Domestic transport costs of 9.9% are 1.3~2x higher than in competitive countries

Domestic companies still pay higher transportation costs than in other countries. Although the costs recorded the lowest proportion since 1994, it is 2 times higher than in Japan. Domestic transportation still remains uncompetitive due to high logistics cost.

According to research conducted by the Korea Chamber of Commerce & Industry (KCCI) and the Ministry of Commerce, Industry and Energy (MOCIE), on the actual conditions of companies?logistic costs in 2004 that targeted 556 manufacturers and distribution companies, domestic companies?logistic costs on all sales decreased to 9.9% last year, as compared with 11.1% in 2001. But 9.9% is still 1.3~2 times higher than in Japan or the U.S..

By company size, the cost for large ones was 9.8%, similar with 10.1% for small and medium sized ones. By type of business, manufacturing companies decreased costs more than distributing companies.

Logistic costs include transportation fees (52.7%) that make up more than half of the total cost, followed in order next by storage fees, stock management fees, packing fees, stevedoring fees, logistic information and management fees.

Meanwhile, domestic companies paid 69.5% in logistic costs for sales, and 16.3% for supply costs, 11.8% for internal costs, 1.5% for returned goods and 0.9% for waste disposal. As compared with 2001, the costs for sales decreased a little, while internal costs increased.

Companies?expenses were paid by themselves (57.3%), which is a little more than their outsourcing costs (42.7%). As compared with 2001, the costs for outsourcing increased by 8.9% from 33.8% to 42.7%.

Costs for domestic logistics were 73.6% and for export logistics, 24.6%. Domestic costs went from 77.6% in 1999 to the current 73.6%, while export costs went from 22.4% to 26.4%.

Companies pointed out that logistic costs increased as compared with sales of the previous year (2003), with lease costs increased (29.7%), oil costs increased (20.5%) and labor costs increased (16.8%).

By type of business, oil costs were an important factor for manufacturers. For distribution companies, their logistic costs increased due to increased transportation, lease and labor costs.

Meanwhile, companies decreased logistic costs as compared with sales of the previous year, citing goods in stock decreases, labor cost decreases and logistic system improvements.