Last week, South Korea’s truckers went on a union strike after months of negotiations. This is the second strike in 6 months, with the first in June 2022. The June work stoppage resulted in a $1.2 billion loss in monetary value and delayed shipments throughout South Korea. Truckers have been protesting in opposition to growing fuel costs and for the extension and expansion of the minimum payment system. After the second strike, there was little resolution and more significant repercussions for South Korea and global supply chains.
The safe trucking freight rates system is a minimum annual pay guaranteeing procedure introduced in 2020. Its implementation was to protect truckers from being overworked and prevent workers from driving dangerously. The Trucking Transport Business Act planned on keeping the pricing system for three years after the commencement. However, truckers are protesting to make the system permanent, with the last day being the end of this year. Inflation and surging fuel prices are the main reasons behind wanting to keep the system. Truckers are also campaigning to expand the rates system to more industries.
The Impact of the Strike on Supply Chains
South Korea is Asia’s 4th largest economy, the world’s 9th largest exporter, and 7th largest importer of cargo. Because of the country’s importance, the protests significantly affect supply chains globally. Domestically, different industries are starting to feel the consequences of limited drivers. Due to scarcity, South Korea’s government has recently ordered 2,500 cement truck drivers to return to work. Construction sites are starting to lose building materials, and the cement industry is increasing its monetary loss. Work has stopped in over 250 construction sites due to the lack of cement materials.
This is the first time a situation where the government forced workers to go back to work happened since 2004. The steel industry has also felt the impact with the amount of shipping tonnage lowering to 22,000 tons on Sunday. The average amount shipped daily is over 40,000 tons. Not only are the protests disrupting the flow of goods domestically, but international supply chains may soon feel the effects. Since over 70% of truckers for major refiners in South Korea are on strike, gas stations could soon have short supplies internationally. The war in Ukraine and China’s covid restrictions have already disrupted global supply chains.
One of the most common methods of conveyance for transporting cargo through a supply chain is trucking. Trucking tends to be the first and last step of movement and may make or break a supply chain. As seen with the protests, businesses can lose large sums of money if truckers cannot move goods. A freight broker connects you with the best shippers and ensures that your freight is shipped. If you need to transport goods domestically in the U.S., contact A1 Freight Solutions at info@a1fsinc.com or 786-375-9420. We help you navigate the world of shipping and provide the correct solution for moving your business forward.