New vessels rush into Korea / Russia trades

Many shipping companies are surging into Korea / Russia trades.

There has been only one container service in between Vladivostok / Vostochny and Pusan through an alliance with Hyundai Merchant Marine and Russian shipping company, FESCO. Russian shipping companies and other foreign shipping companies, however, rushed into the trade this year, especially during July and August.

Russian bulk carrier, Formag Corp., took the first step in taking away HMM's monopoly, calling at Masan, Vladivostok and Vostochny early this year. Following this, the Chinese carrier, Hyuntong Corp., launched a Pusan / Vladivostok service, deploying a 100 TEU semi-container vessel in mid July. And at the end of August, Transmarine started a Masan / Vostochny weekly service with a 150 TEU semi-container vessel.

In addition, during early September, the Russian company Sovcomflot got involved in Pusan / Vostochny trade with containerships. SATEC, a Vietnamese carrier, handles inbound cargoes from Vladivostok and will treat outbound cargoes from Pusan to Vladivostok in the future.

Another Russian shipping company, Magitrans, is also considering launching a Korea / Russia trade. Sinotrans, also, handles Russian bound cargoes through the TCR (Trans China Rail).

As many shipping companies have entered Korea / Russia trades since July, the HMM and FESCO market share is decreasing. Though Tonghae shipping, a general agency for HMM and FESCO for this service, collected 888 TEU weekly or 85% of total Korea / Russia bound cargoes in the first half this year, it only gathered 735 TEU per week in July.

On the other hand, Transmarine collected 12% of total cargoes, Formag 9%, and Hyunton 2%.

Officials in the shipping industry revealed strong dissatisfaction that the government allowed other foreign shipping companies, including Russian ones, to come in the trade. They said that Korean Shipping companies are not involved in the trade, and to make things worse, the new companies, in what was a stable trade, have turned it into a mess.

Neutral industry sources pointed out that the Korea / Russia trade has been under special government management. However, MOMAF gave up on managing the project and it passed over to the local MOMAF office, allowing many services in the trade and creating over-capacity and hyper-competition.