Concerns are growing that global maritime traffic will decrease due to tariff barriers and heightened protectionism based on America First when Donald Trump’s second administration begins early next year. National shipping companies in South Korea are calling on the government for measures such as tax incentives, subsidies, and long-term ship management.
According to the shipping industry on the 21st, the Ministry of Oceans and Fisheries held a meeting with representatives of major national shipping companies on the 17th. It is reported that representatives from HMM, Sinokor Merchant Marine, Korea Marine Transport, Pan Ocean, and Korea Line participated in the meeting. The purpose was to discuss related measures amid expectations of a shift in trade policy when Trump’s second administration takes office next year.
Trump has indicated that he will impose universal tariffs of 10% to 20% on all foreign imports and a 60% tariff on Chinese imports. As he emphasized that protectionist policies would lead to increased revenues for U.S. corporations and a recovery in manufacturing, many anticipate that related policies will be implemented soon.
During Trump’s first administration from 2017 to 2021, a high tariff policy based on protectionism was maintained, leading to a sharp decline in container traffic amid the U.S.-China trade dispute. According to the Korea Export-Import Bank, the global container traffic growth rate was 5.7% in 2017 compared to the previous year, dropping to 4.4% in 2018 and 2.2% in 2019.
As traffic decreased, freight rates also fell. The Shanghai Container Freight Index (SCFI), the global benchmark for container freight rates, dropped to 710 in September 2017, which was less than one-third of the value on the 13th of this month (2384.4). The SCFI did not recover to the 1,000 mark until 2020.
Major shipping companies demand tax incentives and other measures for cost reduction. Given that the 'Trump risk' is signaling a shipping recession, they argue that institutional support is necessary for stable management. While specific amounts or timelines have not been determined, the Ministry of Oceans and Fisheries is reportedly considering expanding the crisis response fund. The crisis response fund was created last year by the Korea Maritime Promotion Corporation and the Ministry of Oceans and Fisheries to prepare for a shipping industry recession and strengthened environmental regulations.
Ok Woong-ki, a researcher at the Korea International Trade Association, analyzed that "next year, the structural oversupply in the global container shipping market is expected to intensify downward pressure on maritime freight rates."