Invest Korea

Korea is home to Busan Port, the world's second largest transshipment port, and Incheon International Airport, the world's third largest air freight forwarder. The time required for import and export is fast and the cost is low, making it easy for companies to trade.

Korea's logistics industry grew rapidly in quantity until the 2000s, thanks to rapid economic growth and its export-oriented economic structure. In the 2000s, the industry grew in quality, thanks to the rise of the Chinese market and the government's investment in logistics infrastructure (Incheon International Airport, New Busan Port, Inland Logistics Base). In the case of domestic logistics, the freight car transport market is in charge of domestic logistics, and the rail freight market has a very weak structure, due to narrow land space and the disconnection of land routes from the Asian continent because of North Korea. On the other hand, international logistics are exclusively handled by air and shipping, and there is no railroad use.

The international logistics industry centered on the metropolitan area (Incheon Port, Incheon International Airport) and the Busan area (Busan Port) has developed, thanks to Korea’s peninsular geography (three sides of the sea), the geopolitical location between China and Japan, and an export-oriented economy. In addition to the transportation network, logistics infrastructure, such as airports, ports, and inland logistics bases, is concentrated in the Metropolitan-Busan logistics belt.

In 2019, the number of companies, the number of employees, and sales in Korea's logistics industry all increased compared to the previous year. The number of companies was 217,000, the number of employees was 596,000, and sales reached KRW 92.4 trillion. The number of companies (4.0%), the number of employees (1.4%), and sales (3.2%) all increased, thanks to an increase in the volume of goods, such as daily logistics, the expansion of logistics, and the establishment of logistics-related information systems. In the cargo transportation industry, the number of companies (4.3%↑), the number of employees (2.6%↑), and sales (2.3%↑) all increased compared to the previous year. In the logistics facility operation business, the number of companies (0.4%↑), the number of employees (2.5%↑), and sales (4.4%↑) all increased. The number of logistics-related service companies (12,000) and the number of employees (85,000) decreased by 0.2% and 6.0%, respectively, while sales (KRW 17.1 trillion) increased by 5.2%.

Foreign direct investment in Korea's logistics and distribution industry was USD 1.83 billion in 2020. Foreign direct investment in transportation and warehouse (logistics) increased by 38.7% compared to the previous year, out of which 92% was greenfield investment. A number of countries, including Hong Kong, the US, China, Singapore, Germany, and the UAE, have entered Korea.

Foreign direct investment in Korea's logistics industry (transportation and warehouse) was USD 6.32 million with 44 cases in 2020. The total amount raised over the past seven years has reached USD 3.15 billion. The investment scale has shown some fluctuations as it is affected by the investment attraction environment (policy, facility, market size) of neighboring countries as well as the economic conditions inside and outside the country.
From 2011 to 2013, the amount was as low as USD 66 million to USD 143 million, but over the past seven years, it has risen sharply to USD 300 to 600 billion, showing a clear stabilization trend at the same level. In terms of the investment scale (based on the reported amount) by investment type, the M&A type accounted for 17%, while the greenfield type accounted for an absolute proportion of 83%.

The country that made the most investment (based on reported amount) in the Korean logistics industry over the past seven years (2014-2020) was the US (USD 1.70 billion), followed by Singapore (USD 340 million), China (USD 308 million), the Netherlands (USD 247 million), the Virgin Islands (USD 142 million), Hong Kong (USD 69 million), and Japan (USD 67 million). Investment made by these seven countries accounted for 91.3% of the total investment in the domestic logistics industry.

In terms of the investment scale, the US has invested USD 300 million for two consecutive years since 2019, followed by China with USD 100 million.

Korea's logistics policies and detailed action items are being prepared in accordance with the National Logistics Master Plan (10 years).
According to the National Logistics Master Plan (2021-2030) announced in July 2021, Korea has six major strategies aimed at establishing itself as a leading global logistics nation through smart and digital innovation in the logistics industry and the creation of a win-win ecosystem.

Seven inland logistics bases and complex logistics terminals, which serve as bases in the national logistics system, are in operation in five major regions (the metropolitan area, Busan area, central area, Honam area, and Yeongnam area). A total of 30 logistics complexes for shippers and specialized logistics companies have been designated and are in operation nationwide (total area: 12 million ㎡).

Most logistics companies are distributed around free economic zones and free trade zones, where benefits, such as duty drawback, tax reduction and exemption, and infrastructure, are available.
Starting with Incheon in 2003, a total of nine areas have been built and are in operation, Busan/Jinhae, Gwangyang Bay Area, Gyeonggi, Incheon, Daegu/Gyeongbuk, Chungbuk, the East Coast Area, Gwangju, and Ulsan. A total of 6,025 domestic and foreign logistics companies entered free economic zones (as of 2020), and logistics and clusters are formed in Incheon, Busan-Jinhae, and Gwangyang Bay, where international logistics ports are located.