New York, June 03, 2022 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "South Korea Third-Party Logistics (3PL) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)" - https://www.reportlinker.com/p06283214/?utm_source=GNW
Logistics issues such as port congestion due to increased cargo volume and a lack of empty containers appeared to be complicated.
South Korea is advantageously situated between two world-class importers: China to the west and Japan, another Asian economic powerhouse, to the east, by the country relies on third-party logistics for trade. 3PL is the function by which a manufacturer outsources activities related to logistics and distribution. A 3PL company can provide specialized services, such as inventory management, cross-docking, door-to-door delivery, and packaging of products. The market for 3PL services is expected to witness significant growth due to the development of the e-commerce industry.
South Korea is one of the top five 3PL markets in Asia-Pacific. The logistics industry in Korea has rapidly grown over the past ten years, with multinational, major manufacturing, and wholesale companies concentrated on the internal and external efficiency and effectiveness of supply chains to reduce logistics costs.
Prior to the onset of COVID-19, governments put high tariffs on traditional staple foods (7.9%), with more than 90% of food being subject to non-tariff obstacles. The quarantine policy in the early stages of the COVID-19 outbreak resulted in a reduction in agricultural production personnel, the closure of agricultural and fishery products processing companies, and the suspension of logistics and transportation, causing China’s supply of agricultural and marine products and preparations to fall short of demand. In the Asia-Pacific area, South Korea is among the top five 3PL markets. Over the last ten years, Korea’s logistics business has exploded, with multinational, big manufacturing, and wholesale enterprises focusing on internal and external supply chain efficiency and effectiveness to save logistical costs. With the development of e-commerce, the volume of shipments increased and there is a need to continuously increase the demand for 3PL companies to handle the demand, which resulted in competition to deliver groceries of good quality is making retailers seek logistics hubs in the Greater Seoul area.
Key Market Trends
Boom in Air Cargo contributing to 3PL market in South Korea
Export performance by air and sea in 2020 was mixed, as a significantly larger setback occurred. The revenue generated by aviation climbed by 11.4 percent in 2020, totaling USD 183 billion, supporting the 3PL market of the country during the pandemic. Exports of air freight further increased to significantly in the year 2021. In 2021, the exports of high-value-added products such as displays (OLEDs), computers (SSDs), semiconductors, and pharmaceuticals exhibited considerable growth, according to the reputation for higher air cargo exports. On the other hand, even though maritime cargo exports were generally slow, secondary battery exports showed an upward trend that stood out.
The proportion of air cargo exports increased, and in particular, in the case of exports to Germany, the proportion of air cargo exports increased.
In August 2021, Korean Air (largest airline and flag carrier of South Korea) reported a 31% increase in second quarter profit, driven by record revenue at its cargo business, which continues to support the airline amid a lack of passenger flights. The Korean flag carrier said revenue in the second quarter of 2021 rose 16% from one year ago to KRW 1.95 trillion (USD 1.7 billion) and operating profit rose to KRW 196.9 billion. Its cargo division achieved revenue of KRW 1.51 billion, which Korean said was the highest in its history, thanks to companies restocking in anticipation of economic recovery and a shortage of capacity in the shipping industry.
Growth of E-commerce:
South Korea’s e-commerce market ranks among the most developed in the world and has been on sustained growth for the past few years. Supported by the country’s robust technology infrastructure, which ensures the availability of high-speed Internet as well as a significant number of tech-savvy customers. South Korea is the sixth-largest market for e-commerce with a revenue of USD 92 billion in 2021, placing it ahead of France and behind Germany.
With an increase of 14%, the South Korean e-commerce market contributed to the worldwide growth rate of 29% in 2021. Revenues for e-commerce continue to increase. New markets are emerging, and existing markets also have the potential for further development. Global growth will continue over the next few years. This will be propelled by East and Southeast Asia, with their expanding middle class and lagging offline shopping infrastructure.
The biggest player in the South Korean e-commerce Market is coupang.com. The store had a revenue of USD 16.6 billion in 2021. It is followed by ssg.com with USD 1.5 billion in revenue and yes24.com with USD 541 million in revenue. Altogether, the top three stores account for 20% of online revenue in South Korea.Store rankings are based on every store that generates revenue in South Korea. These stores can either have a national focus and only sell in their main country or operate on a global scale. For this evaluation, only revenue created in South Korea was considered.
Competitive Landscape
The third-party logistics (3PL) market in South Korea is fragmented, with a mix of foreign and local businesses such as CJ Logistics, Pants Logistics, and Lotte Global Logistics among the leading competitors. Consistent economic growth, the rapid expansion of e-commerce retailers such as Coupang, Wemakeprice, 11street, G-Market, and TMON, as well as the desire to achieve carbon-neutral operations, are driving increasing demand for third-party logistics businesses. Companies are concentrating on incorporating automation into their processes and upgrading their energy sources in order to reduce their carbon footprint.
South Korean gas stations have partnered with courier service providers, subletting their buildings as logistics hubs, bringing a new dynamic to the local delivery business. Hyundai Oil bank Co., a major refiner in South Korea, has entered into a strategic relationship with Coupang Inc., an e-commerce business, to establish a gas station-based logistics system.
Additional Benefits:
The market estimate (ME) sheet in Excel format
3 months of analyst support
Read the full report: https://www.reportlinker.com/p06283214/?utm_source=GNW
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