Market Report, "South Korea Freight Transport Report Q4 2010", published

Oct. 17, 2010 - PRLog -- In August, South Korea's national airline Korean Air Lines (KAL) said it had registered an operating profit of KRW352.1bn (US$299mn) in Q210, compared with an operating loss of KRW127.3bn (US$107.9mn) in Q209. In the same period, the airline recorded an 86% year-on-year (y-o-y) surge in cargo sales to KRW1trn (US$850mn), which was attributed to a growth in the sales of Samsung Electronics TVs and Apple iPads. However, KAL posted an unexpected net loss of KRW233.1bn (US$196mn) in Q210 due to currency fluctuations. A stronger won against the US dollar resulted in increasing expenses. KAL is the larger of South Korea's two airlines. By 2006, its fleet had grown to 118 planes and the company operates passenger routes to 77 destinations in 28 countries.

BMI continues to see a strong economic recovery in South Korea in 2010, a trend favourable to the overall freight industry sector. We maintain our projection that GDP growth during the year will reach a strong 5.5%, a welcome change after the standstill in 2009. Other recent developments give cause for some concern, but do not overshadow this positive economic story. The ruling Grand National Party suffered quite serious losses in local elections in June, suggesting it could suffer in-fighting in the run-up to the 2012 presidential elections. Relations with North Korea remain tense and unpredictable, a major source of political risk. BMI still believes all-out war on the Korean peninsula is unlikely, but holds that deadly exchanges on sea or on land are possible as a result of military and/or political miscalculation. Looking towards 2011, we see the pace of economic growth slowing to a below-trend 3.2%, largely as a result of a slowdown in China, the key market for Korean exports.

BMI sees a strong recovery in South Korean airfreight in 2010. The latest data available confirms the trend. We expect total volume of cargo shipped by air to grow by 7.8% to 3.69mn tonnes during 2010, more than offsetting the 4.1% contraction experienced in 2009. Underlying fundamentals look good for airfreight demand going forward.

Korean rail freight growth will be moderate to low, reflecting the fact that most shorter-haul cargo is carried by road and that priority on the rail system is given to passenger rather than to freight trains. In 2010, we see 3.5% volume growth to 45.831mn tonnes, following on from the 2009 contraction of 1.9%.

Throughput at the Port of Busan is reflecting the effects of both the global and Korean recoveries. However, for 2010, we have edged down our forecast in the light of performance-to-date (data shows the 2009 recession was less steep than we feared and correspondingly 2010's recovery is also less 'Vshaped'). We now expect total tonnage to rise by 4.6% to 217.7mn tonnes. We do not see Busan's peak tonnage - 224mn tonnes achieved in 2007 - being surpassed until 2012. At the Port of Incheon, where volume dropped by 6.6% in 2009, we are expecting a sharper 'bounceback' with 6.95% growth in 2010 to 141.6mn tonnes. Volume here peaked in 2008 at 141.8mn tonnes, which should be surpassed by 2011, according to our projections.

South Korea's foreign trade pattern has become more mature, another way of saying that the period of very, very dynamic export-led growth has ended. In fact, in real terms in 2010 we expect total trade to grow by an impressive 9.5%, but imports will lead the way (+11.5%) with exports lagging behind a little (+8.0%). In our view, the country's free trade agreement (FTA) with the EU, and similar negotiations with the US, China and Japan will continue to underpin moderate-to-high trade growth. Rising living standards and greater purchasing power in Korea itself will keep imports ahead of exports over the next five years. Our five-year forecast in real terms is for trade to grow by an average of 8.2% per annum, as a mid-point between imports (+8.9% pa) and exports (+7.7%) per annum. In nominal terms, in 2010 we are expecting imports to grow by 18.6% to US$505.7bn, while exports will advance 15.2% to US$523.8bn.

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Partial Table of Contents:

Executive Summary
SWOT Analysis
- Table: South Korea Freight Transport SWOT
- Table: South Korea Political SWOT
- Table: South Korea Economic SWOT
- Table: South Korea Business Environment SWOT
Business Environment Ratings
- Table: Asia Pacific Freight Business Environment Ratings
- Freight Industry Ranking
- South Korea Logistics Performance Index (LPI)
- Transport Intensity Index
- Political Risk Summary
- Economic Risk Summary
- Business Environment Risk Summary
- Legal Code
- Red Tape
- Labour Force
- Table: South Korea's Demographic Indicators, 2000-2030
Industry Trends and Developments
- Multimodal/Logistics
- Air
- Maritime
Industry Forecasts
- Air Freight
- Table: Air Freight, 2007-2014
- Rail Freight
- Table: Rail Freight, 2007-2014
- Maritime Freight
- Table: Maritime Freight, 2007-2014
- Trade Overview
- Table: Trade Overview, 2007-2014
- Table: Key Trade Indicators, 2007-2014
- Table: Main Import Partners, 2002-2008
- Table: Main Export Partners, 2002-2008
Market Overview
- Multi-Modal
- Infrastructure
- Road
- Rail
- Air
- Maritime
Company Profiles
- Korea Express
- Table: Korea Express' Financial Performance
- Korail
- Korean Air (KAL)
- Table: KAL's Financial Performance, 2008
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$)
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Full Table of Contents is available at:
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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.