With the expansion of the ‘quick commerce market’, which offers guaranteed delivery within an hour, South Korean firms are employing gas stations as warehouses and logistics hubs.
It has become a new alignment of interest between the quick commerce industry that needs logistics hubs in the heart of the city, and gas stations in search of a breakthrough as they struggle from dwindling sales with the emergence of eco-friendly cars.
Shinsegae Property, property development unit of retail giant Shinsegae Group, signed an agreement with Koramco Energy Plus REITs to begin the development of gas station sites. The plan is to turn idle spaces at 187 gas stations owned by REITs into logistics hubs.
Major logistics company CJ Logistics also signed an agreement with oil refinery and gas station operator SK Energy late last month to use their gas stations as logistics hubs.
The plan is to set up small to medium-sized warehouses at these gas stations to keep stock of popular consumer goods to ship them out as soon as an order is placed.
GS Caltex, South Korea’s second-largest refiner by sales, teamed up with local food delivery firm Mesh Korea last year to come up with plans for establishing logistics hubs at gas stations nationwide that will focus on short-range deliveries.
This trend is partially the result of gas stations struggling to remain profitable. There were 11,290 gas stations in South Korea as of May and 109 gas stations had closed down in the first five months of the year, according to the Korea Oil Station Association.
The Korea Energy Economics Institute said in a report published in January that number of gas stations in the country has been shrinking by an average of 1.3 per cent annually in the last 10 years, claiming that only 3,000 gas stations will be operational by 2040.