Samsung Electronics

Samsung's new Galaxy S4 smartphone will boost freight sales for Korean Air

PUBLISHED : Saturday, 16 March, 2013, 12:00am
UPDATED : Tuesday, 11 October, 2016, 1:04pm

The introduction of Samsung's Galaxy S4 smartphone has one clear winner - Korean Air.

Samsung may ship about 44 million of the smartphones in the second and third quarters, according to Young Park, an analyst at Woori Investment & Securities in Seoul. A Boeing 747-8 freighter plane carrying nothing else can hold about one million phones.

Moving high-value goods such as a smartphone by air quickly to various markets is important for Samsung to capture market share when the product has maximum demand.

The introduction is likely to reverse a two-year decline in freight sales at the Seoul-based carrier, the world's second-biggest international cargo airline.

"The Galaxy can provide Korean Air with the relief it needs during these difficult times," according to Joo Hae-mee, an analyst at LIG Investment & Securities with a buy rating on the airline.

"While the introduction of one product isn't enough to make a full recovery, given the dire situation of the cargo industry worldwide, this is positive."

The global air-freight market shrank 1.5 per cent in 2012 for a second consecutive year and airlines were filling less than half of their cargo planes, according to the International Air Transport Association.

Hurt by the economic slowdown, cargo carriers such as Cathay Pacific have turned to high-value items like diamonds because moving low-technology goods is adding little to profits.

Mobile phones are one of the top three products that are moved by air in South Korea, home to Samsung and LG Electronics.

Airlines haul about US$5 trillion annually of total cargo, accounting for a third of the global trade in terms of value, according to IATA.

Sending phones by ship on long distances, although cheaper per unit, can be uneconomical because of the high value of inventory at sea. Still, sometimes the sea route is preferred when urgency is not at stake.

Samsung, which unveiled the Galaxy S4 in New York on Thursday, will first sell the phone initially in three countries by the end of April and reach 155 nations by early May, said a company spokeswoman. The phones will be made at factories in South Korea, China and Vietnam.