S Korea army trucks used to offset strike impact

16 June 2008 06:20  [Source: ICIS news]

S Korea army trucks used to offset strike impactBy Brian Myung

SINGAPORE (ICIS news)--South Korean authorities on Monday were trying to mitigate the impact of the nation-wide truckers’ strike by deploying army lorries while urging all affected companies to negotiate with the union for a quick end to the crisis.

The government has ordered 100 of the Army’s chemical transport trucks to be dispatched to the various affected ports in Busan and Gwangyang to help move cargoes from the ports - which have been close to maximum capacity – to their destinations inland.

The strike by around 15,000 truckers for better wages and lower diesel prices – which started early last week in Daesan and spread to Yeosu and Ulsan – has engulfed the whole country. By halting the movement of goods over roads, it threatens to paralyse South Korea’s economy

Noting that the economy was not doing well, President Lee Myung Bak said companies and the union should make concessions to resolve the issue as early as possible, local media reported.

Petrochemical firms have hired self-employed workers and non-union members to transport smaller cargoes. The size of the trucks were 1.5 tonnes on average however, much smaller than the normal container trucks which are 20 tonnes, and could not fully compensate for the ones that were not available.

“If companies do not negotiate with the union to settle the problem soon, they will be forced to shut down within the next week or so,” a Yeochun based company source said, adding that the union was firm in its stand and had the advantage in negotiations.

Companies were heard to be making little progress in negotiating with the union as the union were asking for an average of 30% increase in transportation fees.

Some companies like Samsung Petrochemical Co were heard not to be negotiating with the union as 90% of the productions were for exports and the remaining 10% sold on ex-tank basis domestically.

The union approached LG Chem, Lotte Daesan and Samsung Total simultaneously requesting for a 30% hike in transportation fees while approaching Hyundai Oilbank with a request for 40% increase, sources said.

The Korea International Trade Association (KITA) estimated losses from the strike at $14.75m, of which $11.75m was from the brake on exports.

Ulsan-based Korea Alcohol Industries, the country’s sole butyl acetate producer, however, has not been affected.

The company had low inventories following curtailed production in May owing to a shortage of feedstock n-butanol and weak demand, a company source said.

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By: Brian Myung
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