The global container shipping market is experiencing significant freight volatility due to geopolitical risks and supply-demand imbalances. However, the shipping route between Korea and Japan has maintained stability.
According to an analysis by the Korea Maritime Promotion Corporation (KOBC), the Korean Container Freight Index (KCCI) indicates that the Korea-Japan route paradoxically continues to show 'calm freight rates' based on structural stability, even amidst global market fluctuations.
Jung Kyung-nam, head of the ESG Management Team at KOBC, stated, "Unlike the global freight index SCFI, the KCCI, which reflects the market conditions of 13 routes originating from Korea, shows that the Korea-Japan route has significantly lower volatility compared to other routes."
An analysis of freight trends from January 2024, set as the baseline (100), through August 2026 revealed that the North America route experienced a surge of over three times its rates due to supply chain disruptions, such as the Red Sea incident in July 2024. The highest freight rate for the North America West Coast route reached $7,000 per TEU, with a fourfold difference between the highest and lowest rates and an average weekly fluctuation of 8%.
In contrast, the Korea-Japan route's highest freight rate was only about $234, with a 1.42-fold difference between the highest and lowest rates and a weekly fluctuation of just 1%. Jung noted, "While the absolute freight level is low, the unique stability of the Korea-Japan route is evident when examining cargo volume and structure."
A key characteristic of the Korea-Japan route is that transshipment (TS) cargo accounts for 68% of the total cargo volume, which was approximately 1.1 million TEU in the first half of this year. Only 32% of the cargo consists of local exports and imports between the two countries.
This structure arises from Japan's multi-port system and cost structure. Japan has numerous minor ports in addition to its five major ports, including Tokyo, Yokohama, and Osaka. When local shippers use major ports in Japan, they incur high land transportation costs (trucking fees), road tolls, and issues related to a shortage of land transport drivers.
As a result, Japanese shippers actively utilize Busan Port as a transshipment hub due to its geographical proximity, frequent scheduled services, and economies of scale. In 2024, Busan Port's cargo volume was approximately 24 million TEU, significantly exceeding the combined cargo volume of Japan's five major ports, which was 15 million TEU.
The Korea-Japan route is primarily led by 11 Korean coastal shipping companies, with limited participation from global deep-sea carriers or Japanese shipping companies. Multinational giants like Maersk and MSC, as well as Japan's ONE, primarily use the Korea-Japan route for feeder services due to the low freight rates.
Korean coastal shipping companies secure stable base cargo volumes by entering into transshipment contracts (such as SOC) with global large shipping companies, allowing them to avoid destructive price competition by lowering rates to attract cargo.
Additionally, the Korea Coastal Shipping Council (KNFC) has contributed to freight rate support through capacity adjustments and a ceiling system. Jung analyzed, "The structural conditions allow shipping companies to manage supply by adjusting loading situations during market downturns."
However, challenges to this stable system remain. A notable concern is the increased scrutiny of joint actions among shipping companies due to the strengthened application of competition laws by global regulatory authorities. Furthermore, if global shipping conditions deteriorate, the possibility of large shipping companies entering the coastal market or shifting to aggressive sales strategies through mergers and acquisitions cannot be ruled out.
Jung emphasized, "While the Korea-Japan route has maintained a calm and stable flow so far, ongoing observation is necessary to determine whether this system can continue amid changes in the global regulatory environment and market volatility."
* This article has been translated by AI.
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