It is clear that competitiveness of Korean economy has been dropped down drastically in these days. one of the reasons which caused the weakness of competitiveness is increase in the cost of physical distribution such as delivery, unloading, etc.

The cost of physical distribution in Korea was increased about 17.5% of GDP in 1996 that is one and half times higher compared to that of Japan, Taiwan, and Hongkong. This fact means that the competitiveness of physical distribution in Korea should be weaker.

The aim of this study is to look through ways to reduce physical distribution cost so that economic competitiveness is revitalized. This study consists of sections of physical distribution cost, physical distribution system, and regulations related to physical distribution.

This study tries to analyze physical distribution cost from 1991 to 1995. This study especially focuses on functions of physical distribution such as delivery, storage, unloading, packing, general handling, etc. It also shows distribution cost by sub-items of each functions. Therefore, it contributes to find out what the main causes of the cost are as well as which part of the physical distribution system is inefficient.

The result of this study shows the major factor of physical distribution cost is delivery. Hence, for the efficiency of the physical distribution, we have to increase efficiency of delivery. To do so, this study examines the status of regulations of delivery in physical distribution related laws, and analyses the appropriateness of regulation of transportation industries. It also suggests how to increase the efficiency of delivery system if the regulations are unreasonable.