EXTRANS GLOBAL - Air Freight News - Week 51

1. Air Cargo General

· Suspension of navigation through the Suez Canal by 4 major shipping companies, expected to affect air transportation by January next year.

HMM, South Korea's largest national shipping company, decided on the 17th to divert its route towards the Cape of Good Hope in Africa without passing through the Suez Canal.
The Europe-Asia route is extended by a significant 9,000km, with an additional travel time of 7-10 days.
The decision follows THE Alliance (THEA), one of the three major global shipping alliances, which includes Hapag-Lloyd from Germany, ONE from Japan, and Yang Ming from Taiwan.
In the past month, more than 55 ships are reported to have bypassed the Suez Canal and detoured to the Cape of Good Hope.
The situation is warned to have serious consequences for the global supply chain. All ships passing through the Suez Canal must traverse the Red Sea and the Gulf of Aden, and Houthi rebels consider all ships in this region as targets. Although the closure of the Suez Canal is not anticipated, the situation may worsen, and temporary full control of the canal cannot be ruled out.
Depending on the scale and duration of the canal closure, maritime freight transportation rates may increase by up to 100%. In the worst-case scenario, it is expected that 8-11% of the global monthly maritime cargo volume will experience a doubling of transport time.
The current rise in oil prices, driven by the "Honghae risk," is reaching its peak this month, with Brent Crude rising by 1.6% to $79.23. An urgent surge in demand for air transport is expected soon.

Divergent Views on E-commerce Demand

A significant portion of e-commerce shipments from China ultimately target the United States and Europe. Therefore, air cargo rates to China-North America and Europe, exceeding the global average, contrast with regions where general air cargo demand remains weak or stagnant.
Market experts hold differing opinions on how long this e-commerce demand will persist.
Negative perspectives include considering the current surge in demand as a temporary phenomenon driven by the preference for low-cost consumer goods through online platforms, coinciding with the end-of-year holiday season in advanced economies.
Concerns about inflation persist in advanced economies like the United States, leading consumers to opt for online shopping with relatively lower costs rather than purchasing gifts through offline stores.
The surge in demand may contract significantly before January, returning to normal e-commerce demand market trends.
Positive perspectives highlight the daily movement of around 2,000 to 3,000 tons of e-commerce from China to Hong Kong, suggesting sustainable demand. The recent increase in air cargo rates is attributed to the growing demand for e-commerce, particularly for high-tech automotive parts and expensive sportswear, potentially portraying the air cargo market in a peak season for a considerable period.

Comparison of Key Categories in the Logistics Industry: 2018 vs. 2023

In analyzing keywords mentioned in the logistics industry in 2018 and 2023, categories were divided, and key terms were extracted and ranked to observe changes in trends.
Under the category of business direction/functionality, terms like 'global,' 'shipping,' and 'operations' are prominent in 2023.
Despite the evident global progress, top keywords show little variation from 2018. Increased mentions of words related to collaboration and agreements reflect a rising focus on synergy through cooperation among companies.
Technological keywords like 'platform' and 'AI' are more prevalent in 2023, reflecting a shift in focus toward new technologies. General terms like 'online,' 'smart devices,' and 'IoT' have dropped in ranking.
The keyword frequency mentions for Coupang have risen significantly in 2023, indicating a potential shift in its role, likely substituting for Amazon's previous role in introducing smart logistics technology and business innovation to the domestic market.
Notable shifts in rankings include Naver and Coupang making significant strides, while E-Mart and Google have seen a decline in rankings.
Geographically, Europe has risen to the third position in 2023, potentially indicating a decrease in dependence on Japan. Keyword mentions for 'India' have increased, while 'Vietnam' has seen a decline. 'Germany' and 'UK' show no significant changes.
In the general/other category, there is little difference between 2018 and 2023, with 'employment' and 'convenience stores' dropping out of the top 10, and 'IPO' entering, reflecting increased corporate listing activities post-pandemic.
Overall, the analysis suggests that there has been considerable variation in the rankings of words related to technological advancements, closely tied to the rapidly changing technological landscape of modern society.

Next Year's South Korean Economic Growth Rate around 2%, with "War" as the Major Risk

Foreign investment banks project South Korea's economic growth rate to be in the 1% range for 2024. However, domestic institutions, including the South Korean government, forecast a GDP growth of over 2% compared to the previous year. International organizations like the International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) also anticipate South Korea's economic growth rate to slightly exceed 2% next year.
The average forecast for the 2024 South Korean economic growth rate by eight major investment banks, including JPMorgan, is 1.9%, highlighting a clear divergence from the expectations of key domestic economic institutions that anticipate growth in the 2% range.
While overall recovery is observed in the domestic economy for the next year compared to the previous year, this is seen as a result of the base effect due to the low growth this year. A dramatic recovery in the South Korean export sector is not expected.
Positive factors for the growth of manufacturing sector exports in 2024 include increased trade volume due to global economic recovery, easing concerns about the landing of major advanced economies such as the United States and the Eurozone, and growing global demand for semiconductors in the AI and IT industries. Negative factors include delayed recovery in Chinese exports, sustained global demand weakness, uncertainty in international oil prices due to production cuts by oil-producing countries in the Middle East, and an expanded reshoring trend due to enhanced protectionist trade policies between the U.S. and China.
The expected growth rate for the real value-added of the manufacturing sector in the next year is projected to be 2.2%, with an increase in cargo volume expected due to the global recovery in demand for semiconductors, South Korea's main export item. However, limited growth in value-added is anticipated for the manufacturing sector next year due to the contraction of the automotive export market, a major contributor to South Korea's exports, amid economic downturns in key importing countries.
The Hyundai Economic Research Institute forecasts South Korea's economic growth rate for 2024 to be 2.2%. Although there is a slight difference between the growth rates for the first and second halves of the year, this is attributed to the base effect resulting from the low growth in the first half of this year. Overall economic trends are expected to remain at a similar level in the first and second halves of the year.

Airline/GSA Event Update

(1) AIR JAPAN: Increase in Daily Flights from Narita to Bangkok

The new LCC AIR JAPAN, a subsidiary of ANA Holdings, announced plans to operate daily flights from Tokyo Narita to Bangkok starting February 9th.
Flight Schedule: NRTBKK DAILY NQ1 1800/2245

(2) Aeroflot (SU): Postponement of SGN-SVO Flights

The SGN-SVO route, initially scheduled for December 28th, has been postponed to January 31st.
Flight Schedule: SGNSVO 2W(D14) SU293 1110/1810, B777 SVOSGN D37 SU272 1935/0930+1

(3) Aero Mexico (AM): High Likelihood of Seoul Operations

The initially planned start date for Seoul operations on March 30th may be changed to commence from August 1st.
Flights from Mexico to South Korea will have a layover in Monterrey, while flights from South Korea to Mexico will be direct.
Flight Schedule: MEXICN via MTY 6W(D234567) AM 090 2000/0600+2 (2150MTY) B788 / ICNMEX 6W(D124567) AM 091 1140/1040

(4) AIR PREMIA (YP): Daily Flights on LA Route from May

Starting from May 16th, AIR PREMIA will increase flights on the Los Angeles route from six times a week to daily, securing the first daily route.
Flight Schedule: ICNLAX DAILY YP101 1250/0820 B787

(5) Red Wings (WZ): Commencement of Cargo Services

Red Wings Airlines, based at DME, initiated commercial cargo operations using aircraft acquired from Sky Gates Airlines in August. The first cargo flight connects Turkmenbashi International Airport in Turkmenistan to Moscow's Zhukovsky Airport.
Future plans involve expanding cargo supply using domestically produced cargo aircraft in Russia.

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