South Korea Shipping Report Q3 2013 - New Report Available

South Korea's Finance Ministry announced in April 2013 that the government was on track towards a 'major easing' of investment regulations in the coming days, according to Bloomberg News. This news came as the country had to grapple with not just slowing global economic activity, but also the aggressive monetary easing in Japan and by extension, a rapidly weakening Japanese yen that has threatened Korean exporters. This latter scenario could end up having a detrimental impact on South Korea's shipping industry over the short term.

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Following the aggressive monetary easing undertaken by the Bank of Japan, the Bank of Korea has likewise intervened in the currency markets in order to stem decline of the Japanese yen against the Korean won, consequently curbing the adverse effects on Korean exporters.

We believe, however, that Korea's electronics exports, particularly in telecommunications and semiconductors, are likely to be shielded to a certain extent, given that a sizeable amount of production occurs outside the country. This should provide a buffer for the country's shipping sector going forward.

South Korea's economy expanded at its fastest clip in two years in Q113, with seasonally-adjusted real GDP growth accelerating to 0.9% quarter-on-quarter (q-o-q), from 0.3% in the previous quarter, exceeding a Bloomberg consensus of 0.7%. Investment spending and exports powered growth in the first quarter. Construction investment expanded 2.5% while facilities investment grew 3.0%, reversing a respectively 1.2% and 1.8% contraction registered in Q412. Exports performed likewise, with a 3.2% print in Q113 contrasting against a 1.1% contraction in the previous quarter. While the economy's performance may have surprised to the upside in the first quarter, this by no means suggests that this pace of growth will be sustainable through the rest of 2013, in our view.

Headline Industry Data

* 2013 tonnage throughput at the port of Busan forecast to increase by 6.80%.
* 2013 tonnage throughput at the port of Incheon forecast to grow by 1.1%.
* Container throughput at the port of Busan is set to rise by 5.80% in 2013, while the port of Incheon is predicted to see a 7.5% increase.
* The total value of South Korea's trade (imports plus exports) is set to enjoy real growth of 2.90% in 2013.

Key Industry Trends

Developed Box Shipping Role, But Growth Opportunities Exist - South Korea is renowned for its welldeveloped container shipping sector, acting as a major Asian transhipment point on both the Asia-Europe and transpacific trade routes. The country will seek to retain this transhipment position over the medium term, while also meeting domestic trade demands. The major question for such a developed container shipping market as South Korea is: where are the growth opportunities?

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