South Korea Freight Transport Report Q1 2012
Includes 3 FREE quarterly updates
BMI View: Solid Growth
Although we expect the South Korean freight industry to achieve steady growth over the forecast period to 2016, we caution that economic uncertainty in key export markets such as China and the US will temper growth forecasts over the mid term.
The country will see the highest levels of growth over the medium term in the air freight sector, closely followed by tonnage throughput increases at the Port of Busan. However, as stated above, a fall in demand for South Korean exports, especially electronic goods, will weigh heavily on our outlook for the freight industry, evidenced by Korean Airlines' Q311 net loss of US$458mn.
However, it is not all doom and gloom for South Korea. On the contrary, we note that South Korea regained its position in top spot in terms of securing the most new shipping orders in the first half of 2011, comfortably beating second placed China. South Korean expertise is considered a key reason for its position, and we believe that the country can continue to secure deals for large, value-added vessels due to its continued focus on high-end, technically advanced vessels such as liquefied natural gas (LNG) carriers and offshore facilities, which are not widely produced.
Headline Industry Data
Korean Air Cargo Suffers 13% Drop In Volumes
South Korea's flag carrier Korean Airlines was hit particularly hard by a fall in demand in Western markets for the country's electronic goods, resulting in the airline posting a net loss of US$458mn and the cargo arm of the company seeing a 13% fall in volumes.
South Korean Shipbuilders Come Out On Top As Japan And China See New Order Declines
Shipbuilders are being adversely affected by a fall in demand for new vessels as shipping lines rein in their spending due to global economic uncertainty. We feel that the slowdown in orders will prove to be good news for the shipping sector in the longer term, as the sector has recently been blighted by overcapacity.
Emirates Shipping Line Attracted By Intra-Asia's Short And Long Term Outlook
Emirates Shipping Line, based in the UAE, has expanded its exposure to intra-Asia, purchasing slots on a soon-to-be launched route connecting Chinese, South Korean and Indian ports. Other lines have also shown an interest in increasing their coverage to incorporate coverage of intra-Asia.
Key Risks To Outlook
South Korea's export-oriented economy makes it especially subservient to global trade activity. Its export sector faces external headwinds because the country's top three trading partners - the US, Europe and China - are all expected to see an economic slowdown in 2012. The resulting effect on South Korea's freight industry will be negative, due to the falling demand for exports. Meanwhile, recent economic data revealed that South Korea's economy is slowing down, with seasonally adjusted Q211 real GDP growth slowing to 0.9% quarter-on-quarter from 1.3% in Q111. We are now forecasting South Korea's real GDP growth to reach 3.1% and 2.4% in 2011 and 2012 respectively.
BMI View: Solid Growth
Although we expect the South Korean freight industry to achieve steady growth over the forecast period to 2016, we caution that economic uncertainty in key export markets such as China and the US will temper growth forecasts over the mid term.
The country will see the highest levels of growth over the medium term in the air freight sector, closely followed by tonnage throughput increases at the Port of Busan. However, as stated above, a fall in demand for South Korean exports, especially electronic goods, will weigh heavily on our outlook for the freight industry, evidenced by Korean Airlines' Q311 net loss of US$458mn.
However, it is not all doom and gloom for South Korea. On the contrary, we note that South Korea regained its position in top spot in terms of securing the most new shipping orders in the first half of 2011, comfortably beating second placed China. South Korean expertise is considered a key reason for its position, and we believe that the country can continue to secure deals for large, value-added vessels due to its continued focus on high-end, technically advanced vessels such as liquefied natural gas (LNG) carriers and offshore facilities, which are not widely produced.
Headline Industry Data
- 2012 air freight tonnage throughput forecast to increase 5.47%.
- 2012 rail freight tonnage throughput forecast to grow 2.70%.
- Total trade (imports plus exports) in real terms is set to grow 6.70% in 2012.
- The Port of Busan will see gross tonnage growth increase of 5.12% in 2012.
- The Port of Incheon is forecast to see gross tonnage growth of 4.15% in 2012.
Korean Air Cargo Suffers 13% Drop In Volumes
South Korea's flag carrier Korean Airlines was hit particularly hard by a fall in demand in Western markets for the country's electronic goods, resulting in the airline posting a net loss of US$458mn and the cargo arm of the company seeing a 13% fall in volumes.
South Korean Shipbuilders Come Out On Top As Japan And China See New Order Declines
Shipbuilders are being adversely affected by a fall in demand for new vessels as shipping lines rein in their spending due to global economic uncertainty. We feel that the slowdown in orders will prove to be good news for the shipping sector in the longer term, as the sector has recently been blighted by overcapacity.
Emirates Shipping Line Attracted By Intra-Asia's Short And Long Term Outlook
Emirates Shipping Line, based in the UAE, has expanded its exposure to intra-Asia, purchasing slots on a soon-to-be launched route connecting Chinese, South Korean and Indian ports. Other lines have also shown an interest in increasing their coverage to incorporate coverage of intra-Asia.
Key Risks To Outlook
South Korea's export-oriented economy makes it especially subservient to global trade activity. Its export sector faces external headwinds because the country's top three trading partners - the US, Europe and China - are all expected to see an economic slowdown in 2012. The resulting effect on South Korea's freight industry will be negative, due to the falling demand for exports. Meanwhile, recent economic data revealed that South Korea's economy is slowing down, with seasonally adjusted Q211 real GDP growth slowing to 0.9% quarter-on-quarter from 1.3% in Q111. We are now forecasting South Korea's real GDP growth to reach 3.1% and 2.4% in 2011 and 2012 respectively.
Contents
Executive SummarySWOT Analysis
South Korea Freight Transport Industry SWOT
South Korea Political SWOT
South Korea Economic SWOT
South Korea Business Environment SWOT
Industry Trends And Developments
Air
Maritime
Multimodal And Logistics
Market Overview
Global Oil Products Price Outlook
Industry Forecast
Air Freight
Table: Air Freight, 2008-2016
Maritime Freight
Table: Maritime Freight – Throughput, 2009-2016 ('000 tonnes and % change y-o-y)
Rail Freight
Table: Rail Freight, 2008-2016
Trade
Table: Trade Overview, 2009-2016
Table: Key Trade Indicators, 2008-2016 (US$mn and % change y-o-y)
Table: South Korea's Main Import Partners, 2002-2009 (US$mn)
Table: South Korea's Main Export Partners, 2002-2009 (US$mn)
Political Outlook
Long-Term Political Forecast
Domestic Politics
Macroeconomic Outlook
Company Profiles
Korean Air Cargo (KAL)
Korea Express
Hyundai Merchant Marine (HMM)
STX Pan Ocean (STX)
Country Snapshot: South Korea Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
South Korea Freight Transport Report Q1 2012
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