LG Electronics predicted that ocean freight rates, which rose due to conflicts in the Middle East and increased shipments from China, would peak in the third quarter this year and decline starting in the fourth quarter.
Yu Jong-in, head of management for the Home Appliance & Air Solution (HS) division at LG Electronics, said on a second-quarter earnings conference call on the 30th, "With conflicts in the Middle East overlapping with increased shipments from China, the Shanghai Containerized Freight Index (SCFI) is on the rise," and added, "During second-half ocean freight negotiations, carriers demanded rate increases, and accordingly, second-half rates rose compared with the first half."
Yu said, "Additional vessel capacity is scheduled to come online, and we expect global cargo volumes to slow after the peak season," and added, "We are continuing to renegotiate with carriers based on the bargaining power we have secured by operating large volumes over long periods."
He added, "We see the third quarter as the peak for ocean freight," and said, "Starting in the fourth quarter, as market conditions weaken and the effects of renegotiations are fully reflected, rates are expected to fall to the level of the same period a year earlier."
LG Electronics plans to reduce logistics costs by improving base rate terms through additional negotiations with carriers, while simultaneously enhancing inland transport structures and optimizing truck and warehouse operations. Yu said, "We expect to gradually reduce the logistics cost burden as we move into the second half."