Operation of 'Logistics Facilities' Possible on Urban Railway Idle Sites in the Future

Perspective view of logistics facilities utilizing idle railway land (Photo by Ministry of Land, Infrastructure and Transport)

[Asia Economy Reporter Moon Jiwon] Logistics businesses utilizing idle railway sites near urban areas will be permitted.

The Ministry of Land, Infrastructure and Transport announced that the amendment to the "Korea Railroad Corporation Act Enforcement Decree," which includes logistics businesses utilizing railway assets within the scope of the Korea Railroad Corporation's operations, was approved at the Cabinet meeting on the 13th.

The main point of this amendment is to include logistics businesses utilizing railway assets such as idle railway sites and station sites within the scope of railway logistics businesses to increase domestic railway logistics transport volume and secure the operating company's self-sustainability.

According to the Ministry of Land, Infrastructure and Transport, until now, railway logistics were only allowed for businesses linked to railway transportation, and comprehensive logistics businesses such as warehouse operations were not permitted. As a result, the business conditions of railway operators have been continuously deteriorating.

The logistics transport volume decreased from 41.67 million tons in 2005 to 37.10 million tons in 2015, and 26.28 million tons last year. Operating losses recorded were 318.1 billion KRW in 2005, 225.9 billion KRW in 2015, and 240.9 billion KRW last year. The cumulative deficit since 2005 amounts to 4.4 trillion KRW.

In contrast, domestic land transportation (road), shipping industries, and overseas railway operators are operating logistics facilities utilizing idle sites and facility assets. DB Schenker, a subsidiary of Germany’s Deutsche Bahn (DB), provides comprehensive logistics services including transportation using all modes of transport including rail, distribution network management, and logistics solutions.

Japan’s JR Freight also operates large-scale logistics centers within freight station premises and achieves overall business profits despite transportation business deficits through various comprehensive logistics business initiatives.

With this amendment to the enforcement decree, it will become possible domestically to provide logistics services such as storage, sorting, and packaging by utilizing previously unused assets such as railway sites and facilities near urban areas. This is expected to partially resolve the shortage of logistics facilities amid the recent increase in e-commerce due to COVID-19.

Kim Seontae, Director of the Railway Bureau at the Ministry of Land, Infrastructure and Transport, said, "The expansion of the railway logistics business scope will enhance the utilization of previously unused railway assets and contribute to strengthening the role of railway logistics."

This content was produced with the assistance of AI translation services.