This thesis is a case study on the storage fee of importing LCL cargo to Busan port. After deregulation on determination of storage fee at 1999, that of importing FCL cargo has consistently been decreased. On the other hand, that of importing LCL cargo has been increased by 10 times in spite of same market conditions.
The reason market failure happen is that Korean forwarders offer a rebate to a forwarder, which take control over the market in the port of landing in the exporting country. That is, the rebate has been a core instrument for competition in Korea transportation industry for LCL cargo which is imported by sea.
This thesis indicated that the rebate practice would result from not only characteristic of distribution structure for LCL cargo, but also excessive supply in the warehousing market. To prevent unfair behaviors of Korean forwarders and rationalize the storage fee, first of all, any proper regulatory actions taken by the government such as a viable upper price limit or a restriction on the place of storage for LCL cargo selected by the forwarder are required. Along with that, it is needed to establish appropriate barriers to entry into the markets for warehousing firms to resolve the overall imbalance in the market.