Small delivery trucks with weight limit of 1.5 tons or under in South Korea will no longer be required to receive approval from the government to run businesses, following the country’s decision to lift licensing regulations for the first time in 12 years. The eased regulation on small delivery truck operations is expected to foster the growth of the county’s e-commerce market.

The Ministry of Land, Infrastructure and Transport on Tuesday announced follow-up measures to its previous plans unveiled in June to vitalize the country’s services sector. The latest measures are aimed at bolstering the local shipping service industry by easing regulations that limit the number of commercial licenses of trucks smaller than 1.5 tons.

So far, the Korean government has made it mandatory for commercial delivery trucks to seek approval and has limited the number of licensing plates as part of efforts to prevent excessive competition. Under the latest measures, shipping trucks would no longer require government approval, but would only have to register with the government. The eased regulation is expected to allow more opportunities for retailers, in particular, local e-commerce companies like Coupang to catch up the global e-mail giant, Amazon.com.

The current Trucking Transport Business Act, which was amended in 2004 on demand from the country’s unionized truck drivers, regulates the total gross capacity of delivery trucks in order to prevent excessive supply of shipping trucks and guarantee industry players optimal profit. However, with the country’s rapidly growing online shopping and parcel delivery markets, demand for cargo delivery has sharply risen, resulting to a shortage in the supply of small delivery trucks.

Once legislation is revised based on the latest measures, retailers with 20 or more light-duty delivery trucks would be able to add more small commercial trucks. All they are required to do is register with the government without receiving approval for separate licensing plates.

The land ministry said it will introduce safety measures that can prevent retailers from monopolizing licensing plates by making sure small delivery trucks owned by companies are directly managed by them and that licensing plates are not yielded or sold to others.

Individual truck owners that have signed contracts with parcel service operators will also be allowed to operate new commercial delivery trucks. The land ministry expects about 13,000 vehicles that are estimated to have been illegally operating as shipping trucks would be under the legal control of the government. Also, about 5,400 new delivery trucks are expected to be added to the market every year to meet the rapidly growing cargo demand.

The ministry, however, said trucks over 1.5 tons of weight capacity will still be required to receive approval for special licensing plates to protect individual and small businesses from an oversupply.

By Chun Jung-hong

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]