POSCO urgently needs integrated logistics management

POSCO is accelerating the establishment of an integrated logistics corporation based on the internal management diagnosis that the company’s inefficient logistics management has wasted tens of billions of won per year. The plan is to set up a corporation named “POSCO GSP” for real-time tracking and management of subsidiaries’ logistics. The company aims to continue win-win by sharing environment-friendly and smart logistics with existing logistics and shipping players.

POSCO conducted comprehensive management diagnostics on the group’s overall logistics in the second half of last year, an insider of the steel-making industry said on Wednesday. It was found that the company paid about 50 billion won for demurrage charges in the logistics sector. Demurrage charges accrue when ships carrying iron ore and coal from overseas cannot unload at quays and have to float in the ocean for a while.

It takes three to four days on average to unload a 150,000-ton cargo ship carrying iron ore and coal. Ships have to wait for their turn, however, when their port entry schedule cannot be set because it is unclear when they will arrive exactly. POSCO has been paying expenses that are avoidable as long as shipping schedule and other logistics information are obtained. “Considering the fact that the POSCO group transports goods worth over three trillion won per year, there was a lot of criticism about the poor management of them,” said a POSCO staff.

Another issue pointed out was that each subsidiary of POSCO signs contracts with logistics and shipping companies, which means smaller subsidiaries are at a disadvantage in terms of their bargaining power. For example, a small company pays twice as much even though cargo shipping and storage conditions are similar.

Therefore, POSCO intends to integrate the logistics work and services across the group to improve efficiency via POSCO GSP by building a real-time tracking system for important cargo, etc. In addition, the group will enhance its competitiveness using a smart logistics platform combined with artificial intelligence technology.


Do-Hyong Kim dodo@donga.com