In 2025, Korea's industrial sectors saw mixed fortunes. Automobiles and petrochemicals struggled under the impact of high U.S. tariffs and the Russia-Ukraine war, while shipbuilding and defense industries boomed on rising global demand. We look at the major issues that will drive the global economy in 2026 and forecast their sector-by-sector effects. [Editor's note]
A major shake-up is expected in Korea's aviation industry this year. With the integrated carrier of Korean Air and Asiana Airlines launching at the end of the year, a top-10 global airline will be born. Attention is expected to focus on route allocation and mileage integration plans during the process. Domestic carriers must respond to expense risks such as exchange rates, oil prices, and labor costs.
In shipping, the acquisition and transfer plan of HMM, Korea's only global shipping line, is expected to be the biggest issue. The Ministry of Oceans and Fisheries is set to announce this month the transfer plan for HMM and its affiliated institutions. In the global shipping market, oversupply and geopolitical risks are also expected to come to the fore.
◇ Integrated Korean-Asiana airline to launch... higher exchange rate likely to increase expense burden
According to the aviation industry on the 14th, Korean Air's acquisition of Asiana Airlines began in Nov. 2020. After being incorporated as a subsidiary at the end of 2024, the process moved into substantive integration last year. The integrated carrier combining the No. 1 and No. 2 players in the domestic market is set to launch in December.
To that end, Asiana Airlines will move on the 14th from the existing Terminal 1 (T1) at Incheon International Airport to Terminal 2 (T2). T2 is currently used by 12 airlines, including JIN AIR, AIR SEOUL, and AIR BUSAN, which are affiliates of Korean Air.
Ahead of the integrated carrier's launch, Korean Air is focusing on creating a "members-only lounge." Timed with Asiana Airlines' T2 transfer, it plans to open a Prestige Lounge on the east side (left) of T2. By April, it aims to complete the expansion of the first-class lounge and the west-side Prestige Lounge. As it expands the lounges, Korean Air will also introduce premium services. It will run a live kitchen to increase variety and freshness of food, and will make cocktails, wine, and beverages on the spot.
Airlines have recently been rolling out premium seats as a middle tier between high-priced business class and cramped economy. Examples include Air Premia's "premium economy (wide premium)" and Farata Airlines' "business smart class." Korean Air introduced "premium class," a middle tier between Prestige and economy, on short-haul routes to Japan and Southeast Asia and plans to expand it this year.
An airline official said, "The economy is sluggish, but customer demand for 'premium' seating is increasing," and noted, "Even if customers pay more expense, the trend of prioritizing comfort is growing, so the industry's shift is likely to continue."
Route allocation to prevent a monopoly by the integrated carrier is expected to draw attention in the aviation industry. In Dec. 2024, the Korea Fair Trade Commission required that traffic rights and slots on 34 routes where a monopoly could arise during the corporate merger of Korean Air and Asiana Airlines be transferred to other airlines within 10 years.
Of these, six routes were transferred last year, and transfer procedures for 18 routes are scheduled to proceed sequentially from the first half of this year. Airlines have not yet applied for the remaining 10 routes. The "mileage integration plan," the final hurdle for integration, received two supplemental orders from the Korea Fair Trade Commission (FTC) last year, and Korean Air plans to draw up supplemental measures within this year.
By business institutional sector, passenger and cargo demand outlooks diverge. For passengers, international routes recovered to pre-pandemic levels last year mainly on Japan and Southeast Asia, while domestic routes are expected to find it hard to grow this year as well. Demand for international air cargo is projected at 106% of 2019 levels.
Baek Seung-han, associate research fellow at The Korea Transport Institute (KOTI), said, "This year's growth level for international passengers is expected to differ by route and region," and added, "Domestic passenger demand is forecast to reach only 93% of pre-COVID-19 levels."
Experts expect the global aviation market to boom this year, but they point out that Korean carriers must prepare for risks related to various expenses such as exchange rates and oil prices.
According to the International Air Transport Association (IATA), global airlines' total net profit is expected to reach a record $41 billion (about 60 trillion won) this year. However, as the won-dollar exchange rate is likely to remain in the 1,400–1,500 won range this year, Korean airlines' expense burdens are expected to rise. That is because jet fuel, lease fees, and maintenance costs are largely settled in dollars.
Choi Min-gi, an analyst at Shinhan Investment & Securities, said, "Jet fuel for aircraft is paid in U.S. dollars, so expense burdens will increase as the exchange rate rises," adding, "Fares may also fall as competition intensifies with low-cost carriers (LCCs) and foreign airlines."
◇ HMM transfer plan to be announced this month... industry faces 'dark clouds' as Suez Canal transits resume
One of the biggest topics in Korea's shipping industry this year is whether HMM will transfer to Busan and be re-sold. HMM's Busan transfer was a campaign pledge by President Lee Jae-myung and is being pursued as a core government task. The HMM transfer plan has gained momentum with the rationale of consolidating all maritime and fisheries functions in the southeast region to overcome the capital-centric system and the added justification of pioneering the Northern Sea Route as part of balanced national development.
The Ministry of Oceans and Fisheries, the lead ministry, decided to postpone the announcement—initially slated for the second week of this month—of the transfer plans for HMM as well as its affiliated institutions, the maritime court, and the Southeast Investment Corporation. The minister's seat is vacant, and HMM's union strongly opposes it. The ministry began its own move to the Busan government complex on Dec. 8 last year and held an opening ceremony on the 23rd.
It was delayed as negotiations with the HMM chapter of the National Financial Industry Labor Union (HMM union) proceeded slowly. Chun Jae-soo, former Minister of Oceans and Fisheries, met directly with the HMM union late last year to persuade them of the legitimacy of the Busan transfer, but the union strongly opposed it, saying, "If the Busan transfer is forced, we will not rule out an all-out strike." On the 4th of last month, the union also held a press conference "condemning the forced transfer of the headquarters."
Attention is also on whether HMM's re-sale will gain speed. Korea Development Bank (KDB), the largest shareholder (35.42% equity), began reassessing the value of its HMM stake at the end of last year. HMM's market capitalization is around 20 trillion won, and the combined equity of KDB and the Korea Ocean Business Corporation (35.08%) comes to about 13 trillion won. Even if only KDB's stake is sold separately, its equity value is estimated at about 6.7 trillion won.
Industry assessments suggest the acquisition price would be around 7–8 trillion won, factoring in a control premium. KDB is said to plan a restricted competitive bid to quickly select an executing institution (such as an accounting firm) and receive a final report by the end of February this year.
Those expressing interest in acquiring HMM include POSCO Group and Dongwon Group. POSCO Group already began a feasibility analysis in September last year, and Dongwon, which failed in the 2023 bidding, has launched an internal task force (TF) to try again. POSCO highlights synergies between steel and shipping, while Dongwon emphasizes ties between fisheries, logistics, and shipping. Both aim for business diversification, lower logistics costs, and stabilized raw material transport.
Many assess that POSCO far outstrips Dongwon in cash firepower. As of the end of September last year, POSCO Holdings' cash and cash equivalents exceeded 7 trillion won, while Dongwon Industries' fell short of 500 billion won.
The global shipping market is widely expected to be sluggish this year. That's because ocean freight rates are falling due to worldwide vessel oversupply and the impact of U.S. tariffs. According to the "annual shipping market report" released by the Korea Ocean Business Corporation (KOBC) at the end of last year, container freight rates, based on the Shanghai Containerized Freight Index (SCFI) as of Dec. 19 last year, stood at 1,580, down 38% from the start of the year (2,505).
This year's expected supply growth rate for slot capacity is 3.5%, outpacing demand (2.1%). This means slot capacity (the total amount of cargo a ship can carry) exceeds cargo volume. By 2028, cargo volume is expected to increase 12.9% from 2024, while slot capacity growth is estimated at 26.3%.
If Suez Canal transits resume this year, ocean freight rates could fall further. The Suez Canal connects the Mediterranean, the Red Sea, and the Indian Ocean, drastically shortening the route compared to going around the Cape of Good Hope at the southern tip of Africa.
After the Israel-Hamas war (Gaza war) broke out in October 2023, Suez Canal transits were suspended until October last year. However, trial sailings have recently been underway, with a mega container ship of the French carrier CMA CGM passing through the Suez Canal in November last year. Carriers have said they will resume use of the Suez Canal this year.
If ships that had been going around the Cape of Good Hope return to the direct route via the Suez Canal, the daily volume they can carry increases accordingly. In that case, ship supply rises and ocean freight rates inevitably fall further. Drewry, a global shipping consultancy, projected that rates on major routes will drop 17% this year from last year. Financial data firm FnGuide presented an operating profit forecast for HMM this year of 863.2 billion won, down 38.2% from a year earlier.
Kim Young-ho, an analyst at Samsung Securities, said, "The container freight index has already begun to correct, and supply is increasing with deliveries of newly built vessels," adding, "The resumption of Suez Canal transits will also intensify downward pressure on ocean freight rates."