In the global era, international logistics is getting more and more important. Korean companies have been able to grow up as global companies since IMF in Korea, through the efforts of establishing overseas factories, purchasing original supplementary material and reducing product costs and labor costs.
Even now, many companies are making a lot of efforts to reduce costs in order to surpass the global economic recession, but from now on, they have to cut more corporate cost using three-party logistics (3PL) as like the United States and European companies. In the future, there is no doubt that the international freight forwarder will be in the center of the logistics market.
Before 1996, the international freight forwarder were able to enter the market only through the government's permission, However, since 1996 when the international freight forwarders joined the OECD, the number of registrants has sharply increased due to relaxation of registration standards and the abolition of facility standards to ease restrictions on entry into the market for shipping and port fields. In 1996, there were only 361 registrants of international freight forwarder. it had increased to 1,204 companies in 1999, increased to 3,245 companies in 2011 and 3,875 companies in 2015.
However, most of the domestic small and medium-sized international freight forwarder's business is weak and profitability is deteriorating due to an excessive competitions and a cutthroat competition because of running for in great numbers of the micro enterprises. And early bankruptcy is a recurring phenomenon. Moreover, major logistics subsidiaries and global enterprises already dominate the majority of the market for the domestic international freight forwarder's market. A logistics subsidiary of a large company is running on the growth route based on the parent company's cargo and foreign-affiliated freight forwarder's expand the share in the domestic freight forwarder's market based on the low-cost structure and its own overseas network. However, ironically, the new freight forwarders are filling the gap as it is shrinking.
At this point it is necessary to check that the market structure of Korea's international freight forwarder is a competitive market or an oligopolistic market. In order to investigate this, industrial organization theory is applied to check the market structure and market performance of international freight forwarders in Korea.
To check the impact of international freight forwarder's market structure on corporate performance, PCM (Price-Cost Margin) is used as a proxy variable of corporate performance and analyze using the top three companies CR3(Concentration Ratio) and HHI (Hirschman-Herfindahl Index) as variables of market structure. Analysis period is from 2011 to 2015 and analysis subjects are the top 50 companies during five years.
As a result of this study, market structure of international freight forwarders in Korea is competition market. And based on that, result of analysis about the impact of market structure on corporate performance, this is found that it's not partly significant on theory of industrial organization theory that market structure has an influence on corporate performance of international freight forwarders.