South Korea’s logistics companies such as local industry leader CJ Logistics Corp. are expanding their overseas operations to take advantage of growing demand for the country’s goods abroad and to maintain profitability amid their falling market shares at home.
Overseas sales of CJ Logistics and its smaller rival Hanjin Transportation Co. have increased so far this year, according to industry sources in Seoul on Tuesday.
CJ Logistics’ global business generated sales of 3.3 trillion won in the first three quarters, up 4.4% from a year earlier. The sales made up 36.8% of the company’s total January-September revenue.
Hanjin’s overseas business sales jumped 55% to 398.6 billion won during the period, accounting for 18.1% of the company’s total revenue, up from 12.4% a year ago.
Its global business includes freight forwarding, the organization and shipment of goods from South Korea to other countries using single or multiple carriers, as well as warehouse and distribution (W&D) services abroad.
Demand for forwarding and W&D services is on the rise as more South Korean companies are exporting products thanks to growing overseas demand, industry sources said.
“Many smaller sellers without logistics networks want one-stop services, including storage and delivery in other countries,” said a Hanjin official.
LOCAL COMPANIES IN OTHER COUNTRIESSouth Korean logistics providers bagged more deals from local companies in other countries based on advanced technology.
“India and Southeast Asian countries prefer Korean companies as logistics technology in those markets is not (yet) very developed,” said an industry source in Seoul.
CJ Logistics’ unit in India, which provides freight delivery through land and rail transportation as well as W&D service there, reported sales of 195.7 billion won in the third quarter, up 13% from a year earlier.
CJ Logistics and Hanjin are also expanding their businesses in the US, the world’s largest economy.
CJ Logistics and Korea Ocean Business Corp. last month broke ground on
a new logistics center in Elwood, Illinois, which is expected to require investments of $416 million. The logistics provider opened
a cold-chain center in Gainesville, Georgia, earlier this month.
Hanjin plans to enlarge a warehouse in New Jersey, its Eastern US hub, by 50% after expanding a fulfillment center in Los Angeles, California by 50% in June.
COUPANG IN SOUTH KOREAN LOGISTICS SECTORThe moves came as logistic firms are losing market shares at home with the rapid growth of Coupang Inc., South Korea’s top e-commerce platform.
CJ Logistics and Hanjin were the country’s largest logistics providers in 2019, with market shares of 47.2% and 13.8%, respectively.
But Coupang Logistics Service Ltd., the e-commerce giant’s unit, has bit into the market share pie.
CJ Logistics’ market share fell to 33.6% last year as Coupang Logistics Service grabbed 24.1% of the local market.
Write to Sun A Lee and Hyun-jin Ra at
suna@hankyung.com Jongwoo Cheon edited this article.
