CJ NowCJ Logistics’ Revenue Triples and Operating Profit Increases Sixfold in 10 Years Following CJ Acquisition
▶ Changes in CJ Logistics revenue composition (left) and performance (right) during 2013-22.
Key business areas have evolved from loading/unloading and land transport to parcel delivery, and then to cross-border eCommerce (CBE) and global business, reflecting the latest breakthroughs in the industry.
CJ Logistics, a company delivering innovative technology, achieved dramatic growth, posting threefold growth in revenue and sixfold growth in operating profit in just 10 years since its acquisition by CJ Group in 2013. The major business areas have evolved from loading/unloading and land transport to parcel delivery, and then to cross-border eCommerce (CBE) and global business, contributing to the latest breakthroughs in the industry and transformations in the distribution sector. Ahead of the 100th anniversary in 2030, CJ Logistics is planning to reach a level on par with multinational logistics companies with its world-class technology.
CJ Logistics announced today that they had celebrated the 10th anniversary since the company was relaunched as an integrated subsidiary with a logistics subsidiary of CJ Group in April 2013. In 2008, Korea Express (now CJ Logistics) was acquired by Kumho Asiana Group while it was placed in receivership, but at the end of 2011, the CJ Group became the biggest stakeholder. In April 2013, the company was again merged with GLS, a logistics arm of CJ, transforming into the CJ Group’s integrated logistics subsidiary true to its name.
Launched an integrated subsidiary after the 2013 merger with CJ GLS and has shown remarkable growth posting record-breaking performance every year.
After joining the CJ Group, CJ Logistics’ has grown at an impressive rate. Revenue increased by more than KRW 8 trillion from KRW 3.7 trillion in 2013 to KRW 12.1 trillion in 2022, and operating profit also increased by nearly KRW 350 billion from KRW 64.1 billion to KRW 411.8 billion. Both sales and operating profit have shown record highs every year for 10 years.
The business and workforce structure changed greatly. While the Contract Logistics (CL) division which used to be the company’s flagship business had accounted for half of the entire revenue in 2013, it dropped down to 1/4 last year. Instead, the Global Business division, which had accounted for only 28% of the overall revenue, jumped to 42%. As for the annual volume of parcels handled, which was 500 million boxes in 2013, this escalated to 1.7 billion boxes last year, leading CJ Logistics’ 10-year leap forward. The number of staff has also increased from 8,400 to 20,000 and the number of staff in overseas subsidiaries has increased from just 2,900 to 13,700, supporting the claim that the company has become a global logistics company.
CJ Logistics’ 10-year leap has been backed by CJ Group’s strong resolve to make logistics its new growth driver since the time of the acquisition of Korea Express. A marquee example is the construction of the Gonjiam Mega Hub Terminal in 2016. Industry insiders had belittled the investment of over KRW 400 billion by CJ Group, saying it is “ridiculously huge,” because the sheer scale of the Gonjiam Mega Hub Terminal, handling 1,700K boxes daily, had topped the daily throughput of a typical logistics company at the time. However, after investing in the mega hub terminal, the parcel market began growing at an exponential rate, and the gap between CJ Logistics and competitors, who had made a belated decision to invest in facility expansion to handle a flood of parcels, widened. The operating profit rate of the courier business, which was only 2-3% at the time, also jumped to 4.8% last year.
In particular, when COVID-19 had driven up courier volume by 20%, people in the industry even said, "If it weren't for Gonjiam, which began operation in 2018, we wouldn't have been able to stop people from hoarding things.” CJ Logistics had not only led logistics reform with overwhelming parcel infrastructure but has also contributed to the national economy.
A CJ Logistics representative said, “We managed to broaden the technology gap with the competition by three to four years, by not only opening the Gonjiam Mega Hub Terminal but also by introducing a wheel sorter, a type of automatic sorting system. We are continuing to grow based on our technology that is far more advanced than competitors and profitability.”
Immediately after the merger, the CJ Group focused on global supply chain management (SCM) and has grown in size through international M&As. Starting with China in 2013, CJ acquired robust logistics companies around the world, including in the USA, India, Vietnam, and Malaysia. As a result, CJ’s global locations have increased from 35 in 17 countries 10 years ago to 112 in 35 countries today. Global sales have also surged from KRW 1.7 trillion won to KRW 5.06 trillion. In particular, the sales in the USA, the heart of the global business, were only KRW 98.7 billion 10 years ago, but it escalated to about KRW 1.26 Trillion last year, growing nearly 13 times.
CJ did however experience some setbacks. In early 2021, CJ had to resell Rokin Logistics, which it had acquired in 2015. However, due to the widespread outbreak of COVID-19 and the closing of national borders, the resell ended up becoming a stroke of genius. The KRW 140 billion of profit it earned from the resale of Rokin set the foundation for building new infrastructure and expanding the business offshore.
CJ spurred growth with our advanced technology and new growth drivers... “We will compete with global logistics companies with our world-class technology.”
In 10 years, CJ Logistics has reached new heights in the logistics industry, which is known as being labor-intensive, and transformed it into a technology-intensive industry. The CJ Logistics’ TES Innovation Center, which has since expanded following a reshuffle, has been the center of development and commercialization of the most advanced technology in Korea, focusing on robotics, AI, and big data. The Gunpo Smart Fulfillment Center, which was revealed to the public in 2022, was the home of developing state-of-the-art unmanned technologies, such as an automated guided vehicle (AGV), digital twin, and box recommendation system, as a business.
CJ Logistics is preparing for yet another transformation ahead of its historic 100 anniversary in 2030. The company is determined to work shoulder to shoulder with the world’s greatest logistics companies with its world-class technology. The company is set to accelerate its efforts in gaining a competitive edge and foster new growth drivers by increasing the market dominance in the last mile market based on the integrated parcel delivery brand O-NE, scaling up the Unban, a platform that directly connects shippers and car owners, targeting the KRW 100 trillion cross-border parcel delivery market, and a global business strategy centered around emerging countries.
A CJ Logistics representative said, “For the past 10 years, we have paved the way for becoming a global integrated logistics company, going beyond the top logistics company in Korea. We will now charge forward for our next wave of growth into a major global player by 2030 as we celebrate the 100th anniversary.”