Concerns about an economic downturn and sluggish domestic consumption have not deterred major logistics companies from estimating good performance last year. The poor performance of the express delivery business was offset by the contractual logistics (CL) and global institutional sectors. CL involves managing the supply chains of other companies. However, analyses indicate that since private consumption is the most significant factor affecting the logistics business, a prolonged consumption slump could inevitably lead to an overall decline in performance.
According to the industry on the 19th, CJ Logistics is estimated to have posted sales of 12.195 trillion won and an operating profit of 518 billion won last year. This represents an increase of 4% and 8%, respectively, compared to the previous year. Although the operating profit in the express delivery institutional sector is expected to decline by about 6% to around 231 billion won, rising profits in other sectors are anticipated to contribute to overall performance growth.
CJ Logistics' sales in the CL business last year are projected to have increased by 5% year-on-year to 2.988 trillion won, while operating profit is expected to rise by 26% to around 182 billion won. The global institutional sector is also expected to see sales and operating profit grow by about 7% and 10%, respectively, reaching 4.491 trillion won and 850 billion won compared to the previous year.
Hanjin Logistics is also analyzed to have improved its performance last year despite the sluggish express delivery institutional sector. Hanjin's total sales last year are estimated to be around 2.980 trillion won, marking a 6% increase compared to the previous year, while operating profit is projected to be 134 billion won, reflecting a 10% increase. Although sales in the express delivery business institutional sector rose by 2% year-on-year to 1.412 trillion won, operating profit is expected to have dropped by about 9% to 239 billion won. Nonetheless, strong performances in the global business and logistics sectors, including land transport and cargo handling, have improved profitability.
Hanjin's global business sales last year are estimated to be about 500 billion won, representing an approximate increase of 37% compared to the previous year, while operating profit is expected to rise to around 9 billion won, reflecting an increase of about 82%. Sales in the logistics and other business institutional sectors are projected to increase by 5% year-on-year to 1.402 trillion won, with operating profit expected to rise to around 114 billion won, marking an increase of about 31%.
Lotte Global Logistics, an unlisted company, is also expecting similar levels of performance improvement. A representative from Lotte Global Logistics noted, "The sluggish performance in the express delivery institutional sector is equally affecting us," adding, "We believe that revenues and operating profits have increased compared to the previous year due to strong performances in other business sectors."
However, if the sluggish consumption persists, the logistics industry, which is heavily reliant on domestic business, will inevitably suffer. As of 2023, CJ Logistics' domestic business sales accounted for 63% of the total. Hanjin and Lotte Global Logistics also derived 83% and 77% of their total sales, respectively, from domestic operations. A representative from the logistics industry stated, "Logistics demand can only follow consumption," adding, "If the sluggish domestic consumption situation continues, the performance will inevitably worsen, excluding the global business sector."