Korea to Europe/Mediterranean Trade Makes Big Noise by Introducing GRI

Most exporters in Korea to Europe/Mediterranean trade routes are givin
g up orders or hesitating on orders due to the weakening of export pri
ce competitivity.
The Shipper's Association under the Korean Trade Association reported
that FEFC (Far East Freight Conference) and MEDFEC (Mediterranean Far
East Conference) would introduce a "GRI" of $350 per TEU and $700 per
FEU. It will also raise the Bunker Adjustment Factor (BAF) as of Augus
t 15th, as much as $65 per TEU and $130 per FEU due to high oil prices
. The Shipper's Association said that this rise will weaken market com
petitiveness for Korean shippers, resulting in decreased exports to Eu
rope, and result in a 30 percent plus hike in shipping costs compared
to the current $1,100 to $1,200 per TEU and $2,200 to $2,400 per FEU i
ncrease.
The Shipper's Association insisted that there is no exit for products
bound for Europe because 13 commodities, including color TVs, and micr
owaves, are restricted by the EU. To make things worse, sea transporta
tion fees are also being raised. The Shipper's Association reported th
at Korean commodities have depreciated 20 percent overall because of a
10 percent depreciation of the Euro against the American dollar and a
10 percent appreciation of Won over the dollar. This fall in competit
iveness has obfuscated possible future contracts of primary export ite
ms.