Cargo truckers' strike aggravates shipping woes in South Korea

[Photo by Park Hyung-ki]

A general strike by unionized cargo truckers from Tuesday has aggravated shipping woes in South Korea on top of supply bottleneck and soaring production cost from expensive fuel and commodity imports.

Members of the Cargo Truckers Solidarity, affiliated with the Korean Confederation of Trade Unions, embarked on a strike across the country for unlimited period, demanding a hike in freight fares and extension of the so-called Safe Trucking Freight Rates System, minimum freight rates to prevent drivers from dangerous driving that are to sunset at the end of this year.

The delivery disruption unsettles manufacturers, especially petrochemical producers, as shipment cancellation leads to direct and indirect losses of up to 2 billion won ($1.6 million).

“Most of the petrochemical products are manufactured based on continuity process,” said an unnamed official from a company that operates a factory inside the petrochemical complex in Ulsan. “It costs 1 to 2 billion won to resume manufacturing process after a pause due to shipment cancellation.”

The official said that he pleaded cargo truck drivers to ship urgent supply to minimize losses, but had been rejected.

Cargo drivers have grounded their trucks at petrochemical complexes in Ulsan, Yeosu, and Daesan, home to petrochemical factories in Korea. Manufacturers had to put up with higher transportation cost under the safe rate system.

[Photo by Lee Seung-hwan]

Extra charge is added to in-land shipment of petrochemical materials on top of higher basic fare of at least 30 percent as truck drivers need special storage tanks when carrying dangerous materials. Another 10 percent charge is added when the weight exceeds certain level. Petrochemical producers have faced up to 80 percent surge in logistics costs in the last two years.

Tire exporters fret a surge in container fares that would weaken price competitiveness. They complain the Safe Trucking Freight Rates System has led to 40 to 50 percent increase in export freight container fares.

Farmers as well as cement producers are also affected by the latest strike.

Unionized cargo truckers blocked cement factories in Jecheon, Danyang, and Yeongwol. Asia Cement in Jecheon on Tuesday was not able to ship 7,000 out of 10,000 tons of daily average cement shipment. The company expected that shipment via land will be disturbed until at least Wednesday.

The strike in South Gyeongsang Province was attended by cargo truckers that transport materials and equipment to major shipyards like Daewoo Shipbuilding and Marine Engineering and Samsung Heavy Industries.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]