|A CJ Logistics terminal in Gwangju, Gyeonggi Province / Courtesy of CJ Logistics|
By Nam Hyun-woo
|CJ Logistics CEO Park Keun-hee|
The Fair Trade Commission (FTC) imposed a combined 46.04 billion won in fines on seven logistics firms which colluded in 3,769 logistics contracts assigned by POSCO from 2001 to 2018. The firms are CJ Logistics, Hanjin, Samil, Dongbang, Chunil Cargo Transportation, Chunil Total Logistics Service and Haedong.
CJ Logistics was fined the most at 9.46 billion won, followed by Samil with 9.34 billion won and Hanjin, 8.69 billion won.
POSCO started receiving bids from contractors for the domestic transportation of steel products, and the companies colluded by selecting the winner before the bidding began, according to the FTC.
After forming "a consultative organization," the logistics firms decided on the volume of steel products for each of them, and adjusted bidding prices accordingly.
From 2001 to 2008, Samil took 26.66 percent of the volume of steel transportation and CJ Logistics followed with 21.16 percent and Dongbang with 21.12 percent.
The FTC said the average success rate of bidding stood at 97 percent in the manipulated 3,796 biddings, which was higher than the 93 percent average after the companies discontinued colluding.
The FTC said the punishments have their significance in cracking down on a cartel which was secretly active for a long period of time. Also, the agency added the punishments will play a role in preventing additional collusions in other industries and lowering logistics costs for companies, given that the punished companies are big name firms in Korea.
CJ Logistics is the largest logistics firm in Korea. It posted 6.6 trillion won in sales and 176.1 billion won in operating profit last year, up 5.9 percent and 58.16 percent from a year earlier, respectively.
Hanjin also saw improvements in its profitability. It reached 1.81 trillion won in sales and 47.55 billion won in operating profit last year, up 5.56 percent and 99.25 percent from 2018, respectively.
POSCO is one of the largest consigners in Korea, spending nearly 3 trillion won for shipping and transporting 160 million tons of steel products last year. To address its growing logistics cost, POSCO is attempting to set up a logistics affiliate, tentatively named POSCO GSP, but is facing strong opposition from shipping firms in Korea.