International liner carrying domestic goods under investigation to be diverted to Busan Port in South Korea

Benefiting from the healthy and rapid development of bilateral trade between China and South Korea, maritime transportation between China and South Korea is also thriving. The relaxation of China South Korea shipping rights to third country shipping companies has shown us both challenges and opportunities.

Analysis of the Current Situation and Prospects of Bilateral Trade between China and South Korea

Since the establishment of diplomatic relations between China and South Korea in August 1992, the economic cooperation between the two countries has embarked on a path of healthy development. Looking back at the development process of economic and trade cooperation between the two countries, although it started relatively late, the development speed has been rapid. In 1998, China and South Korea established a cooperative partnership oriented towards the 21st century. In 2000, the two countries announced that they would push the friendly and cooperative relationship between China and South Korea to a new stage of comprehensive development. In July 2003, the two countries positioned their China South Korea relationship as a "comprehensive cooperative partnership" and made new progress in exchanges and cooperation in various fields. In November 2005, South Korea recognized China's market economy status. Over the past 15 years, the scattered small-scale trade between China and South Korea has gradually developed into clustered large-scale trade. South Korean companies have invested in China from small to large, and their investment areas have become increasingly diverse. Currently, China is South Korea's largest trading partner and largest investment target country.

According to statistics, the bilateral trade volume between China and South Korea increased from 5.03 billion US dollars in 1992 to 111.93 billion US dollars in 2005, an increase of nearly 22 times. The goal of increasing the trade volume between China and South Korea to 100 billion US dollars by 2008 was achieved ahead of schedule in 2005. In terms of trade scale, China has become South Korea's largest exporter and source of goods trade surplus for three consecutive years, and has become South Korea's second largest importer for the second consecutive year. South Korea is China's fourth largest trading partner and third largest source of imports. In 2005, the bilateral trade volume between China and South Korea exceeded 100 billion US dollars, an increase of 24.3% compared to 2004. Among them, China's exports were 35.11 billion US dollars and imports were 76.82 billion US dollars, an increase of 26.2% and 23.4% respectively year-on-year. China's trade deficit reached 41.71 billion US dollars. South Korea has become the sixth country or region after the European Union, the United States, Japan, Hong Kong, and ASEAN to trade with China with a scale exceeding 100 billion yuan.

In November 2005, the leaders of the two countries publicly announced the "Joint Research Report on the Medium - and Long Term Development Plan for China South Korea Economic and Trade Cooperation" (referred to as the "Report"). The report clearly sets out the development goals and 12 key areas for future economic and trade cooperation between the two countries. On November 17, 2005, South Korea recognized China's full market economy status, which means that South Korea will take the principle of win-win as the guideline for developing bilateral relations and firmly believe in further strengthening bilateral economic and trade cooperation. The economic and trade cooperation between China and South Korea is gradually maturing and has good development prospects. The report predicts that if the investment and trade pattern in the Asia Pacific region can remain stable, the bilateral trade volume between China and South Korea will reach 150 billion US dollars in 2010. It is expected that by the 20th anniversary of the establishment of diplomatic relations between China and South Korea in 2012, the total bilateral trade volume will reach 200 billion US dollars.

Analysis of the Current Development Status of Container Transportation between China and South Korea

In terms of maritime transportation, the transportation authorities of China and South Korea jointly manage the maritime container transportation between the two countries based on the principle of equality and mutual benefit. At the same time, the China South Korea Yellow Sea Association has been established to provide reliable and safe transportation guarantees for the economic and trade exchanges between the two countries. With the rapid growth of bilateral trade between China and South Korea, the container transportation market between the two countries has achieved sustained and stable development under the management and guidance of the two governments and two agreements. Looking back at the development process of container transportation between China and South Korea in recent years, the main characteristics are as follows:

The scale of transportation capacity is on the rise

According to statistics on transportation capacity from the Yellow Sea Regular Ship Agreement and the Yellow Sea Passenger and Freight Liner Agreement, the total container transportation capacity on the China Korea route increased from 39000 TEU/week in 2004 to 41000 TEU/week in 2005, of which the container liner transportation capacity was 32000 TEU/week, accounting for 79.7%; The capacity of passenger and freight ships is 6914 TEU/week, accounting for about 16.8%; The third-party transportation capacity is 1440TEU/week, accounting for about 3.5%. In 2004, the container shipping capacity and passenger and cargo shipping container capacity were 31340 TEU/week and 6617 TEU/week, respectively. In 2005, the year-on-year growth was 4.5% for both. However, in 2005, the weekly capacity of third country container shipping decreased by 0.6% compared to 1618 TEU/week in 2004. With the rapid growth of bilateral trade between China and South Korea, many third-party container shipping companies are also eager to compete in the Chinese Korean container market.

As of September 2006, there were a total of 85 ships operating 114 voyages per week on the China Korea route, including 71 container liners with a total capacity of 32000 TEUs per week and 79 voyages per week. Container liners were mainly smaller than 400 TEUs, accounting for 47.8% of the total operating vessels; There are a total of 14 passenger and freight liner ships, operating a total of 35 voyages per week.

The container shipping capacity of China and South Korea is roughly equivalent, while the container shipping capacity of third countries is relatively small

There are currently 16 Chinese shipping companies operating container liner transportation in the China Korea shipping market, with 38 container ships and 41 weekly operations, with a total capacity of 17000 TEUs. There are 14 South Korean container shipping companies with 33 container ships operating 39 times a week, with a total capacity of 17000 TEUs. According to statistics, in 2005, there were a total of 2 third country ships operating twice a week on the China Korea route, while in 2006, there was only 1 third country ship operating once a week on the China Korea route. Although the current capacity of third countries is insufficient to threaten the stability of the China South Korea shipping market, since the 8th China South Korea Shipping Talks in 2000 proposed allowing third countries to join the operation of China South Korea container shipping routes, there have been continuous attempts by third country container shipping companies to enter through low price competition, which has had a certain impact on the stability of the China South Korea container shipping market.

Continuous and stable growth in transportation volume

According to statistics, the total container volume of the China Korea route in 2005 was approximately 2.35 million TEUs, of which the total container volume carried by member companies of the Yellow Sea Regular Ship Agreement and the Yellow Sea Passenger and Freight Liner Agreement was 2.15 million TEUs, a year-on-year increase of 6.4%; The transportation volume carried by third countries is 200000 TEUs, accounting for approximately 8% of the total transportation volume. In 2005, the eastbound container volume of the China Korea route was approximately 1.35 million TEUs, the westbound container volume was approximately 1 million TEUs, and the transit container volume was 676000 TEUs. The transit container volume accounts for 28.8% of the total container volume, of which the eastbound transit container volume is 459000 TEUs, accounting for 19.5% of the total container volume, and the westbound transit container volume is 217000 TEUs, accounting for 9.2% of the total container volume.

The container transportation of passenger and freight liners has developed rapidly

Due to the characteristics of high flight density, high punctuality, fast speed, and strong safety of passenger and cargo liners on the China Korea route, they can meet the requirements of customers for timely transportation of certain special goods, including fresh seafood, refrigerated seafood, as well as clothing, electronic products with high delivery time requirements. This has led to an increase in the container volume carried by China Korea passenger and cargo liner companies year by year, from 148000 TEUs in 2000 to 316000 TEUs in 2005, with an average annual growth rate of 16.4%. The total freight volume of passenger and freight liners from 2000 to 2005 was 1.288 million TEUs, while from January to September 2006 it reached as high as 259000 TEUs.

The stable development of the market cannot be achieved without the support of the governments of both countries

China and South Korea are friendly neighbors, and the healthy development of container transportation business is an important support for China South Korea economic and trade cooperation. Both governments maintain a positive attitude towards the development of container transportation between China and South Korea. Since the launch of container transportation between China and South Korea, with the support of the Chinese and South Korean governments, especially through the annual maritime talks held between the two countries' maritime authorities since 1993, many contradictions in the development of the container transportation market on the China South Korea route have been resolved. The policy environment for market operation has been continuously improved, and cooperation between shipping companies has been further strengthened, resulting in significant development of the China South Korea container transportation market.

Analysis of the Prospects of Container Transportation between China and South Korea

Opportunities Faced

In the future, Chinese and Korean passenger and cargo ships, as well as full container ships, will leverage their respective advantages to segment the market.

In the future, passenger and freight liners will leverage their advantages of fast sailing speed and accurate flight schedules to consolidate and expand the transportation market for refrigerated and frozen goods, fresh green goods, and high value-added goods, attract and stabilize a passenger and freight group different from container liners, achieve differentiated competition, and segment and grasp markets that suit their own characteristics. At the same time, passenger and cargo ships will leverage the potential advantages of large cargo space, making it easier for vehicles to board and disembark, and promote vehicle logistics and travel. The issues of in vehicle logistics and car travel were raised at the first China Japan South Korea Maritime Transport and Logistics Cooperation Ministerial Conference held in September 2006, and were identified as one of the practical problems to be coordinated and resolved by government regulatory departments in the next step. Vehicle logistics and car travel will bring new economic growth points to passenger and freight shipping routes, reduce dependence on container cargo sources, and make the service markets of the two routes more differentiated, which is conducive to the coordinated development of the two routes.

The governments of China and South Korea attach great importance to and will continue to support the development of container transportation

After the opening up of the China South Korea maritime market, the governments of China and South Korea have always advocated for a strong maritime country and focused on the development of the maritime industry. They will further pay attention to the survival and development of container transportation enterprises on the China South Korea route. China and South Korea will improve relevant laws, regulations, and systems, and jointly formulate and introduce relevant policies and norms according to the needs of the development of the China South Korea container market, strengthening the guidance and supervision of competitive behavior in the shipping market.

The China Korea Yellow Sea Association will further leverage the self-discipline role of industry associations

As an intermediary organization specialized in managing the China Korea shipping market, the China Korea Yellow Sea Association will comply with the development needs of the China Korea container transportation market, strengthen the construction of industry self-discipline management system after market liberalization, continuously improve its self-discipline function through the construction of self-discipline organizations and the enrichment of self-discipline measures, further play the self-discipline role of industry associations, and promote the sustained stability and healthy development of the China Korea container transportation market.

Challenges Faced

The operational risks of shipping companies will increase

The opening of China Korea shipping routes, especially in the early stages, may result in a large influx of third-party shipping companies and capacity due to short-term speculative behavior by some container shipping companies. According to the current situation and development trend of economic and trade cooperation between China and South Korea, although the development prospects of the China South Korea maritime market are promising, the capacity is limited after all. Shipping companies will inevitably adopt various competitive measures to compete for sources of goods, market share, and customers, which will cause fierce competition. Freight rates may fluctuate greatly, and shipping company operational risks will further increase.

The container shipping market for passenger and freight shipping between China and South Korea will be impacted to some extent

On the China Korea route, due to the higher rental and freight costs of passenger and freight ships compared to container ships, the operating costs of passenger and freight ships are higher than those of full container ships, and the container freight rates of passenger and freight ships are also about one and a half times higher than those of full container ships. Therefore, after the relaxation of shipping rights between China and South Korea, it will have a certain impact on the container transportation of Chinese and South Korean passenger and cargo ships.

In summary, there are both opportunities and challenges in the container transportation market between China and South Korea, but the opportunities outweigh the challenges, and its development prospects are optimistic.