A Study On The Problems And Improvement Strategy Of Railway Logistics In Korea

Korean Railway (Korail) has played an important role for passengers and freight transport through the middle of 20th century; however, according to the rapidly changing logistics environment, the competitiveness of railroad logistics has gradually weakened because the Korean Government has given much more weight to policy concerning road transportation.The data clearly shows that freight traffic allotment via roadway has continuously increased by 12.2% to 76% in 2004, compared to 63.8% in 1990. On the other hand, the freight traffic allotment by railway has been tending downward and has shown a large decline, dropping by 10.2% to 7% in 2004, compared to 17.2% in 1990. The traffic volume of railway logistics in most foreign countries has also been continuously decreasing due to the inability to meet all the requirements to cope with the rapid change of the international logistics environment.Therefore, the purpose of this study is meant to steer Korail Logistics in the right direction by making a correct diagnosis of the circumstances and policies of overseas logistics industries, and the present condition of Korail Logistics in order to adapt to the rapidly changing international logistics environment and to reconstruct Korail Logistics which has seen increasingly depressed times. In conclusion, the main purpose of this thesis is to draw-up some revamped measures to revitalize the Korail Logistics as the'Central Place of Northeast Asian Logistics'by establishing a logistics transportations system to operate a train from Korea to European countries via China and Russia.Korail Logistics has a number of advantages such as high transportation efficiency, safety, punctuality and timeliness, and environmentally friendliness. However, the volume of freight transportation by rail has been steadily decreasing due to the Korean government's pro-road transportation-oriented policies which caused a shortage of resources for railway logistics infrastructure, inability to deliver door-to-door service, the increase of untimely"just-in-time"services, and so on. Other main culprits to the decrease in rail fright transport are likely to have stemmed from these problems and difficulties that companies encounter when they transport their products by rail.However, according to an increase of social economy expenses, such as national distribution costs, environmental issues, operating expenses of automobiles, etc, railway transportation systems are forecasted to be an ever-important strategic transportation method for the 21st century. Since the 1990s major European countries and Japan have given top priority regarding transportation policy to railway transportation. ASEAN, along with China, is also expecting the unification of economies by the connection of the continental railway.Railway appeared for the first time at the beginning of the 19th century. Its importance has resurfaced as the importance of environmentally friendly transportation becomes controversial and pivotal issue of the 21 century. As a result, the importance of railway has become a greater priority and will bring a new'Renaissance of railway'to Korea in the near future. In addition, as a result of the Kyoto protocol and economical cooperation between North and South Korea there is an atmosphere of reliance and peace. Consequently, the possibility and prospect of connecting an international railway is very hopeful. Korea also enjoys a geographical advantage as it is located between northeast Asia, central Asia and Europe. Therefore, Korail Logistics can lead in the international railway logistics network. All these facts could help make Korea become a more logistically advanced country.To strengthen its competitiveness, this thesis makes four alternative proposals for the fundamental remedy of the Korail Logistics systems through review and analysis of the difficulties which have caused the stagnation of railway logistics: strengthening its service system to build up the total railway logistics service, innovation of the railway logistics business system, building up the cost reduction operating system, and a revolution of the railway logistics transportations system.Korail is currently experiencing difficulties because of the road oriented policy. However, Korean railway logistics industry is just entering the golden age due to the many advantages of the railway industry. It is thought that logistics transportations by rail will play a greater role into the 21st century. Taking advantage of this trend, Korail should boost its competitiveness in rail logistics and industry as part of its efforts to gain a foothold in the railway logistics and industry. It should not only expand its investment plans to leverage its advantages but strengthen its position as an alternative transportation in the 21st century.First of all, Korea should adjust the allocation of investment which places too much emphasis on road transportation, increase its investment on rail and harbors in order to realize its goal of strengthening its competitiveness, and replace the outdated railway systems to cement reform.Secondly, in order to strengthen the railway competitiveness and steady efforts for a developing railway Korail must concentrate on introducing and applying high logistics technology of advanced foreign countries and developed management skills of the private sectors into Korean's rail logistics transportation rather than relying upon management under somewhat inefficient government controlled systems. If the restructuring of the Korean rail industry is successful it will accelerate and advance not only the relations of the North and South and the operating service for continental rail links, but also the revitalization of Korean rail logistics. This will prove to be an invaluable boon for Korail Logistics.Rail transportation has merits that satisfy the essential requirements of the logistics industry which are speed, accuracy, low cost, and the competitively advantages in bulk and long distance transportation. Besides, because of Korea's geographical advantage, after NAFTA(North America Free Trade Agreement) and the EU(European Union), Northeast Asia is the world's third-largest economic bloc and handles 30 percent of the world's freight cargo. Considering the rapidly rising industrial countries like China, India, Vietnam, the logistics market of the Pacific Rim will become the fulcrum of the world logistics. So for the sake of securing competitiveness, Korail should provide a high-dimensional logistics service which can make the utmost use of economical value and open up a new world market linked between Northeast Asia and the world by taking advantage of the Korean peninsula's geographical advantage and an outstanding logistics infrastructure.However, if these solutions and reformations of railway logistics systems are not performed at the proper opportune time it will cause a negative influential effect on railway logistics and industry. So it will require ceaseless efforts in order to achieve the"National Strategy for the 21st century", called'Renaissance of Railroad'.The Korean government should be intensively strengthening internal development capabilities and as the Northeast Asia business hub it will bring about Korea's competitiveness on the world stage.With almost no money invested in upgrading the rail system in recent years the quality of Korean railroad infrastructure has declined sharply. Therefore, unless the government and Korail discuss ways to revamp the logistics business environment, such as wide deregulation to help jumpstart investment for the rail sector and improve logistics infrastructure up to par with international practices, Korea rail logistics does not stand much chance when pitted against world competitors.Accordingly, continuous work both for reform and improvement of the rail logistics system will invigorate the competitiveness of the rail logistics through a rail industry revival and help the unification between the North and South.