Boston, MA -- (SBWIRE) -- 02/12/2013 -- BMI View:All Eyes On The Global Picture

South Korea's export market is experiencing some turbulence at present, with this having a detrimental effect on the country's freight industry. According to the purchasing managers' index report, alongside the fall in output, export orders also saw a fourth straight month of decline, with the Middle East and more crucially, Europe, singled out as regions of demand weakness. Additionally, domestic orders for machinery continued to exhibit significant weakness, declining 16.1% year-on-year (y-o-y) in August, following on from a 18.5% contraction in Q212.

Therefore, our forecasts for 2013 across the different modes is relatively muted, although we expect this scenario to alter over our forecast period. For 2013, the best performing freight mode in terms of y-o-y growth will be the maritime sector, with the Port of Incheon enjoying steady annual tonnage throughput growth. Air freight will also see a decent outcome this year, while rail freight is forecast to witness uninspiring growth over the same period.

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Headline Industry Data

- 2013 air freight tonnage throughput forecast to increase 3.39%.
- 2013 rail freight tonnage throughput forecast to grow 1.67%.
- Total trade (imports plus exports) in real terms is set to grow 3.80% in 2013.
- The Port of Busan will see gross tonnage growth increase 3.52% in 2013.
- The Port of Incheon is forecast to see gross tonnage growth of 4.74% in 2013.

Key Industry Trends

Korean Airlines To Up Capacity On Russian Route

Korean Airlines is to boost its cargo offering on the route from Incheon Airport in South Korea and Vladivostok in Russia, announcing at the end of August 2012 that it is to begin switching over aircraft on the route from the B737-900F to a wide-bodied B777-200F.

Busan Builds For The Future

BMI believes that the Korean port of Busan, one of the world's largest ports in terms of container throughput, will continue to maintain its position in the top 10 through continuing to innovate, develop and expand at its facilities. Two new developments reported in September 2012 offer upside risk to both Busan's short-term and long-term growth outlooks.

Special Economic Zones Face Uphill Struggle

North Korea is set to experiment with reform by developing Special Economic Zones (SEZs) to attract greater foreign investment, with South Korea an obvious benefactor. However, neither of the two long standing SEZs at Rason and Sinuiju have been successful, suggesting that future ventures will also fall short of expectations.

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