Major South Korean companies say they are suffering as a strike by thousands of truck drivers across the country enters its seventh day. Among the companies impacted by the strike are Hyundai and POSCO, both of which manufacture steel.
As fuel prices rise, truckers are demanding more pay and an extension of government subsidies. It comes as the country’s exports plummeted by about 13 per cent in the first ten days of the month compared to the same period last year.
The strike has generated fears that it would exacerbate global supply chain disruptions caused by the epidemic and the Ukraine war, causing prices to rise even further around the world.
South Korea is a major manufacturer of items ranging from automobiles to electronics and computer chips.
Hyundai, South Korea’s largest automaker, told the BBC on Monday that it has “had minor production disruption” at its main manufacturing plant in the south eastern city of Ulsan.
“Hyundai Motor is closely monitoring the situation, and we hope to normalise production soon to minimise impact on our customers,” the spokesperson added.
POSCO, the country’s largest steelmaker, also said that it had paused certain production at its mills due to a lack of storage space for finished items. Because of the strike, the company’s present stocks have not been shipped.
“We are not yet certain how long this suspension will last,” said a spokesperson for POSCO.
The problems arise since South Korean government and the Cargo Truckers Solidarity union have yet to negotiate an agreement to end the strike, which began on June 7.
There are around 420,000 truck drivers in South Korea, where they are classified as self-employed individuals.
The truckers on strike have demanded pay increases as well as a promise that minimum freight rates will be maintained. The system was implemented during the pandemic and will expire in December.
The Ministry of Land, Infrastructure, and Transport claimed on Saturday that it met with union representatives for more than eight hours to discuss “means to normalise logistics,” but that “no agreement was reached.”
“[We] plan to continue dialogue to resolve this situation as soon as possible,” the ministry said.
Stephen Innes, managing partner at SPI Asset Management, cautioned that the strike could cause a bottleneck in South Korean exports, worsening global inflation – the rate at which prices grow.
“This is a big problem hitting at an inopportune time as Korea is a massive exporter,” Innes said.
“It adds to global inflation concerns since Korea is a significant supplier of semiconductors, smartphones and a host of other top-shelf electronics names and components,” he added.
According to official data issued on Monday, South Korean exports fell by 12.7 per cent in the first ten days of this month compared to the same period last year.
Car exports declined by more than 35 per cent during the time, while wireless communication device shipments fell by more than 27 per cent.
(Adapted from BBC.com)