Is Logistics a Labor-Intensive Industry? CJ Changed It... A 10-Year Look at the Oldest Company, Daehan Tongun

CJ Logistics, Sales and Profits Rise Since Joining CJ Group in 2013
Adoption of AI and Big Data Advanced Technologies...Increasing Global Share

It has been 10 years since CJ Logistics merged with CJ Group's logistics affiliates and started anew as an integrated corporation. Founded as a state-owned enterprise in 1930, this company is considered the oldest logistics company in South Korea. After going through various ups and downs, the company was incorporated into CJ Group in 2011. In April 2013, it merged with GLS, a logistics affiliate within the group, becoming the integrated logistics affiliate of CJ Group.

On the 1st, the company stated, "Since the integration with CJ Group in 2013, sales have tripled and operating profit has increased sixfold over 10 years," adding, "Both sales and operating profit have set record highs every year for the past decade." The company's sales grew from around 3.7 trillion KRW in 2013 to 12.1 trillion KRW last year. Operating profit increased from 4.1 billion KRW to 411.8 billion KRW during the same period, an increase of about 350 billion KRW.

The shuttle AGV applied by CJ Logistics last year at the Icheon 1 Fulfillment Center. It moves autonomously and adjusts its height within the storage space composed of high shelves 4.7 meters tall to place or retrieve products.

The core business has also changed. Until 10 years ago, it was mainly focused on cargo handling and land transportation, but since then it has expanded comprehensively into parcel delivery, cross-border parcel delivery (CBE), and global business. The contract logistics (CL) sector, which was the main business, accounted for half of total sales in 2013 but its share dropped to one-quarter last year. Meanwhile, the global division's sales share increased from 28% to 42%.

The annual parcel handling volume, which was 500 million boxes in 2013, rose to 1.7 billion boxes last year. The number of employees increased from 8,400 to 20,000, and the number of locally hired staff at overseas subsidiaries grew from 2,900 to 13,700, making it a truly global company.

The company explains that the significant changes over the past decade stem from CJ Group's determination to make the logistics industry a new growth engine for the group from the time of acquisition. The Gonjiam Mega Hub Terminal, whose construction began in 2016, is a representative example. At the time, the industry regarded CJ Group's investment exceeding 400 billion KRW as a 'reckless scale.' The Gonjiam Mega Hub, which processes 1.7 million boxes per day, surpassed the daily processing capacity of most competitors at that time.

However, after the investment in the Gonjiam Mega Hub, the parcel delivery market grew rapidly. The gap widened with competitors who delayed facility investments to handle the surging volume. The operating profit margin of the parcel delivery sector, which was only 2-3%, rose to 4.8% last year. Especially when parcel volumes surged by about 20% due to COVID-19, the foresight shone even brighter. The company is praised for having preemptively established parcel delivery infrastructure, minimizing inconvenience in industrial sites and the daily lives of the public.

A CJ Logistics official said, "The technological gap with competitors has widened by 3 to 5 years due to the introduction of the Gonjiam Mega Hub and automated sorting systems like wheel sorters."

CJ Logistics EHS Situation Room. It is a type of integrated control center that connects closed-circuit (CC) TVs installed at workplaces to monitor site conditions scattered across the country at a glance. [Image source=Yonhap News]

Since shortly after integrating Daehan Tongun, CJ Group has focused on the global supply chain (SCM). The company grew through global mergers and acquisitions. Starting with China in 2013, it acquired excellent logistics companies worldwide, including in the United States, India, and Vietnam. The number of global bases increased from 35 in 17 countries 10 years ago to 112 in 35 countries today. Global sales rose from 1.0705 trillion KRW to 5.0612 trillion KRW.

Sales in the United States, which were only 98.7 billion KRW 10 years ago, increased more than tenfold to 1.2628 trillion KRW last year. Although the company sold the Chinese company Logen, acquired in 2015, in early 2021, the move turned out to be a masterstroke due to the spread of COVID-19 and border closures in China. The company earned a profit of around 140 billion KRW from the resale.

In the past, the logistics industry was known for its labor-intensive nature, but it is now considered a technology-intensive industry. CJ Logistics has contributed significantly to this transformation. The CJ Logistics TES Logistics Technology Research Institute, expanded and reorganized in 2020, develops and commercializes advanced technologies centered on robots, artificial intelligence (AI), and big data. The Gunpo Smart Fulfillment Center, unveiled last year, attracted attention as the first in Korea to commercialize advanced unmanned technologies such as AGV, digital twin, and box recommendation systems. The company aims to become a global logistics company by its 100th anniversary in 2030.

A company official said, "Over the 10 years since integration, we have built a foundation to become a global comprehensive logistics company beyond being number one domestically," adding, "We will actively pursue a leap to become a global major player by 2030, the 100th anniversary of our founding."

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