Adding Insult to Injury... Inevitable Snowball Damage for Companies and Consumers

War-Driven Global Logistics Cost Increase

Already in Emergency Management Situation

Cost Burden... Management Risks Growing

Construction Sites Facing Shutdown Crisis

If Special Vehicles for Cement Transport Stop

There Is Virtually No Way to Respond

If Supply Shortages Cause Delivery Disruptions

Small and Medium Enterprises Bear the Damage and Losses

Delays in Soju Product Shipments from Factories

Convenience Store Industry Faces Urgent Need to Secure Inventory

On the 7th, the Cargo Solidarity Headquarters of the Public Transport Union under the Korean Confederation of Trade Unions began an indefinite general strike from midnight, causing trucks to stop operating at the Seongsin Cement Suseok Plant in Mapo-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporters: Kim Jonghwa, Kim Dongpyo, Song Seungyun, Moon Chaeseok] Companies operating under emergency management systems due to rising global logistics costs caused by geopolitical risks are on high alert as the recent Cargo Solidarity Union strike adds to their challenges. If the strike prolongs, it could negatively impact inflation, which is the biggest risk to our economy. After COVID-19, there was optimism about economic recovery due to increased cargo volumes, but this outlook now seems uncertain.

'Adding Insult to Injury' Amid Global Logistics Crisis

The industry’s main concern is the timing of this strike. It comes amid global logistics disruptions caused by rising oil and petroleum product prices following the Russia-Ukraine war. The sectors expected to suffer immediate visible damage include construction-related industries and distribution, with the shipping industry also unlikely to escape harm.

The cement and ready-mixed concrete (remicon) industries recall the Cargo Solidarity Union strike last year with concern. During peak season, domestic daily cement demand is about 200,000 tons, but during the strike in November last year, daily shipments dropped sharply to around 40,000 to 50,000 tons. Remicon companies typically stock only one or two days’ worth of cement demand domestically, so supply disruptions are inevitable depending on the strike’s impact. There are approximately 2,700 to 3,000 Bulk Cement Trailers (BCTs) operating nationwide, with about 30%, or roughly 1,000, belonging to the Cargo Solidarity Union. Based on past cases, if union-affiliated BCT drivers block the cement shipment plants or obstruct non-union drivers, there is no clear way to prevent this.

A cement industry official said, "The Cargo Solidarity Union has already started blocking the main gates of cement plants since the morning of the 7th, causing transport disruptions. Considering the recent shortage of cement inventory and the immediate shipment after production, the construction and remicon industries will also suffer damage."

The strike is also directly hitting the distribution sector, where consumers can feel the impact immediately. A representative product is soju. Companies are adjusting order volumes in preparation for the strike. Seven Eleven has limited each store to ordering only one box of bottled and PET products since the 4th. Emart24 has restricted orders to a maximum of three boxes for bottled products. CU has decided to stop orders for Chamisul Fresh bottled products from some logistics centers starting that day. Earlier, about 130 truck drivers belonging to Suyang Logistics, a subcontracted freight carrier for HiteJinro, joined the Cargo Solidarity Union under the Korean Confederation of Trade Unions in March and began striking. On the 2nd, striking truck drivers blocked deliveries by other truck drivers, causing inventory overflow at the Icheon plant and temporarily halting production. HiteJinro plans to normalize logistics deliveries through additional carrier contracts, but if this situation continues, resolution will be difficult.

Construction Sites in Critical Condition; Long-Term Strike Could Hit Large Corporations

Construction sites, already suffering from raw material shortages, are being pushed toward shutdown due to logistics paralysis. There is particular concern about Bulk Cement Trailer (BCT) vehicles stopping. A CEO of a specialized construction company in the Seoul metropolitan area said, "Cement must be transported quickly from factories to remicon companies. If the strike prolongs, it will lead to remicon supply shortages, impacting the entire construction industry."

Since the strike was anticipated, large construction companies have been able to minimize short-term damage by stockpiling materials, but small and medium enterprises find this difficult. The CEO added, "If supply shortages cause delivery disruptions, small construction companies are likely to be deprioritized. They may bear the full brunt of damages and losses caused by construction delays." Another CEO of a specialized construction company said, "With ongoing wage increases and rising raw material prices since last year, small construction sites are already on the brink of collapse. Now, with the logistics strike added, it feels like giving up."

If the Cargo Solidarity Union strike prolongs, even large corporations that have stockpiled raw materials are expected to face production disruptions. In the shipping industry, where logistics costs heavily impact management, loading and unloading cargo on ships is handled by shipping companies, so they are outside the direct influence of the strike. The problem lies in land transportation, which heavily depends on union members. An HMM official said, "There is no immediate impact on ship arrivals and departures, but if the strike intensifies, delays in container (box) movement within ports are expected."

The steel industry plans to use logistics subsidiaries and non-union truck drivers for transportation but acknowledges that some decline in sales or profits cannot be ruled out.

This content was produced with the assistance of AI translation services.