The logistics costs in domestic companies are reported to account for 10% of total sales. There is a comment that such high costs result from market domination and inefficient operation by conglomerate(Chaebol) affiliated logistics companies.

According to the recent VIP report of 'The problems in domestic logistics industry and plans to upgrade the efficiency' published by Hyundai Research Institute(HRI), the proportion of logistics cost in the sales has appeared to be higher than that of developed countries. The concrete figure shows that Korea 10.8%, the US 7.6% and Japan 8.6%. Astonishingly the gap of the proportion in non-metallic industry between Korea and Japan turns out to be more than 6 times as shown Korea 16.8% and Japan 2.6%.

Even in the latest Logistics Performance Index by country released by the World Bank, Korea only ranks 21st getting 3.7 points out of 5. Japan ranks 8th and then the US follows.

The report points out that high logistics cost in Korea is inescapable as it is difficult to specialize logistics firms and foster them  hampered by conglomerate-owned logistics enterprises. In the respect of supply, the report says, low value added business structure due to the lack of specialized logistics firms has brought about that result.

Another factors which influenced high logistics cost in the report include; △poor effect on the efficiency of logistics △high dependence on roads and consequently excessive transport cost △postal courier service's participation in private market and consequential formation of unfair competitive landscape.

It is also advised that Korea has to find its own solutions for efficient logistics system. There are two types of process Korea could refer to as regards how to advance logistics industry. One is enterprise-led institution as shown in German and the US's cases. DPWN, former German Postal Service, gained a foothold through privatization of public institutions and M&A while the US's logistics firms have grown as global enterprises entirely relying on their own efforts. The other is government-led type such as Singapore and Japan.

The specialized American logistics enterprises like UPS and FedEx expanded their services and networks by implementing integrated transport management, designing logistics system M&A, opening branch offices and partnership. Germany laid a foundation on worldwide transport service after acquiring Danzas, DHL and Exel(3PL) sparked by privatization of DPWN.

Singapore has pushed policies that expand logistics infrastructure and promote its demand based on the strong government support. Further, a lot of incentives and aids were provided to the private sector concerning certification of specialized logistics firms and informatization of logistics system.

Japan is another case of providing government support in order to foster specialized logistics companies. They help small logistics firms switch into 3PL business and put efforts to cultivate logistics experts.

The report suggests that Korea should set up and operate so called 'integrated logistics performance management system' if the nation wants to achieve enhanced logistics infrastructure. Relevant laws and institutions need to be reformed to support and nurture specialized logistics enterprises.

The fair market competition system, privatization of ePost service for instance, should be established to raise growth potential for logistics industry and the companies also have to make a lot of efforts to jump up to global level by reinforcing service competitiveness and expertise, the report stresses.