Samsung SDS Acquires Woojung Air, Aims to Improve Logistics Margin Stuck Around 1%

Samsung SDS is moving to strengthen the operational competitiveness of its logistics business by acquiring Woojung Air, a company specializing in air cargo logistics. Although logistics accounts for more than half of Samsung SDS's total revenue, the business has shown limits in profitability, with its operating margin remaining in the 1% range.

Samsung SDS said on October 12 that it had signed a share purchase agreement to acquire 100% of Woojung Air. The company has been reviewing the feasibility of the acquisition since the first half of this year and plans to complete the process by the end of the year.

Woojung Air operates a logistics business by securing cargo space on aircraft and using a consolidation model in which small shipments are combined into a single large shipment. It operates iNOMAD, a digital air logistics platform, and has secured cargo space through agreements to operate air cargo capacity with Korean carriers and major foreign airlines. The company also operates an Incheon Airport logistics center equipped with a known consignor terminal, which enables integrated processing of tasks such as security screening and loading outside the airport terminal, as well as its own air cargo transportation management system.

Samsung SDS plans to expand its air transportation business by bringing Woojung Air, previously a partner, into the company as a subsidiary. Since 2022, Samsung SDS and Woojung Air have worked together to integrate Woojung Air's air cargo location and freight rate information into Samsung SDS's digital logistics platform, Cellosquare, and to jointly develop international air logistics services to help Korean e-commerce sellers expand overseas.

Logistics, alongside IT services, is one of Samsung SDS's two main business pillars, but its contribution to earnings is low relative to its revenue. Last year, the logistics division generated revenue of KRW 7.3864 trillion, accounting for 53% of total revenue, but posted operating profit of KRW 130 billion, with an operating margin of about 1.8%. In the first half of this year, it recorded revenue of KRW 3.6977 trillion and operating profit of KRW 44.1 billion, leaving its operating margin at about 1.2%.

 

The acquisition is seen as a move to expand the operational infrastructure for air logistics and improve cost efficiency through cargo consolidation and in-house security screening. With Incheon Airport as their hub, the two companies will be able to jointly handle not only cargo originating in Korea but also cargo from across Asia routed through Incheon, building optimal cargo consolidation capabilities.

Samsung SDS expects to improve time and cost efficiency by using Woojung Air's known consignor terminal infrastructure to provide its own security screening services. It also plans to strengthen air transportation processing capabilities by linking Woojung Air's iNOMAD system with Cellosquare and accelerate data-driven work automation.

"As a subsidiary specializing in air cargo consolidation, Woojung Air will be an important partner as we expand our air transportation business," an industry official said.

This content was produced with the assistance of AI translation services.