4.6 Trillion won more Paid in Logistics Costs in 1998

The Ministry of Construction and Transportation (MOCT) announced that
recently changes have occurred in the portion of the GDP (Gross Domest
ic Product) occupied by logistics costs. The Bank of Korea changed th
e standard account year to 1995 from 1990, and the United Nations (UN)
began to revise the System of National Accounts (SNA) in 1993. The re
vised GDP index, an important statistical descriptor used in estimatin
g the national logistics costs, is affected by these changes.
According to this logistics cost/new GDP ratio, the logistics portion
occupied 15.4 percent of the GDP of 377,350 billion won after changes,
compared to previous ratio of 16.5 percent of the GDP (351,295 billio
n won) in 1995.
MOCT also said that, based on KOTI's research, the total national logi
stics costs in 1998 were 74.2 trillion. It showed that the logistics c
osts increased by 6.6 percent (4,580 billion won) over 1997 but the in
crease was slowing every year. Also, the logistics ratio over the GDP
was 16.5 percent in 1998, increasing by 1.1 percent over 15.4 percent,
that of 1997.
Logistics costs were classified into several divisions. Transportation
costs, the biggest portion, occupied 67.7 percent (50,244 billion won
) of all logistics costs, stock fees 20.2 percent (14,976 billion won)
, packing charges 1.9 percent (1,411 billion won), stevedoring charges
1.3 percent (961 billion won), information charges 4.6 percent (3,420
billion won) and administration charges 4.3 percent (3,158 billion wo
n).
The national logistics costs increase is explained by the fact that in
ternational cargo transportation fees were very expensive due to a hig
h monetary exchange rate. Ocean transportation charges increased by 4,
128 billion won and air transportation charges by 531 billion won. Sta
gnation and interest rate increases created an additional 474 billion
won in stock fees payments. The increase in the logistics portion of t
he GDP occurred because the National logistics costs increased but the
GDP decreased to 3, 800 billion won.
Thus, the logistics costs increase was caused not by inefficiency in t
he national logistics system but by outside factors stemming from the
IMF era like ocean and air cargo transportation charge increases, stoc
k fee increases due to stagnation, an interest rate increase, and a de
crease in the GDP.