South Korea part 4: Full steam ahead

A mix of carrier, 3PL, 4PL integrator and central logistics purchaser, Hyundai Glovis’s strength and expansion rely on third parties as well as Hyundai-Kia

The rise of Hyundai Glovis has been the logistics parallel to Hyundai and Kia’s emergence as production and export superpowers. The company has solidified its position as a supply chain integrator across the Hyundai Motor Group, making use of its increasing purchasing power in negotiating logistics services, investing in direct shipping, port and trucking equipment, and a set of IT systems designed specifically for Hyundai-Kia.

As part of the Hyundai Motor Group, Glovis moves to the beat of the carmakers’ drum. Last year, it incorporated a Mexico subsidiary to handle Hyundai Motor sales in the country, with an eye on the 2016 launch of Kia’s plant in Monterrey. Glovis also has fleets of bulk and pure-car-and-truck carriers (PCTCs), which last year carried 891,000 Hyundai vehicles and 420,000 Kia exports out of Korea, India, Turkey, the Czech Republic and Slovakia. Hyundai Glovis plans to expand its ro-ro fleet from around 60 vessels today to 100 by the end of the decade, according to Sang Sok Suh, director of the planning and strategy group at Hyundai Glovis. 

Such expansion is not calculated solely on Hyundai and Kia’s growth, especially as the OEMs’ regional production capacities are growing faster than their exports from South Korea. Rather, a significant share of Glovis’s PCTC volume will be for third party customers, which today make up nearly 45% of the cargo mix. 

Glovis’s total revenue outside affiliated Hyundai Motor companies is now around 27%. “This has grown a lot in the past five years, and our goal is for 50% 3PL volume by 2020,” says Suh, who is based at Glovis’s Seoul headquarters. “The shipping business will be important to reaching this target.”

According to executives at the company’s Glovis America subsidiary, it is even considering entering the short-sea market for North America, mainly for exports out of Mexico. 

Glovis is also expanding its shipping focus by building its first port terminal; the company will invest 72 billion won ($65m) at Pyeongtaek-Dangjin, a major port for finished vehicles located 70km south of Seoul. Glovis expects to eventually handle up to 400,000 vehicles here after operations begin in 2017. That volume will likely include Hyundai and Kia vehicles – both of which currently use existing terminals at the port – as well as high-and-heavy cargo and equipment from other sectors. 

Glovis’s foreign subsidiaries are also encouraged to explore opportunities beyond the group. A recent example was Glovis taking a controlling stake in Poland’s Adampol, which gives it a strategic fleet for Hyundai and Kia, while also connecting it to a portfolio of car brands across Europe and Russia. 

“Hyundai Glovis’s strategy is that ‘localisation is the motor of growth’,” says Suh. “We have more than 30 branches, and they are each chasing business one after the other. Their primary job is to focus on Hyundai-Kia, but they are also very hungry for third party business.”

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