The Korean people expected that the Oct. 4 South-North Summit Declaration in 2007 would provide the Korean Peninsula with a blueprint for economic cooperation and act as a catalyst for the reunification of two Koreas.

The declaration was largely composed of agreements on logistics cooperation between the South and the North, such as renovating the Gaeseong-Pyongyang highway and Gaeseong-Sinyeoju Railway, opening direct flights between Seoul and Mount Baekdusan, allowing railroad freight transportation between Moondan and Bongdong, and enabling civilian vessels to sail directly through Haeju. However, continued military clashes and disputes regarding the Northern Limit Line have faded the agreement of 1997.

President Park Geun-hye’s unification bonanza also bases itself on logistics cooperation such as Trans-Siberian Railway. Logistics cooperation is her priority focus for the moment. However, this plan does not seem easy to achieve from the North Korean perspective, as this railway must pass through its inland regions.

It is not likely that North Korea will open up its inland railroads in the near future because, just as in South Korea, these railroads are part of North Korea’s military infrastructure. Therefore, in order for inter-Korean economic cooperation to be enhanced, more feasible logistics cooperation plans that must come to the table.

West Germany started an incentive program 40 years before the German unification to promote materials and human exchange. In 1951, East and West Germany transportation agreement has provided for separate families a means to meet each other by granting cars and cargo trucks to transit in Eastern Berlin’s restaurants at motorway rest stops by paying a fee. In 1980, West Germany paid 50 million Western Deutsch Marks a year in exchange for transportation rights for West Germans in East Germany.

The accession of North Korea’s new leader, Kim Jong-un, was accompanied by the recognition of logistics as a means of obtaining foreign currency. North Korea, therefore, is trying to expand its logistics operations. On the same wavelength, Kim Jong-un has given to China and Russia long term leases of the operation rights of Najin, Nampo and Cheongjin whose constructions were joint ventures between Hunchun, China, and North Korea through the Najin agreement. This reveals Kim Jong-un’s effort to expand its business with China and Russia through logistics. Koryo Airlines, the state-owned national flag carrier of North Korea, has purchased modernized fleets in 2012 to fly them to 12 destinations. North Korea’s Pyongyang Airport is also being renovated by a Hong Kong-based civil construction firm and aims to boosts its passenger and cargo transportation services.

We must learn from Germany’s case, where an immense sum of money was spent on building and standardizing the logistics infrastructure such as highways, ports and railroads. Realistic logistics businesses must be proposed to North Korea in order for us to be logistically ready for a unified Korea and to prevent a loss of initiative for economic cooperation with North Korea to either China or Russia. 

By Lim Jang-hyuk

Lim Jang-hyuk is a director at Kuehne Nagel, a global transportation and logistics company based in Switzerland, and previously managing director for Pantos Logistics Belgium and France till 2010. ― Ed.