Strike By Truck Drivers In South Korea Adds To Fear Of Rising Global Inflation

Explained In Brief: Why Thousands Of South Korean Truckers Are On Strike

by Swarajya Staff - Tuesday, June 14, 2022 05:27 PM IST
Explained In Brief: Why Thousands Of South Korean Truckers Are On StrikeTruckers striking in South Korea.
  • The global supply chain was already under strain due to lockdowns in China and the war in Ukraine.

    The truck driver strike in South Korea will put the global supply chain under more strain.

A strike by truck drivers in South Korea has entered its eighth day, forcing the country's manufacturers to slow down production. Traffic at South Korea's ports has slowed down due to this strike.

According to South Korea's Ministry of Trade, Industry and Energy, this strike has resulted in production and shipment disruption for automobiles, steel and petrochemicals worth $1.25 billion.

The global supply chain was already under strain due to lockdowns in China and the war in Ukraine. The truck driver strike in South Korea will put the global supply chain under more strain.

Korean companies are significant suppliers for critical components and materials like steel and semiconductors. South Korea is also a major producer of goods from cars to electronics and computer chips.

Automobile manufacturer Hyundai said that it had to cut production at one of its domestic plants because of the strike. Steel producer POSCO has also been affected by the industrial action. POSCO is South Korea's biggest steel producer and has halted operations at some facilities because the company has run out of space to store its products.

"We are not yet certain how long this suspension will last," said a spokesperson from POSCO.

According to the Cargo Truckers’ Solidarity Union, they had no choice but to strike because their repeated demands for safer conditions and reasonable fares were ignored.

The truckers are also demanding an extension to government subsidies as they are facing rising fuel costs.

South Korea's transport ministry is urging the truckers to go back to work. The government has said it would enact emergency measures including allocating 100 cargo trucks from the military and 21 vehicles from other local government agencies to carry goods to major ports, to ameliorate the impact of the strike.

Over the weekend, the Korea Enterprises Federation along with 30 other business industry groups, including semiconductor manufacturers and carmakers, released a statement urging the truckers to call off the strike because "it is causing enormous damage to manufacturing and trade, the backbone of our economy".

South Korean officials and the Cargo Truckers Solidarity Union have so far failed to reach a deal to end the strike, which started on 7 June.

According to the BBC, there are around 420,000 lorry drivers in South Korea and they are regarded as self-employed workers.

This strike adds to global inflation concerns as South Korea is a key supplier to global markets. The strikes may lead to bottleneck in South Korea's exports, which runs the risk of worsening inflation around the world.

South Korea's Ministry of Land, Infrastructure and Transport met union representatives for more than 8 hours on Saturday to discuss ways to normalise logistics but they could not reach an agreement.

"[We] plan to continue dialogue to resolve this situation as soon as possible," the ministry said.

South Korea's exports have fallen by almost 13 per cent in the first 10 days of the month from a year earlier.

Exports of cars have fallen by more than 35 per cent, while wireless communication device exports have dropped by over 27 per cent.

Petrochemical firms have seen average daily shipments from factories tumbling 90 per cent as truckers target complexes in Ulsan, Yeosu and Daesan, an industry association said.

There are no signs that the situation will improve. According to a report from Reuters, the striking truck drivers are considering blocking shipments of coal to power plants in South Korea.

"We are thinking of a complete blockade," union leader Kim Jae-gwang told Reuters, referring to coal shipments to a power plant in Gunsan, North Jeolla Province that he did not name, which uses trucks for its coal.

The strike is a major test for South Korea's new conservative president Yoon Suk-yeol. Any prolonged slowdown in the production and shipment of chips, petrochemicals, electronics and automobiles would add to fears about rising inflation and slowing growth.

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