2. Railway Logistics Business Efficiency Improvement Case

(Cost Reduction, Revenue Increase)

1. KORAIL Railway Logistics Business Status

3. Direction of Investment in Railway Logistics Infrastructure

(Government Support)

[Unit: 1,000 tons]

4,453

4,681

3,890 3,922 4,001 4,031

3,982

3,738

2007 2008 2009 2010 2011 2012 2013 2014

3

Classification 2007 2008 2009 2010 2011 2012 2013 2014

Annual

average

fluctuation

2014

composition

Cement 16,478 17,670 16,015 14,791 14,676 14,602 14,847 14,126 -2.2% 37.8%

Container 11,729 12,443 8,511 9,948 11,679 12,110 11,853 10,386 -1.7% 27.8%

Coal 6,878 7,077 6,367 6,170 5,294 4,876 4,585 4,288 -6.5% 11.5%

Steel 1,816 2,001 1,128 1,735 2,118 2,669 2,644 2,648 +5.5% 7.1%

Oil 2,104 2,006 1,818 1,641 1,348 1,173 1,033 890 -11.6% 2.4%

Ore 2,000 1,939 1,969 2,023 2,210 2,319 1,944 2,106 +0.7% 5.6%

Other 3,526 3,670 3,090 2,909 2,687 2,560 2,917 2,935 -2.6% 7.9%

Total 44,531 46,806 38,897 39,217 40,012 40,309 39,822 37,379 -2.5% 100.0%

[Unit: 10,000 tons]

[Unit: KRW 100M] Revenues/ Costs Operating Profit & Loss

0 Deficit Surplus

2007

2008

2011

2012

2013

2014

[Unit: KRW 100M]

Labor cost 43.4%

Power cost 19.5%

Track access charge 9.5%

Other expenses

27.6%

-3,070

-3,448

-3,132

-3,030

-2,498

-1,795

4,324 4,496

3,982 4,035 4,342 4,494

4,675 4,789

7,394

7,944

6,767

6,610

7,464

7,524 7,173

6,584

3,000

4,000

5,000

6,000

7,000

8,000

2007 2008 2009 2010 2011 2012 2013 2014

수익

비용

Cost

2014

4

Revenues

Costs

Need to reduce fixed costs,

such as labor cost

Facilities

5

Railway Map of KOREA

6

Container Cement Coal

Steel Oil Ore

8

Production

area

(Gyeongin

Region)

Consumption

area

(Busan Port)

셔틀 2차 셔틀

셔 틀

셔틀 Shuttle + cargo-working

KRW 157,000 Railway KRW 273,000 Shuttle + cargo-working

KRW 56,000 Departure

station

Arrival

station Shuttle: 60 min.

Cargo-working: 30 min.

Train Operation: 390 min.

(6.5 hr) Total: 9 hours

Cargo-working: 30 min.

Shuttle: 30 min.

* Railway Transportation Time (9hr): Transportation on main track 6.5h, shuttle loading 2.5h,

Auxiliary expenses other than fare - 42.9% of total transportation cost

‣ Closing freight stations of small freight volume

‣ Functional integration of freight stations with

similar characteristics

‣ Freight handling and train operation centering

on hub freight stations

- 127 stations (2014) → 80 (2018)

*Revenue Decrease: KRW 52.1 billion

*Cost Reduction: KRW 91 billion

→ Effect: KRW 38.9 billion

*Ha, O. K.,(2015) Development of Indicators of freight stations for digital convergence, Cluster Computing, Vol 18(1), pp. 269-278

9

Before (42 container stations) After (22 container stations)

*Source : http://blog.naver.com/PostView.nhn?blogId=travelmap&logNo=220464402837

10

Classification 2007 2008 2009 2010 2011 2012 2013 2014

Trains in operation per day (A) 353 327 300 299 303 290 289 250

Train-unit contract trains per day (B) 14 16 18 33 34 37 55 167

Ratio (A/B) 4.0 4.9 6.0 11.0 11.2 12.8 19.0 66.8

11

Classification 2012 2013 2014 Fluctuation

Freight Volume (1,000 tons) 40,309 39,822 37,379 -3.7%

Transportation Revenues (KRW 100M) 4,494 4,675 4,789 3.2%

80

90

100

110

120

130

140

150

2007년 2008년 2009년 2010년 2011년 2012년 2013년

유가(경유) 철도화물운임 육송화물운임

Railway Freight Transportation Fare Increase (07~13)

Oil price increased by 5.4%

Railway transportation fare increased by 1.3%

Overland transportation fare increased by 4.4%

Oil price

(diesel) Railway

transportation fare Overland transportation fare

12

Classification 2007 2008 2009 2010 2011 2012 2013 2014 Annual

Average

KTX Courier - - - - - - 933 1,081 15.90%

Cargo-Handling 7,813 7,874 6,659 8,046 10,279 10,928 11,471 13,660 8.30%

Loading/ unloading equipment rental - - - - 417 376 376 368 -4.10%

Warehouse - - 570 1,373 1,569 1,035 321 1,817 26.10%

Forwarding - - - - - 875 890 - -

Total 7,813 7,874 7,229 9,419 12,265 12,340 13,101 16,925 11.70%

[Unit: KRW 100M]

14

15

<Details of Railway Logistics Structure Expansion>

16

Project promotion

through feasibility

study