Chinese ports lure cargo carriers away from Korea amid global container crunch
South Korean exporters grappling with global container shortages, described as ‘Containergeddon,’ have met another challenge as Chinese ports are luring away cargo carriers returning from the U.S. with nearly zero rates, making Korea’s largest sea gateway Busan port less competitive.
Busan port had received 18,629 foreign cargo ships from January to July this year, down 14.5 percent compared to the same period a year ago, showed National Logistics Information Center data on Wednesday.
The year-on-year drop comes as container carriers returning from the U.S. ports to Asia have chosen to head to Shanghai and other Chinese ports, instead of Busan, to benefit from cheaper rates.
Amid the so-called world-wide ‘Containergeddon,’ referring to severe container shortages, global shipping companies including Chinese carriers are scrambling to secure containers. With the prolonged logjams at U.S. ports, container shortages have worsened, leading Chinese container shippers to offer near zero rates for containers returning to Chinese ports to help Chinese exporters as like others in the world competing to secure more containers.
The move has led some global shippers, which are originally planned to head to Korea, to make a detour to China for goods transport from the U.S. To woo more sea carriers, Shanghai port operator has upgraded its facilities and services for container ships, such as repair and maintenance supports.
A number of multinational companies have already set up logistics centers in Shanghai, which they use as the regional base for transport to other Asian markets, said a shipping industry official. Mettler Toledo, a multinational analytical instruments manufacturer based in the U.S., currently has some products shipped through China instead of having them directly delivered to Korea, said an official from Mettler Toledo.
Busan port, however, projects the latest trend would not last long. Rate is not the only factor when making a port call, said a Busan Port Authority official, adding that Busan port also has actively secured empty containers.
While port bottlenecks show little sign of easing, the Shanghai Containerized Freight Index, serving as barometer of the global shipping market, marked 4,647.60 last week to make a fresh record high in just two weeks.