South Korea’s delivery costs are notably lower than those in many leading countries, a factor often cited as contributing to the slim profit margins in the logistics sector. Despite this, local firms are ramping up investments to compete with their United States and Japan counterparts. However, there are concerns that the financial burden might intensify due to the longstanding downward trend in local delivery charges.
Industry data from Feb. 13 shows that the average delivery cost per package for American logistics giants FedEx and UPS was approximately $11.29 (15,000 won) in the previous year. This figure is almost seven times higher than the average delivery cost in Korea, which is $1.62 (2,156 won). Moreover, it is more than half the cost of services like Germany’s DHL and Japan’s Yamato-Sagawa, which charge around $4.14 (5,500 won).
The gap widens further when comparing delivery costs to the minimum wage in these countries. In the U.S., the average delivery cost represents about 80% of the minimum wage, while in Japan, it exceeds 60%. In Korea, even the highest delivery cost, charged by CJ Logistics, the market leader, amounts to merely 20% of the minimum wage.
Internationally, firms have been incrementally adjusting courier charges to align with inflation and rising wages. Conversely, in Korea, the price for parcel delivery has dropped from around $5.27 (7,000 won) in 1990, at the dawn of the parcel delivery era, to about 70% of that value in 2023. Over the same period, the minimum wage increased by 1,294%, from $0.52 (690 won) to $7.24 (9,620 won).
As Korean logistics businesses push for global market penetration, they persist in their investment strategies to maintain local competitiveness. As an infrastructure-intensive sector, parcel delivery necessitates ongoing facility maintenance and expansion. Despite integrating some automation, the industry relies heavily on human labor for tasks like loading, unloading, and sorting.
Like global giants FedEx and UPS, Korean firms allocate significant human resources to these essential operations. Rising societal expectations for better treatment and benefits for delivery workers contribute to increased costs. Moreover, there is an increasing demand to expand services, including weekend and scheduled deliveries.
A logistics industry insider said, “In Korea, courier services have become a ubiquitous social utility, yet the rate of price increases has lagged behind other services. It’s essential to establish courier fees at a reasonable level that reflects societal benchmarks, as is the case in advanced economies, to enhance consumer convenience and foster the growth of the distribution sector.”
