S Korea unionised truckers’ strike begins; may disrupt petrochemical ops anew

Nurluqman Suratman

24-Nov-2022

SINGAPORE (ICIS)–South Korea’s unionised cargo truck drivers began a nationwide strike on Thursday, potentially disrupting petrochemical production and logistics operations across the country.

Leading the protest is the Cargo Truckers Solidarity Union (CTSU), which is affiliated with the Korean Confederation of Trade Unions. The group is calling for the South Korean government to extend its “Safe Trucking Freight Rate” policy beyond December this year.

“At least 25,000 truckers are expected to join an indefinite strike over the government’s failure to live up to its promises on Safe Rates legislation,” the International Transport Workers’ Federation (ITF) said in a statement.

The union kicked off 16 rallies across the country on Thursday morning, including at a port in Ulsan, which houses Hyundai Motor’s main manufacturing plant, according to a Reuters report.

There have been no clashes between the protesters and the police so far, it said.

A prolonged strike could cause delays in deliveries of polyolefin cargoes, ICIS analyst Amy Yu said, noting that South Korea is a major exporter of polyethylene (PE) and ethylene vinyl acetate (EVA).

“If it is longer, the delivery of the polyolefin cargoes will be delayed due to the impact of the strike … Referring to the situation of similar event in June, some S Korea producers may reduce the operating rates as well,” Yu said.

In June this year, the eight-day strike held by truckers over the same issue was estimated to have cost the South Korean economy $1.2bn and sent shockwaves through global supply chains.

The safe trucking freight rate system introduced in 2020 guarantees a minimum annual wage to truckers, to help them cope with surging fuel costs and to deter dangerous driving. It is due to expire at the end of this year unless lawmakers pass a legislation for the policy to continue.

The policy is limited to the haulage of bulk cement and containers, but trucker unions in South Korea have been lobbying for its expansion to other trucking services and be made permanent.

“The government is backtracking on its promise to the determent of workers and public safety,” Bongju Lee, president of the Korean Public Service and Transport Workers’ Union (KPTU-TruckSol), an affiliate of ITF, said on 23 November.

“We are prepared to strike until that changes. Legislation to make Safe Rates permanent and expand coverage must pass in the National Assembly. It’s as simple as that.”

In June, the South Korean government had agreed to prolong the duration of the policy and to actively discuss extending its coverage to more trucks but has since retracted this position.

Several producers in the petrochemical hub of Ulsan at the time were forced to consider production cuts amid logistics disruption.

South Korean Prime Minister Han Duck-soo on Thursday called for the unionised truckers to return to work, urging the CTSU to consider the “severe economic conditions” that the country is under currently, local news agency Yonhap reported.

Han also called on the National Assembly to swiftly review a bill to extend the system, and renewed a pledge that the government will sternly respond to any illegal activities by the truckers’ union.

The South Korean government this week offered a three-year extension to the system for the containers and cement sectors but declined to extend the benefits to certain other industries such as fuel and steel.

“We will strictly crack down on acts of sabotage by the truckers’ union so that safe operation can be guaranteed,” transport minister Won Hee-ryong said in a separate statement on Thursday, noting that South Korea is currently in a “difficult national economic situation” amid high interest rates due to runaway inflation.

The country’s central bank – the Bank of Korea (BoK) – raised on Thursday its benchmark interest rate for the seventh time in a row. The policy rate was increased by 25 basis points to 3.25% – the highest since 2012.

The marked depreciation in the South Korean won (W) has been aggravating inflationary pressures on the Asia’s fourth largest economy, which is heavily reliant on energy imports.

The won has shed more than 10% of its value against the US dollar since the start of the year.

“Going forward, domestic economic growth is expected to weaken, affected by the global economic slowdown and the increase in interest rates,” the BoK said in a statement.

On a quarter-on-quarter seasonally-adjusted basis, South Korea’s GDP growth slowed to 0.3% in July-September 2022, marking the slowest pace of increase since the third quarter of 2021 amid high inflation and slowing exports. Year-on-year GDP growth in the third quarter was 3.1%.

Focus article by Nurluqman Suratman

($1 = W1,326.51)

Thumbnail image: Truckers’ strike in Seoul, South Korea on 14 June 2022 (By Ahn Young-joon/AP/Shutterstock)

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