Receiving a permit, however, would often take up to a year, and involved the analysis of the previous year’s supply and demand of trucks, and a final decision from Supply-Demand Regulation Committee and both industry and government officials. (image: KobizMedia/ Korea Bizwire)
SEOUL, Aug. 31 (Korea Bizwire) – With Koreans increasingly likely to prefer online shopping over the physical experience, parcel delivery services are among the rapidly prospering businesses in Korea.
Tuesday’s decision to abolish the Supply-Demand Regulation Policy, which made it difficult for service companies to increase their use of smaller trucks (1.5 tons and less), is expected to boost business even further.
The policy was first implemented in 2004 to regulate the indiscrete supply of smaller trucks, requiring companies to acquire government permits to increase their small truck operations.
Receiving a permit, however, would often take up to a year, and involved the analysis of the previous year’s supply and demand of trucks, and a final decision from Supply-Demand Regulation Committee and both industry and government officials.
While the number of parcel deliveries increased by an annual average of 14.6 percent over the past twelve years, only 11,200 and 12,000 new trucks received permits in 2013 and 2014, respectively.
The onerous bureaucratic procedures resulted in the proliferation of illegally operating parcel delivery trucks, which grew to account for 29 percent (13,000) of all 45,000 trucks in Korea. The Korea Integrated Logistics Association (KILA), with major freight transportation companies like CJ Korea Express and Hanjin as members, have repeatedly pushed for policy reforms over the past decade.
With the new policy changes, companies will now be able to receive permits by simply registering their vehicles, with the processing period shortened to just 20 days, allowing them to quickly react to changing demand.
Coupang claimed that because it was delivering products for free, it was not bound by the legal clause regulating the “paid delivery of goods upon a third party’s request”. (image: Coupang)
The biggest beneficiary of the new policy is Coupang, one of Korea’s most popular e-commerce companies. The changes in policy were initially triggered by Coupang’s controversial operation of vehicles that lacked proper permits for its “Rocket Delivery” service.
Rocket Delivery was introduced in 2014, and provides delivery within 24 hours for some Coupang products, free of charge.
Coupang claimed that because it was delivering products for free, it was not bound by the legal clause regulating the “paid delivery of goods upon a third party’s request”. Even so, the company was sued by the KILA in May 2016, which led to an intervention by the Ministry of Land, Infrastructure and Transport resulting in the latest decision to ultimately abolish the regulations for truck permits.
“Once the current permit-based system becomes registration-based, we expect the controversy surrounding our use of unlicensed vehicles to subside,” said a Coupang official.
The KILA also viewed the latest move as a positive change.
“We think very highly of the latest government measures on behalf of the freight transport industry,” a KILA official said. “We expect this to resolve the long-lasting shortage of parcel trucks.”
By Kevin Lee (kevinlee@koreabizwire.com)
