As Chinese e-commerce giants aggressively pursue global expansion, South Korea’s logistics sector is reaping the benefits. China, which is in the midst of a consumption slump caused by an economic downturn, is exporting deflation to the rest of the world by offloading surplus inventory at low prices. These products go through Incheon International Airport before heading to the United States and Europe.
Some experts are concerned that Korea is facilitating goods deflation via China by serving as a logistics hub for China’s outbound commerce.
Incheon International Airport reported on Mar. 28. that “sea-air intermodal cargo” - cargo that entered Korea by sea and was shipped to third countries through Incheon Airport - reached 98,560 tons last year, up 43.1% from the previous year. Notably, 99.6% of this cargo came from China. Experts believe that most of this surge is generated by goods from Chinese e-commerce giants.
Incheon Airport emerged as a pivotal logistics hub for China due to its geographical position. The principal departure city in China, Weihai(威海), is designated by the government as the overseas dropshipping logistics hub. A significant portion of China’s e-commerce cargo is collected at logistics centers in Weihai before being exported overseas.
“The Weihai area lacks airports capable of handling large cargo volumes, and it is faster to ship cargo from Weihai to Incheon by sea than by land to airports in China, so most of the cargo ends up in Incheon Airport,” said an industry insider.
Cargo from Weihai is brought into the country through west coast ports, including Incheon, Pyeongtaek, and Gunsan, then airlifted overseas from Incheon Airport. North America (47%) and Europe (31%) are the primary destinations for these shipments.
Last year, Incheon Airport sent about 700,000 tons of cargo from Korea to international destinations, with around 14% originating from China. “Incheon Airport has become a base for China’s goods deflation,” said an industry insider. “As Chinese e-commerce continues to expand its presence globally, China’s share in cargo volumes from Incheon to international markets is also expected to increase.”
Airlines are also reportedly scrambling to accommodate the growing volume of cargo from China. Incheon Airport is considering introducing more flights to China because handling Chinese cargo could improve the airport’s cargo revenue. “It’s surprising how the sales of Chinese e-commerce companies have come to affect Korea’s international air freight,” said an airport official.
