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Current Status of Korea’s Smart Logistics Industry
The Korean smart logistics market is rapidly growing due to increasing demand for cost effective logistics and supply chain solutions from various industries. The rising expectations from customers and logistics cost management are playing an important role in shaping the future of the logistics market. Technological development in artificial intelligence, IoT, and blockchain are changing the market ecosystem. Increasing data volume of the growing E-commerce market and digital transformation are expected to serve as a crucial factor in driving the growth of the smart logistics market.
Trends of Investment in Smart Logistics Facilities by Korean Companies
Looking back on the trends of automation equipment application in Korean logistics centers over the past 10 years, Multi Stacker Crane (MSC) and Multi Shuttle System (MSS)—smart automation storage system—have been actively introduced in response to the need for highly-efficient logistics centers to accurately and swiftly handle increased volume of goods and small-quantity low-frequency multi-items.
|Automation Level||Step||Step 1||Step 2||Step 3||Step 4||Step 5|
|Key Equipment||Information||ERP, WMS||WMS, WCS¹||WMS, WCS
Real-time Monitoring System
|WMS(AI), WES²||WMS(AI), RMS⁸|
|Picking||Manual Picking||DPS³, DAS||DPS, DAS⁴, SPS⁵||DPS, SPS, RPS⁶, MPS⁷||SPS, RPS, MPS|
Self Rack with AMRⁿ
Self Rack with AMR
|Sorting||Manual Conveyor||Slide Shoe, Tilt Tray||Slide Shoe, Cross Belt||Cross Belt, AMR||Cross Belt, AMR|
|Application Cases||Dongsuh Foods, Daehan Flour, JW Pharmaceutical, POSCO, Hankook Tire, KT&G, Lotte Chilsung Beverage, Woongjin||Amore Pacific, Emart, SK Chemical, Dongwha Pharm, Samsung Fine Chemicals, Pulmuone, Shinsegae International, Lotte Confectionery, GC Pharma||Emart 24, DAISO, Lotte Mart, Lotte Super, SK Innovation, OurHome, Shinsegae Food, Emart Mall, BGF Retail||Dongwon Industries, SK Networks, Lotte Chilsung Beverage, E-Land, UNIQLO, Hyundai Department Store||Automation market of Intelligent Level, centered on Wholesale distribution & Online is expected|
|Industry||Food/Pharmaceutical/Steel/Tire||Chemical/ Pharmaceutical/ Food/Retail||Wholesale Distribution/Online||Wholesale Distribution/Apparel/Online|
* Source: Paradigm Shift in Logistics Center Establishment, SFA, Park Jung-hyun, 2022, Partial modification of contents
All in all, the distribution and logistics centers are expected to actively adopt various smart logistics automation equipment to improve productivity and resolve the shortage of manpower.
Korean New Deal Policy and Smart Logistics Industry Promotion Policy
This can be seen as a plan which considers the aging population, decreasing productive population, urban concentration, smart urbanization, growing middle-class, and increasing importance of quality of life.
|Vision||Logistics Industry: Leap into world’s leading logistics country through creation of win-win ecosystem and smart•digital innovative growth|
|Goal||• Advanced and Digitalized,
• People-centered/Decent jobs
• Shared/Connected convergence infrastructure
• Secure the industry’s response capability to the future
• Sustainable environment
•Secure global competitiveness
|Strategy||• Strategy 1.Establish the advanced smart technology-based logistics system and work towards digital transition
• Strategy 2. Establish shared/connected infrastructure and network for seamless logistics services
•Strategy 3. Prepare people-centered decent jobs and create high-quality logistics services from the perspective of demand
• Strategy 4.Create sustainable logistics industry environment
• Strategy 5. Strengthen the competitiveness and improve the fundamentals of the logistics industry in order to respond to new demand
• Strategy 6. Strategic expansion to overseas market in line with changes in global economic map
Prospects for Korea’s Smart Logistics Market
The system where the national government gives the ‘Smart Logistics Center Certification’ to logistics facilities equipped with excellent efficiency, safety, and environment-friendliness through deployment of advanced and automated facilities, equipment, and systems, and provides them with administrative and financial benefits, has been in place since April 2021. The certification enables low interest-rate loans needed for the construction of logistics centers or purchase of advanced and automated equipment, as well as the government’s support for up to 2%p of interest cost. For such benefits, it attracts increasing attention from relevant companies, and is expected to play out as a positive factor in expanding investment in smart logistics infrastructure.
The continued growth of the e-Commerce market, changes in the market that require quick delivery, shortage of manpower on the logistics site, and increasing demand for the work environment and safety are likely to accelerate the transition to smart logistics. In addition, the automation market growth of the intelligence level is expected, led by the wholesale distribution and online sectors.
By Chan-Seok Park (firstname.lastname@example.org)
MIRAE Logistics Consulting
< The opinions expressed in this article are the author’s own and do not reflect the views of KOTRA.>