The peak-time duty-free shop logistics problems urgently need an ingenious solution like Columbus’s Egg.
상태바
The peak-time duty-free shop logistics problems urgently need an ingenious solution like Columbus’s Egg.
  • 김재영
  • 승인 2015.06.16 18:12
  • 댓글 0
이 기사를 공유합니다

More than 40,000 transactions per day are handled in the delivery areas. If transactions are concentrated in a certain time slot, the transaction volume will sharply increase to 70,000~80,000.
An insight into the policy and structure looking ahead 10 years into the future is required right now.

The South Korean duty-free industry is enjoying a boom that it has never experienced before. Since 2010 South Korea has been ranked No. 1 in the world in duty-free sales, and the sales of South Korean duty-free shops, which amounted to KRW8.3 trillion last year, is forecast to exceed KRW10 trillion this year. Experts are painting the picture all rosy. As the duty-free industry is growing rapidly, however, side effects are appearing. Several issues, including the issue of recruiting professional manpower for the new downtown duty-free shops scheduled to be added this year and the issue of duty-free logistics attributable to the rapidly increasing volume of duty-free goods, will inevitably plague the industry. Serious problems are already happening.

The duty-free industry, whose sales have been increasing by more than 10% a year on average, cannot but suffer from the shortage of storage spaces and working spaces due to the increase in the volume of goods transported and inventories caused by the industry’s structural problems.

Print

In relation to this, a Lotte Duty Free Shop insider said, “I cannot disclose specific data, such as the inventory and volume of goods transported of Lotte Duty Free Logistics Center at Incheon International Airport. However, the upward trends in logistics are certain, and we built the second logistics center in December 2014 in response to the increasing volume of duty-free goods. Its total floor space is 26,446㎡(about 8,000 pyeong).” Lotte Duty Free Shop used to have a logistics center with a floor space of 26,895㎡ (about 8,136 pyeong), and now the total floor space of its logistics centers became 53,342㎡ (about 16,136 pyeong). As the tourist demands are exploding, however, it is impossible to estimate the limits in inventories and volume of goods transported it can withstand. So other means of coping with the exploding demands are urgently needed.

In addition, the number of logistic transactions in delivery areas is also an issue. During peak time, e.g. long weekends in which tourists are concentrated, the number of logistic transactions are increasing so much that the industry cannot handle.

On May 8, on which the long weekends of Korea, China and Japan overlapped, a Chinese tourist from Guangzhou, traveling in a group, purchased a rice cooker in a downtown duty-free shop in Seoul, but it was not delivered to her in the duty-free delivery area. So she had to carry it herself and ship it by air at the airport.

In an interview with KDF News, this tourist said, “I bought a rice cooker at a downtown duty-free shop, but the salesperson told me that I cannot receive it in the duty-free delivery area. So I have no choice but to carry it myself.” She added that when she purchased at a duty-free shop in the past, she received the goods in the duty-free delivery area, but now she was told that she had to carry the goods herself and no one told her why.

“It’s too cumbersome and heavy. China Southern Airlines allows only one consignment per person, and I have to pay KRW80,000 to ship the rice cooker by air. I am really upset as a shopper. If I had known it beforehand, I would not have bought it in Korea.”

“Paragraph 2 of Article 4-9 of the Notification Regarding the Operation of Duty-Free Shops” stipulates, “If departing foreigners want to have the goods they purchased at a store selling domestic goods in a downtown duty-free shop delivered at the duty-free shop, the proprietors must check their passports and boarding passes, record them in the purchaser management log and deliver the goods to them.”

However, it is limited to those who want to have their purchases delivered at the duty-free shop, but it is wrong to have foreigners receive their purchases directly at the duty-free shop even if they don’t want to do so. At the time, an employee of the downtown duty-free shop explained why foreign buyers must receive the goods at the duty-free shop by saying, “They will have to wait more than 3 hours to receive their goods in the duty-free delivery area. As it’s going to be too late, it’s better off to receive their purchases here. So I am inducing them to do so.”

“We are aware of the problem related to the rapid increase of logistic transactions in delivery areas, but as the duty-free delivery areas are managed by Incheon International Airport, we cannot take any aggressive measures like increasing the floor space,” said an official from the duty-free shop in relation to this. “As a passive response during peak time, we send reinforcements and operate two temporary delivery areas in addition to the existing one, but we cannot respond to the shopping pattern of rapidly increasing Chinese tourists.”

Another industry insider said, “The average number of logistic transactions handled by the delivery area on a daily basis exceeded 40,000, and during peak time the number increases by 100% to 70,000~80,000.” He added, “Lotte Duty Free Shop accounts for 60~70% of the total logistic transactions in Incheon International Airport, and The Shilla Duty Free Shop accounts for about 25%.”

The one-packing method, which was devised to improve efficiency in the past, has become a ball and chain around the ankle of the logistics system due to the rapid increase of tourists. Due to the rapid increase of one-packing transactions, the industry failed to respond to the changes, thereby deteriorating its work efficiency. One-packing refers to the system where the logistics center packs into one package and handle a few duty-free goods for each customer. As one-packing consists of lines and a fixed amount of work can be done per line in a certain time slot, it is inflexible and has difficulty responding to the increasing volume of transactions. As there are separate one-packing lines for large goods and the amount of work done per line varies, there is a serious fluctuation in the volume of goods handled. As a result, the argument that the industry needs solutions like line balancing according to the volume of goods handled instead of fixed operations is gaining momentum.

In addition, there are many other invisible problems related to logistics. If downtown duty-free shops are added in Seoul and Jeju while no special solutions are in sight, the issue of handling duty-free logistics will rear its ugly head as well as the issue of a serious shortage of professional manpower.

The duty-free industry has been neglecting logistics over the years. Although logistics is attracting public attention since the industry has rapidly grown, logistics is not so important in the duty-free industry as it is in the general market, and the duty-free industry is a special industry running on licenses. However, it is about time to pay attention to duty-free logistics, and understand its unique characteristics.

For the sake of the duty-free industry’s development, it is high time to seek dramatic changes and aggressive alternatives in logistics and distribution. Rather, it is too late. Right now Korea Customs Service, Korea Duty Free Association and duty-free shops must put their heads together and come up with solutions. Changing the system and institution is a default, and they need an insight into the policy and structure looking ahead 10 years into the future.

It is deemed necessary to improve the governance structure of duty-free shop logistics centers, build the infrastructure for developing logistics business, and improve various systems and operations for invigoration of logistics centers. In addition, awareness of the issues in various areas and to solve these issues, e.g. building an information system and improving packing, storage and loading and unloading, will be necessary as well as ways to efficiently operate the second logistics center.


주요기사
댓글삭제
삭제한 댓글은 다시 복구할 수 없습니다.
그래도 삭제하시겠습니까?
댓글 0
댓글쓰기
계정을 선택하시면 로그인·계정인증을 통해
댓글을 남기실 수 있습니다.