A nuclear-free Korean Peninsula opens up new trade opportunities for South Korea.
This week was unprecedented in Korea for many reasons, notwithstanding the peace agreement reached to end the Korean War when President Moon of South Korea and President Kim Jong Un of North Korea met in the “peace village” located within the Demilitarized Zone (DMZ).
Beyond the common goal of complete denuclearization and a nuclear-free Korean Peninsula, the agreement also promises economic cooperation and increased trade between the two countries. Since South Korea is effectively land-locked by the DMZ , access to new markets via road and rail through North Korea opens up all sorts of additional trade and tourism opportunities.
For South Koreans in the logistics industry, connecting North and South Korean railways to form a freight corridor allows them to ship freight direct to markets as far away as Europe. China is particularly invested in the Moon-Kim peace agreement as South and North Korea are an integral part of what many consider to be China’s project of the century – the “One Belt, One Road” trade network initiative linking railroads and shipping lanes with 70 countries across Asia, Africa, Europe, and Oceania. The “Belt” part seeks to recreate the famous Silk Road trade route and the “Road” refers to ocean shipping lanes. This ambitious project has already begun operation with the first train completing a 12,000km/7,500 mile 18-day journey between London and Yiwu in China’s Zhejiang province in April this year.
This historic Moon-Kim agreement also coincides with what’s known in the west as Korean Thanksgiving or Chuseok locally, translated as “Autumn Eve” which occurs on September 24th this year. Similar to the American Thanksgiving, Chuseok is a major harvest festival and three-day holiday where family members come together to give thanks.
According to the Center for Global Education at Asia Society Korea’s annual thanksgiving holiday, “is one of the biggest migration events in modern Korea. Over half of the population of 52 million visits families and ancestral graves”, and with 83% the population living in urban areas and cities, massive traffic jams are a common occurrence on freeways throughout the country.
For logistics companies it is also their business period of the year forcing them to increase staff levels by as much as 30% as residents send gifts to relatives all over the country. So busy in fact, Korea Post ships so much freight this time of year their normal distribution and cross-docking facilities are unable to cope with peak demand.
This week in Seoul, postal delivery riders created curbside cross-docking operations taking thousands of parcels delivered by truck and stacking them into delivery routes on the sidewalk of Seoul’s busiest downtown streets. Lunchtime shoppers and workers passed by as if it’s a normal daily occurrence. Inner-city parcel deliveries in Seoul are mostly undertaken by motorbike and as drivers are out on their final-mile runs, the remaining parcels sit curbside safe but unattended until around 6pm when they’ve all been delivered.
The Korea Herald reports CJ Logistics, Korea's largest logistics company, “expects to see about 25 percent more parcel volume year-on-year during the Chuseok holiday according to a CJ Logistics official”.
Along with Lotte Global Logistics, CJ Logistics recently joined the Blockchain in Transport Alliance (BiTA) and is preparing to provide an innovative logistics solution by utilizing blockchain technologies. Joining BiTA will allow the company to cooperate on the development of standards for blockchain framework in Asia. In conjunction with BiTA’s Singapore-based team, BiTA was also in Seoul this week presenting at the Real Estate Blockchain Expo to discuss global blockchain standards in the warehousing, final mile and home delivery sectors of the global supply chain.
The CJ Logistics operation includes 8,000 staff, 5,000 vehicles, 102 warehouses operating in 22 countries enabling the company to set a record delivering of 1.05 billion parcels in 2017. It was the first time any company in the parcel delivery industry delivered over 1 billion parcel boxes.
CJ Logistics are also heavily invested in China’s “One Belt, One Road” mega-project having commenced their international “Iron Silk Road” intermodal transport service between Europe and Asia on May 2nd, 2018. According to CJ Logistics, “Utilizing Trans China Railway (TCR) to Europe will be 20% cheaper than air transport and will be three times faster than sea transport”.
In addition to its current routes, “CJ Logistics plans to expand its rail freight network to 52 routes between China and Europe and 74 routes from Europe to China. Future plans also include sea transport with CJ Logistics' plans to provide a new integrated multimodal transportation service connecting Eurasia, Indochina and India”, according to the company. CJ Logistics also state, “the rail freight transport market between Europe and China is showing an annual growth rate of 10 to 20%”.
South Korea is an economic powerhouse and according to the World Shipping Council, nine of the world’s ten most busiest ports are in Asia with South Korea’s city of Busan ranking number five. This week’s events including the Moon-Kim denuclearization peace summit cannot be understated, especially with the possibility of the road and rail link being opened between north and south.
The combination of the two countries makes for a Korean peninsula population of around 77 million people which is more than the populations of strong economies including France and the United Kingdom, placing it firmly in the top 10 world GDP rankings.