KOREA: BMI: South Korea to see strong air freight growth

Business Monitor International (BMI) continues to see a strong economic recovery in South Korea in 2010, a trend favourable to the overall freight industry sector. BMI is maintaining its projection that GDP growth for 2010 will reach a strong 5.5 per cent, a welcome change after the standstill in 2009. Other recent developments give cause […]


Business Monitor International (BMI) continues to see a strong economic recovery in South Korea in 2010, a trend favourable to the overall freight industry sector. BMI is maintaining its projection that GDP growth for 2010 will reach a strong 5.5 per cent, 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 group said. The US reached an agreement on a new bilateral free trade agreement with South Korea in early December. The deal now goes to the Senate for ratification after announcing resolution of issues regarding trade in beef and automobiles that posed obstacles to final ratification. South Korea now ranks No. 7 among US trading partners, up a step from its position in 2009. Under the deal, South Korea will reduce tariffs on imported manufactured goods and agricultural products. The agreement will eliminate tariffs on 95 per cent of consumer and industrial products in three years. The US-South Korea Free Trade Agreement contains important provisions for the express delivery industry, including enhanced market access and improved customs clearance times. US officials are predicting an increase of US$10-11 billion in exports to South Korea from the new free trade agreement. Air freight grew 10.2 per cent in 2010, a strong rally from a 3.4 per cent fall in 2009. In 2010-2014, air freight is expected to grow 6.8 per cent. The Port of Busan is expected to grow 6.5 per cent in 2010 after contracting 6.4 per cent in 2009. BMI expects it to grow on average 3.8 per cent over the period 2010-2014. Total trade in real terms grew 4.6 per cent in 2010 after contracting 1.6 per cent in 2009. Over the forecast period, total trade in real terms is expected to grow on average 3.1 per cent a year. Korean Air, meanwhile, saw a 94.2 per cent increase in shipping tied to the Americas, Korean Air’s largest market and a 112.3 per cent jump in air trade with Europe in the second quarter. Asian Airlines began scheduled freighter service from Seoul to Atlanta in mid September BMI said threats to the growth of freight include a greater slow down in China than expected which would have a knock-on effect to Korea’s economy in 2011. A military exchange between North and South Korea could hit business confidence and investment