International shipping container export freight rates skyrocketed by 72%

The ongoing Red Sea crisis has impacted international shipping. In South Korea, sea freight accounts for up to 99% of foreign trade transportation. The latest data shows that in January of this year, the shipping cost of containers exported by sea from South Korea to Europe surged.

According to the latest data released by the South Korean Customs Agency, in January this year, the sea freight cost of exporting containers from South Korea to Europe surged by 72% compared to the previous month, marking the highest increase since statistics began in 2019. The main reason is the impact of the Red Sea crisis, causing shipping companies to detour to Cape of Good Hope in South Africa, resulting in longer voyages and an increase in freight rates.

The extension of shipping schedules and the decrease in container turnover have had a negative impact on South Korean exports. The latest data from Busan Customs shows that the export volume of Busan City decreased by nearly 10% compared to the same period last month, with a sharp 49% decrease in exports to Europe. The main reason is that during the Red Sea crisis, it was difficult to find car transport ships from Busan to Europe, and local car exports were hindered.

Not only Busan, but also Ulsan, the second largest export city in South Korea, the situation is not optimistic. A recent survey showed that about 60% of local export companies suffered losses directly or indirectly due to the Red Sea crisis. Due to the transportation time being extended by at least three weeks, some companies have also encountered situations where they need to pay huge liquidated damages for delayed delivery.