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Strengths of Korean Logistics |
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02_CMS_ Business Opportunities
| Why
is Korea emerging as a regional logistics hub- |
Geographical location
Northeast Asia is a vast market with a population of 1.5 billion, 4 times
that of Europe. In addition, Northeast Asia is emerging as one of the world's
3 leading trade blocs along with EU and NAFTA. Specifically, Northeast Asia's
share of total world trade volume increased from 27% in 1998 to 28.1% in
2000, and is expected to increase to 32.4% by 2010. In terms of global GDP,
Northeast Asia's share is 25% this year, and is expected to increase to
30% by 2020. Strategically positioned as a gateway to China and Europe,
the Korean peninsula is expected to play the role of Northeast Asia's logistics
and business hub when the Trans-Korean Railway (TKR), connecting North and
South Korea is restored and reconnected to the Trans-Siberian Railway (TSR).
Market accessibility - Vast markets nearby
Korea has a great geographic advantage in terms of the market. First, Korea
itself is the world's 10th largest domestic market place. It has huge consumer
base with strong purchasing power. Especially, sophisticated taste for new
technologies makes Korea an ideal test bed for cutting-edge IT products.
In addition, approximately 41 cities with populations of more than 1 million
are within a 3.5 hour flight from Korea. In other words, there are 700 million
people living within a 1,200km radius of Seoul, providing easy access to
large potential markets. Finally, Korea can also serve as a launching pad
for penetrating China, the world's foremost emerging economy, and Japan,
the traditional powerful economy.
Logistics-related infrastructure
Korea has an excellent inland logistics system comprising highways, roads,
and railways that reach every corner of the country. The Korea Train eXpress
(KTX), the world's 5th high-speed rail network, started its service in 2004,
connecting Seoul with Busan and Mokpo. Korea is also expected to become
a passageway to Europe when reconnected to the Trans-Siberian Railway (TSR),
Trans-China Railway (TCR) and Trans-Manchuria Railway (TMR). Once the TKR
is connected to the TSR, TCR and TMR, the present transportation costs between
East Asia and Europe will be reduced by one third.
As for telecommunications, Korea is a world leader in high-tech information
and telecommunications technology, being the first nation to commercialize
CDMA technology. The country also boasts the world's highest high-speed
Internet penetration ratio
Competitive Cargo Handling
According to "Airports Council International," Incheon International Airport (IIA) is ranked 5th in cargo traffic in 2005.
The table below shows the total amount of both international and domestic cargo |
Rank |
City (Airport) |
Total Cargo |
% Change |
1 |
Memphis, TN (MEM) |
3,598,500 |
1.2 |
2 |
Hong Kong, CN (HKG) |
3,437,050 |
10.1 |
3 |
Anchorage, AK (ANC) * |
2,609,498 |
9.7 |
4 |
Tokyo, JP (NRT) |
2,290,346 |
(3.5) |
5 |
Seoul, KR (ICN) |
2,149,937 |
0.8 |
6 |
Frankfurt, DE (FRA) |
1,963,141 |
6.7 |
7 |
Los Angeles, CA (LAX) |
1,928,894 |
1.4 |
8 |
Shanghai, CH (PVG) |
1,856,328 |
13.7 |
9 |
Singapore, SG (SIN) |
1,854,610 |
3.3 |
10 |
Louisville, KY (SDF) |
1,814,730 |
4.3 |
ACI Traffic Data: World airports ranking by total cargo - 2005
Airports participating in the ACI monthly traffic statistics collection.
Total Cargo: loaded + unloaded freight + mail in metric tones.
*ANC data includes transit freight. |
| If only international freight cargo is considered, IIA is ranked 3rd after Tokyo as shown in the table below. |
2005 International freight world ranking
|
Unit: tons |
Rank |
City (Airport) |
International Freight |
% Change |
1 |
Hong Kong, CN (HKG) |
3,443,000 |
10.2 |
2 |
Tokyo, JP (NRT) |
2,230,591 |
(3.2) |
3 |
Seoul, KR (ICN) |
2,137,555 |
1.1 |
4 |
Anchorage, AK (ANC) |
1,990,442 |
5.1 |
5 |
Frankfurt, DE (FRA) |
1,856,947 |
8.1 |
| Source: Airports Council International |
Fast growth in the container handling market
According to "Containerization International yearbook 2005", Korea is ranked 5th in container traffic with 10.9% growth rate, compared to 2002. |
Top 10 in World Container Port Traffic League
|
|
Rank
'03 |
Rank
'04 |
Port |
2005 TEU |
Increasing
rate (%) |
Country |
1 |
(2) |
Singapore |
23,192,000 |
8.7 |
Singapore |
2 |
(1) |
Hong Kong |
22,427,000 |
8.7 |
China |
3 |
(3) |
Shanghai |
18,084,000 |
24.2 |
China |
4 |
(4) |
Shenzhen |
16,197,000 |
18.7 |
China |
5 |
(5) |
Busan |
11,843,000 |
3.1 |
Korea |
6 |
(6) |
Kaohsiung |
9,470,000 |
-2.5 |
Taiwan |
7 |
(7) |
Rotterdam |
9,300,000 |
12.0 |
Netherlands |
8 |
(9) |
Hamburg |
8,050,000 |
14.9 |
Germany |
9 |
(10) |
Dubai |
7,619,000 |
18.5 |
UAE |
10 |
(8) |
Los Angeles |
7,485,000 |
2.2 |
U. S. |
| Source: 2006. 03 CI-online |
| What can Korea offer to foreign investors- |
| Currently, various measures and policies designed to promote foreign direct
investment are in place or under review by the government. For example,
the Ministry of Commerce, Industry and Energy is planning to revise the
Foreign Investment Promotion Act to give expanded and more practical incentives
to foreign-invested companies. Furthermore, Incheon, Busan and Gwangyang
areas, the best candidate cities for logistics investment, were designated
as Free Economic Zones (FEZs) in 2003, thereby being able to offer a more
favorable business environment to foreign investors. All of these measures
are constructive steps toward the nation's goal to become the global logistics
base of Northeast Asia. |
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