• 02. Juni 2020
  • 10:43
  • Economy

South Korea is containing the pandemic but struggling with economic consequences

Although South Korea was hit early by the Corona pandemic, there has not been a nationwide lockdown yet. Despite new increase in infections in early May, the country is relatively successful in containing the virus. Nevertheless, the global pandemic is affecting the South Korean economy, especially the export-oriented industries, which continue to struggle due to low demand from abroad.

South Korea’s economy shrank 1.4 percent in the first quarter of 2020 compared to the fourth quarter of 2019, according to an estimate released in early April by the Bank of Korea. Due to the decreasing inland demand and the strong integration of South Korea in foreign trade, an even stronger decline is expected in the coming months. In April 2020, exports were already down by 24.3 percent compared to the previous year, for instance in the automotive (-36.3 %), mineral oil (-56.8 %) and petrochemicals (-33.6 %) sectors. Imports declined by 15.9 percent compared with April 2019.

Production in the manufacturing industry fell by 0.1 percent in the first quarter of 2020 compared to the same period of the previous year. The aviation, service and tourism sectors were hit much harder than manufacturing. Domestic passenger air traffic has almost come to a standstill and the national carrier Korean Air has converted a large part of its passenger fleet to freighters.

To stabilise the economy and the labour market, the South Korean government promises financial support of over 100 billion USD in total. 33 billion USD alone will go to protect South Korea's key industries, which include shipbuilders and shipping companies.
Eight liner services connect the Port of Hamburg with South Korea including three container liner services and five multipurpose services. Last year 255.000 TEU were transported between the Hanseatic City and the South Korean ports of Busan and Masan – an increase of 5.2 percent compared to the previous year. This makes South Korea the 6th most important trade partner of the Ports of Hamburg in container handling in 2019. In the same period, handling of seaborne cargo reached a total of 3.2 million tonnes increasing by 12.4 percent. This puts South Korea in 11th place (based on tonnage) in the ranking of all seaborne goods handled in Hamburg.

Currently, the shipping companies CMA CGM, Hapag-Lloyd and ONE are operating container services between Hamburg and South Korea, and Cosco, Evergreen, HMM, OOCL and Yang Ming with their own ships and slot capacities. In addition, AAL, BBC, Chipolbrok and SAL call at Korean ports as part of their multipurpose services.
Due to the current situation, the Asian services of THE Alliance FE-2 and FE-4, which both call at South Korea, are still merged to one service in May and June.

Contrary to many expectations, South Korea's most important port, Busan, continued to record an increase in transhipment volumes in the last two months compared to the previous year (March +10.6 %, April +1.8 %). With 1.8 million TEU, the total volume handled in April was also just 2.4 percent lower than in the same month in 2019, although numerous vessel departures had been cancelled. This is due to the fact that the port of Busan continues to be considered a stable hub for transhipments and an alternative to other East Asian ports. In the first quarter of 2020, a total of 5,484,500 TEU were handled, 3.0 percent more than in the same period in 2019, while other South Korean ports recorded declining numbers in the single to double-digit range (see below). Nationwide import and export volumes decreased by 11.6 percent in April.

Amidst the corona pandemic, the "HMM Algeciras" of the South Korean shipping company HMM (formerly Hyundai Merchant Marine) started its first voyage from Busan via China to Europe. With a slot capacity of 23.964 TEU, it is currently the largest container ship in the world and the first ship to be delivered out of twelve in total of the so-called HMM Megamax class, which HMM had ordered in 2018. The HMM Algeciras is expected to be deployed on FE-4 service, one of the Asia-North Europe trade lanes of THE Alliance and is scheduled to arrive in the Port of Hamburg on June 7th.
The following throughput was reported by individual seaports for the 1st quarter of 2020:
  • Busan: 5.48 million TEU (+3 %)
  • Incheon: 695,700 TEU (-2 %)
  • Gwangyang: 552,600 TEU (-10 %)
  • Masan: 2,800 TEU (- 32 %)

Press contact

  • Bengt van Beuningen

    Bengt van Beuningen

    +49 40 37709 102
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