Industry Update

Volume 8 Issue 3

Inside this Issue: 1. U.S. - Korea FTA 2. KWE Korea and Asiana Airlines 3. New Airport in Beijing 3. Air Canada and Labor Unions 4. Diesel Prices Rise 4. U.S.’ 2012 Economic Growth 5. Updated BAF/IFC

Ron Kirk, U.S. Trade Representative (USTR), announced that the U.S.- Korea free trade agreement (KORUS FTA) will take effect March 15, 2012. This agreement supports the riddance of agricultural and industrial tariffs, obligations on non-tariff measures and intellectual property rights and enforcement provisions. “Entry into force of this agreement will open up Korea’s $1 trillion economy for American workers, businesses, famers, and ranchers while also strengthening our economic partnership with a key Asia-Pacific ally,” U.S. Trade Representative Ron Kirk said. “Coming at a time such as this, the U.S. FTA is a positive opportunity for our exports to the United States, which is the world’s largest developed market, to grow significantly,” South Korean Minister for Trade Park Tae-Ho stated.

photo credit: Yonhap News

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The pact could also attract Chinese and Japanese investment to Korea, along with creating jobs, Korean President Lee Myung-Bak told reporters last week. USTR states that on March 15, 2012, almost 80% of U.S. exports of industrial products to Korea will become duty-free, including aerospace equipment, auto parts, building products, chemicals, consumer goods, electrical equipment, environmental goods, all footwear and travel goods, paper products, scientific equipment and shipping and transportation equipment. Two-thirds of U.S. exports of agricultural products to Korea will also become duty-free including wheat, corn, soybeans for crushing, whey for feed use, hides and skins, cotton, cherries, pistachios, almonds, orange juice, grape juice and wine.

photo credit: Korea Times

photo credit: travel Vietnam

Asiana Airlines will begin to operate a Boeing 767 Freighter (B767F) from Incheon International Airport (Incheon, South Korea) to Noibai International Airport (Hanoi, Vietnam). The flight schedule is as below: Wednesdays and Thursdays: ICN/ 22:10- HAN// 00:50+1 Thursdays and Saturdays: HAN/02:20- ICN/ 08:10 on With this new flight route, KWE Korea can strengthen their Asia-Pacific business initiative with customers by providing better services and additional options.

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Air Canada announced the tentative agreement between themselves and the International Association of Machinists and Aerospace Workers (IAMAW). The IAMAW is Canada’s largest union representing nearly 8,600 employees. Air Canada is also collaborating with other labor unions such as Local 2002 of the Canadian Auto Workers Union (CAW) and the Canadian Airline Dispatchers Association (CALDA) which represents their in-flight service crew and their central operations control crew. Details of all three agreements will be released upon ratification and approval by Air Canada’s board of directors.

photo credit: Canadian Encyclopedia

The yet-to-be-named airport in rural Daxing, China is anticipated to overthrow London’s title as the world’s busiest aviation hub as well as eclipse Hartsfield-Jackson Airport in Atlanta as the busiest passenger airport in the world. The airport is expected to handle an estimated 5.5 million tons annually, possess a minimum of nine runways and will cost an estimated $4.8 billion to construct. China’s aviation industry is currently booming; last year, there was a 43 billion yuan profit, reflecting triple the figure from the year before. Within the next two decades, China forecasts to buy a minimum of 4,300 new jet aircrafts. The government’s most recent five-year economy plan calls for an expansion of eight international airports, the construction of new smaller airports as well as aviation studies in Chengdu, Qingdao and Xiamen.

China is also opening up private aviation, which will allow China’s wealthiest to splurge on luxury private jets and cars. KWE has a significant presence in China with more than 112 business sites and over 3,200 employees. KWE China eagerly awaits the additional resources and capacities the new airport will provide upon its opening in 2017.

photo credit: Air Cargo World

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Surging gas prices have been sweeping across the country over the past few months. Diesel prices have tipped past the $4 per gallon mark over the last week of February and has risen 9.1 cents to a nearly 10 month high as oil prices fell after a seven day rise (Journal of Commerce). The average price jumped to $4.051, setting the fastest pace since the first week in November. According to the U.S. Energy Information Administration, diesel costs are 33.5 cents higher than last year. The West coast, excluding California, was hit the hardest with the 17.3 cent jump that lead to $4.227 per gallon on diesel. The East Coast saw the mildest increase as prices rose 6 cents to $4.221.

“Forty-five economists surveyed by the National Association of Business Economics (NABE) expect inflation-adjusted GDP growth to accelerate slightly in the second half of the year (Journal of Commerce).” Economist Mario O. Moreno forecasts that the volume of containerized imports to rise 4.5 percent this year, with growth from Europe and Latin America outpacing the expected 2.8 percent growth of trans-Pacific imports. He predicts the export volume to increase 3.5 percent.

Diesel prices stayed below $4 a gallon in the Midwest, the lower Atlantic and the Rocky Mountain region. CNN Money states the possible fears of disruption in oil supply because of the country’s tension with Iran and our slowly recovering economy will continue to boost gas prices.

photo credit: inautonews.com

Other arenas of change include a decrease in the nation’s unemployment rate, from 8.3 percent to 7.8 percent; an increase in consumer spending of 2.1 percent; a slow but positive recovery in the housing market, business spending to rise 8.1 percent, an increase in industrial production of 3.5 percent, etc.

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WESTBOUND (from USA to Asian destinations)

January 1, 2012 through March 31, 2012

20’ dry 40’-45’ dry 20’ reefer other reefer

BAF – West Coast 584 730 823 1029

BAF – East Coast 1149 1436 1531 1914

IFC – Pure truck 102 102 102 102

IFC – Truck/Rail 353 353 353 353

EASTBOUND (from Asian origins to USA)

January 1, 2012 through March 31, 2012

per 20’ per 40’ per 40HQ per 45’

BAF – West Coast 430 538 605 681

BAF – East Coast 847 1059 1191 1341

IFC-Truck 102 102 102 102

IFC-RIPI 177 177 177 177

IFC-IPI 353 353 353 353

19 St. Patrick’s Day KWE Ireland Closed

March Holiday Schedule

Transpacific Ocean (Asia to Canada)

CAF: 7% February 1, 2012 through March 31, 2012

per 20’ per 40’ per 40HC

BAF 430 538 605

* Second quarter updates will be available on April’s Industry Update