by the fast-food Lottery chain, replacing chips with cheese sticks for bringing in potatoes.

The tightening has created some winners, HMM shares have been sold 12 times since the beginning of 2020 and higher growth is expected.

“Global container volume is growing. Our peak season is usually the third quarter, but as the exporter tightens we expect the trend to continue in the fourth quarter,” an HMM official said.

($ 1 = $ 1,136,5700)