logistics industry

Striking South Korean truckers say they may block coal to power plant

Reuters
Striking South Korean truckers say they may block coal to power plant

STRIKE. Trucks transporting containers drive past members of the Cargo Truckers Solidarity union gathering in front of an inland containers depot in Uiwang, South Korea, June 13, 2022.

Yonhap/Reuters

The trucker strike has cost key industrial sectors more than $1.2 billion in lost production and unfilled deliveries, the South Korean government estimates on Monday, June 13

SEOUL, South Korea – Striking South Korean truckers are considering blocking shipments of coal to a power plant if the government rejects their demands for minimum pay guarantees, a senior trade union official said on Monday, June 13.

The Cargo Truckers Solidarity Union, on strike for a seventh day, is weighing several options to press its demands, including stopping coal to generate electricity and shutting down petrochemical complexes by blocking their shipments in and out.

“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.

“But we hope such a situation doesn’t happen.”

The impact of a blockade of the power plant would be limited in terms of national electricity output, even in the high-demand summer, but would mark a significant intensification of the truckers’ action.

The strike has cost key industrial sectors more than $1.2 billion in lost production and unfilled deliveries, the government estimated on Monday, as the damage spreads deeper through Asia’s fourth largest economy.

The union is protesting against soaring fuel prices and demanding minimum pay guarantees. Four rounds of negotiations with the government have failed to find a compromise.

Some 7,050 people, or about 32% of union members, were striking on Monday, according to an updated transport ministry estimate. The ministry said in a statement it plans to continue talks with the union to resolve the situation.

Kim said his members were for now letting some movement of traffic to prevent the shutdown of petrochemical facilities, which would cost a lot of time and money to restart, but the union would “reconsider” that if the government did not show willingness to negotiate.

The strike is a major test for South Korea’s new conservative president Yoon Suk-yeol, raising the risk of eroding his support, distracting him from his agenda, and sowing the seeds of long-term antagonism with powerful unions.

On Monday, Yoon called for ways to reduce the impact of the strike on industry. A transport ministry official said no new meeting with the union was scheduled.

The strike has forced steelmaker POSCO to shut some plants because of a lack of space to store finished products.

It also caused manufacturing losses of 5,400 vehicles for South Korean automakers between June 8 and 11, according to the Korea Automobile Manufacturers Association, with Hyundai Motor cutting production for some assembly lines. Cement makers have also reduced output.

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Chips not disrupted

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

Two petrochemical industry sources, who declined to be identified, told Reuters that although naphtha crackers are still running at previous rates, some companies may be forced to halt them as soon as later this week if the situation continues.

There have been as yet no reports of major production disruption at Samsung Electronics, SK Hynix, and other semiconductor firms.

Kim Yang-pang, a researcher at Korea Institute for Industrial Economics & Trade, estimated Samsung Electronics and SK Hynix and their suppliers had enough supplies of raw materials in stock for at least two weeks.

Samsung declined to comment, while SK Hynix did not immediately respond to a request for comment.

The government has urged the truckers to return to work but said it would seek to reflect their demands in legislation. It has also deployed some 100 military vehicles to help companies with shipments.

The truckers are demanding an extension of subsidies, set to expire this year, that guarantee minimum wages as fuel prices rise. The Yoon administration says it is up to parliament to change the legislation.

As supply bottlenecks plague the global economy, any prolonged slowdown in the production and shipment of chips, petrochemicals, and autos could add to fears about rising inflation and slowing growth.

South Korea’s inflation is set to hit a 24-year high of 4.8% this year, the Organisation for Economic Co-operation and Development said last week, cutting its growth forecast to 2.7% from a December projection of 3%. – Rappler.com