The current logistics policies in Korea are exacerbating a livelihood crisis for contract truck drivers. The government must address the oversupply in the freight market, improve freight rate structures, and foster social consensus to build a sustainable logistics system by 2026. Here are the key solutions.
Why is the Korean Logistics Market Oversupplied?
South Korea's freight transportation market faces a structural issue of oversupply, with more commercial trucks than demand. Contract drivers, in particular, bear high fixed costs like fuel, insurance, and maintenance, but limited freight rate increases lead to declining profitability. This situation not only impacts individual drivers but also risks destabilizing the entire logistics service. This problem has surfaced as a significant social issue before, notably in 2003.
This oversupply is often attributed to government logistics and transportation policies that fail to reflect current realities, remaining focused on 'supply control' and 'deregulation.' Past administrations are criticized for neglecting policy blind spots and weakening institutional oversight in managing freight transport permits, vehicle allocations, and freight rate systems, thus deepening market distortions.
Government Policies and the Contract Driver's Income Crisis
Critics argue that the current administration's policies—promoting deregulation, market revitalization, and easier truck permit approvals—have paradoxically led to increased supply, worsening market imbalances. Lenient requirements for transport business permits and straightforward processes for adding new vehicles have continuously flooded the market with unnecessary trucks. This directly contributes to falling freight rates, severely impacting contract drivers' profitability. Furthermore, the disconnect between policy decisions and on-the-ground realities persists, partly because the voices of transport unions like the Cargo Workers' Solidarity are not sufficiently incorporated into policy-making.
Recommendations for a Sustainable Logistics System
To resolve these issues, reforming the supply control and permit system is urgent. Stricter requirements for vehicle permits and more rigorous procedures for transport business licenses and new vehicle approvals are necessary. Concurrently, market restructuring through demand-driven logistics network management and route optimization is essential. Transparency in freight rate calculation, consideration of a minimum freight rate guarantee system, and practical government support to alleviate fixed cost burdens are also crucial. Ultimately, establishing close consultation channels between contract drivers, transport companies, and the government, and designing medium-to-long-term logistics policies that reflect field experiences, is vital.
What to Watch Out For in Logistics Policy Reform
The most critical aspect to consider during logistics policy reform is avoiding a sole focus on short-term supply adjustments or deregulation. Such approaches could destabilize the market long-term and worsen the livelihood crisis for contract drivers. Moreover, unilaterally pushing policies without sufficient social consensus among stakeholders can lead to on-site resistance and distrust. Therefore, policy design must prioritize listening to on-the-ground feedback and gathering opinions from various stakeholders. Ensuring policy consistency and sustainability alongside legal revisions is also paramount.
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