Seoul’s Neighborhood Joint Delivery improves on delivery efficiency, transportation, environment, safety, and labor issues by integrating the previously fragmented private-sector delivery system. A sustainable and organic business model was created by negotiating volume and commission through voluntary agreements with delivery drivers, agencies, and firms.

The previous system was at a breaking point. Although labor is limited, deliveries have increased by 14% annually. Drivers were working more than 13 hours per day. The new model reduced the labor required through a voluntary agreement. Silver Delivery, first introduced in 2006, failed due to the need for large subsidies and affiliation with only one delivery firm. On the other hand, centers cover their own operating expenses through fees, and use an open model that integrates deliveries from about 10 firms. Scalability is secured through recycling collection, regional MFC bases, and high-tech autonomous delivery.

The project to create joint delivery centers for Neighborhood Joint Delivery, the first logistics innovation project in Korea to be attempted by the Seoul Metropolitan Government, was initially planned in 2021. Seoul established a master plan for innovation in the everyday logistics business such as in delivery services in February and secured a budget of 3.2 billion won for 2022. A business promotion agreement was signed with several partners in April.

The remodeling work of the joint delivery centers will be completed within the year, and delivery schedules are being coordinated with vehicle manufacturers (Hyundai, Kia, etc.) to secure eco-friendly vehicles. When the system is completed, it plans to deliver more than 700,000 parcels within two years, starting with about 70,000 deliveries from the end of 2022.

Robin signed a contract with an apartment complex resident association and has been integrating deliveries of parcels to the complex for 10 years. Another partner, Wonders, is introducing an eco-friendly joint delivery model that recycles resources by collecting wrapping paper before delivery. Korea Postal Service Agency provides idle space within the Geumcheon Post Office for use as a delivery center.

• The direct beneficiaries are citizens residing in the common delivery area. 360k households benefit from the joint delivery service.Residents can now receive parcels several hours earlier than before. Fewer delivery vehicles means less traffic and safer streets.
• The indirect beneficiaries are citizens living near the common delivery area. Fewer trucks and less pollution enhance quality of life.
• Local couriers benefit from shorter working hours, travel distances, and guaranteed brea

Seoul’s Neighborhood Joint Delivery service, first introduced in ‘22, aims to achieve the following results within the next two years.

• Delivery efficiency is enhanced through integrated delivery. Approximately 60 delivery drivers can handle the volume of deliveries previously handled by 100 workers.
• By converting all delivery vehicles to electric vehicles, carbon emissions are reduced to zero. In addition, the environment is improved by recycling packaging materials for parcels through eco-deliveries. and collecting recycled products during delivery.
• The working conditions of delivery drivers improve. Working hours are reduced from 13 hours to 8 hours daily, and the distance traveled by freight vehicles is decreased from 42 kilometers to 20.
• A 40% reduction in the number of freight vehicles operated and a 5-hour reduction in their operating time boosts traffic flow and minimizes the number of accidents caused by freight vehicles.

When Seoul’s Neighborhood Joint Delivery service was initiated for the first time in Korea in 2022, the first model used was a project promotion model for local districts. This led to early failure, as it proved difficult to secure a space to create a community delivery center and there was no existing model to follow.

Afterwards, the city of Seoul altered the business model and the city recruited private organizations to carry out the project directly. Afterwards, the city of Seoul re-issued an open call for the private sector, and private firms participated in the city’s request by finding a site to build a joint delivery center. A total of 7 organizations applied, and the city government selected 3 partner organizations.

Seoul plans to carry out the project directly in 2022, and if the project proves a success, many autonomous local districts will likely participate in the project in the future.

The most important condition is obtaining the consent of local residents where the joint delivery center will be established. About 15 to 25 delivery vehicles are needed for integrated delivery within the region. If local residents oppose the center, its sustainability will be in doubt. To prevent such problems, Seoul established a Neighborhood Joint Delivery center adjacent to a major 8-lane road and away from schools and residential clusters.

Citizen support for the necessity of the project is also needed. Since this is a project to solve the transportation, environment, safety, and labor problems caused by the increasing number of deliveries, Seoul considers the active promotion of the public nature of the project a priority.

To secure a stable delivery volume for the service, which integrates parcels from 10 delivery services, the participation of such companies is essential. Seoul has been encouraging such participation and cooperation through several rounds of meetings.

Seoul's Neighborhood Joint Delivery system is a good model to emulate elsewhere because of its sustainable business model that does not require continuous subsidies after support at the initial stage.

Although the project is limited to Seoul this year, next year it is expected to expand nationwide. The relevant ministry (MOLIT) has already selected it as a promising project deserving of support. The Ministry is providing about half of the necessary budgetary support, and after evaluating the results of trial operations in Seoul in this year, plans to expand it nationwide after 2023.

This initiative has also led many private courier firms to introduce their own ‘joint delivery systems’. Hanjin, CJ, and Lotte are hoping to participate in the project starting next year. As private-sector participation increases, the system is expected to grow more rapidly.

The Neighborhood Joint Delivery service is a world first for the city of Seoul. As such, the first open call was targeted at local districts, but failed due to a lack of interest. The lack of a track record was the biggest reason local districts did not participate. For this reason, the city decided to get involved directly.

There is a need to create a successful model by promoting the project early on, rather than waiting for other organizations to step in.
It was critical to secure a space for construction prior to implementation. When the request was first made, the city expected local districts to find the necessary space. However, there was practically no such space available. To resolve this, the project was designed to secure space for the centers directly from the private sector. When the city made this change, 7 companies secured a site for the joint delivery center and signed on to the initiative.

Issues related to logistics in daily life due to the proliferation of contactless transactions are a growing concern not only in Seoul but around the world. In order to solve this problem, the city of Seoul looked for case studies of other countries and cities, but could not find a reference model. In the end, Seoul Metropolitan Government decided to take the initiative and promote a new policy to reimagine the existing delivery system.

Neighborhood Joint Delivery is a project that shows how private-sector inefficiencies can be improved upon and public goods such as transportation and the environment can be enhanced through public sector intervention. If the city of Seoul succeeds in this new initiative, we expect the Neighborhood Joint Delivery model to spread widely not only in Seoul but also to other countries and cities globally.