Airfreight operators in South Korea are benefiting from a strong recovery in the industry, according to a new report from Business Monitor International (BMI). In April, Korean Air reported record results for Q1 which saw operating profits for the company rise to KRW220.2 billion (US$197.6 million), a rise of 3,300 per cent compared with the same period in 2009. Despite the massive slump in airfreight demand in 2009, creating a low baseline for comparisons, BMI believes that the results are still impressive and are the best for the carrier since Q3 of 2008.

Korean Air is now expecting profits for the year to reach KRW1 trillion (US$896 million). Industry observers have said that the results are indicative of a strong global rebound for the aviation and air freight businesses. Cargo utilisation for Korean Air increased to 77.1 per cent in Q1 2010 compared with 70.6 per cent in Q1 of 2009. Meanwhile, cargo revenue for the carrier was up 57 per cent, with both the Japan and China routes exceeding their pre-crisis performances. Demand is expected to stay strong in the future as a result of rebounding exports of IT products and trade agreements between Korea and India, and also the EU, BMI said.

While the ongoing stand-off with North Korea continues to be a shadow on the economic optimism, the rest of the operating environment is positive with the local economy enjoying a strong recovery, based on inventory re-stocking and rising consumer demand. BMI predicts 5.5 per cent GDP growth this year, sharply up from 0.2 per cent growth in 2009. For the five years to 2014, BMI is forecasting that GDP growth will average 4.2 per cent.

BMI expects a strong recovery in South Korean airfreight this year with total volume of cargo shipped by air to grow by 7.8 per cent to 3.7 million tonnes, more than offsetting the 4.1 per cent contraction experienced in 2009.

BMI expects South Korea’s total trade to grow by an impressive 9.5 per cent this year, with imports leading the way (+11.5 per cent) and exports lagging behind a little (+8.0 per cent). “In our view, the country’s free trade agreement (FTA) with the EU, and similar negotiations with the US on the one hand, and China and Japan on the other, will continue to underpin moderate-to-high trade growth,” BMI said in its report. Its fiveyear forecast in real terms is for trade to grow by an average of 8.2 per cent per annum, as mid point between imports (+8.9 per cent per annum) and exports (+7.7 per cent per annum).