South Korea part 3: From export champions to masters of logistics

Some aspects of South Korea’s supply chain may come under pressure as logistics requires more value than just shipping constant high volumes

Even if South Korea is displaced from its top-three spot on the global export podium, it will remain important for logistics. The country’s vehicle logistics are notable for their speed and flexibility. At Kia’s terminal alone at Pyeongtaek port, an export manager reveals that around 55 PCTC sailings for Eukor and Glovis leave the docks each month. Eukor president Craig Jasienski notes that Kia’s proximity to export hubs in north Asia, including Japan and China, allow for high cargo utilisation and frequency of sailings.

Although Hyundai and Kia have increased regional production, Korean exports move to nearly every country, a diversity of trade supported by free-trade agreements. Mexico, despite its many such agreements, still sends most vehicle exports north to the US and Canada, usually by rail. India and China, meanwhile, remain export minnows for vehicles compared to Korea. 

South Korea is also an important exporter of heavy commercial equipment and vehicles. Hyundai Glovis is targeting more of this business for its PCTC fleet, says Sang Sok Suh. Meanwhile, with the decline in GM Korea’s exports, Höegh has been focusing on this area, including high-and-heavy, breakbulk and project cargo. According to head of commercial Trond Sjursen, the decline in Höegh’s South Korean business is expected to stabilise this year thanks to growth in these segments. “We are starting to see some traction, including in the rail business, machine tools and machinery,” he says. “We are building up a competence in moving oversized cargo out of Korea.”

Despite some decline in volume out of South Korea, there are logistics capacity constraints. Kia’s terminal at Pyeongtaek, which has capacity to park 9,000 vehicles, is nearly full. 

“We need to be on our toes constantly to keep up with the capacity and be very careful with the space that we have,” says one manager, who does not wish to be named. 

The question for South Korean carmakers and logistics providers is how their vehicle logistics will evolve beyond the pure capacity and cost control that characterised an era of ever-growing exports. With those days gone, and Hyundai and Kia battling profit declines, even more pressure on costs is likely. However, as brands look to push upmarket, getting a better handle on inventory, product visibility and production planning across the supply chain will be important. 

See more at http://www.automotivelogisticsmagazine.com/intelligence/south-korea-part-3-from-export-champions-to-masters-of-logistics