In response to the sharp increase in freight costs due to the COVID-19 pandemic and global political tensions, the Korean government has added more sea cargo ships and supported transportation costs for small and medium-sized enterprises.
The Korean government has instructed HMM (Hyundai Merchant Marine) – one of the leading shipping companies – to deploy additional more sea cargo ships
Support measures
Add more sea cargo ships
The Korean government has instructed HMM (Hyundai Merchant Marine) – one of the leading shipping companies – to deploy additional sea cargo ships to ease the pressure on its business. HMM will operate three 9,000-TEU vessels on the trans-Pacific and Persian Gulf routes this month and next. By November, HMM plans to add seven 10,000-TEU vessels and two 1,800-TEU vessels.
Establish temporary container warehouses
The Korean government has set up a temporary container warehouse near Busan Port to support businesses in storing and reducing costs. The warehouse can hold up to 700 TEUs at a low price, helping businesses save on storage and shipping costs.
Objectives of measures
Reduce transportation costs
With this policy, businesses, especially small and medium-sized enterprises, can “remove” some of the pressure on transportation costs. The Korean government has pledged to provide up to 20.2 billion won (about 15 million USD) to help these businesses. Cutting costs not only helps save money but also improves competitiveness in the international market.
Monitor the situation and respond promptly
The Korean government has established an emergency response team to monitor the logistics situation and trends in imports and exports. The team will ensure that support measures are implemented effectively and promptly and respond quickly to market fluctuations.
International plans
Countries and leading shipping companies around the world have also taken similar measures to support businesses in the current context. For example, French shipping company CMA CGM has announced that it will add additional seas on the Asia-Europe route from the end of this month until early September. This demonstrates international cooperation and solidarity in reducing the pressure on shipping and supporting businesses to overcome challenges.
Impact on markets and businesses
Improve competitiveness
These support measures help reduce costs and enhance the competitiveness of Korean companies in the international market. The addition of seas and the establishment of temporary container warehouses allow businesses to transport goods more flexibly and efficiently, thereby improving the quality of services and products.
Promote exports
Reducing transportation costs creates favorable conditions for exporting businesses, especially when global demand for goods is recovering after the pandemic. These measures help businesses optimize costs and increase exports, contributing to national economic development.
Challenges and solutions
Challenges
While support measures are being actively implemented, the management and implementation of these policies still face many challenges. Effective sea dispatch and temporary container depot management are needed to avoid overloading and congestion.
Solutions
To cope with these challenges, the Korean government needs to closely monitor the situation and adjust policies promptly. Close coordination between government agencies and businesses is key to ensuring the effectiveness of support measures. In addition, investment in logistics infrastructure and technology is also essential to improve management and operation capabilities.
In the context of the global economy facing many challenges, expanding cargo trains and supporting transportation costs are among the key measures that the Korean government is taking. These measures not only help reduce cost pressures for businesses but also enhance the competitiveness of the Korean economy in the international market. This is a typical example of how governments and businesses can coordinate and seek innovative solutions to overcome difficulties.
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