One Week of Logistics Disruptions... Factories Also Come to a Halt

Steel Industry Faces Production Disruptions Due to Shipment Failures
Automotive Industry Moves Vehicles Directly
Cement Industry Accumulates 91.2 Billion KRW Losses
Widespread Industrial Losses Snowball
Negotiations Difficult, Raising Concerns of Prolonged Impact

On the afternoon of the 13th, as cement shipments were halted due to the Cargo Solidarity strike, more ready-mixed concrete plants have stopped operations, and ready-mixed concrete trucks are parked at a ready-mixed concrete company in Hwaseong-si, Gyeonggi-do.
[Image source=Yonhap News]

[Asia Economy Reporters Jonghwa Kim, Hyunseok Yoo, Donghoon Jung] Company A, a national designated blood product pharmaceutical manufacturer, has had the shipment of plasma, which is the raw material for pharmaceuticals, halted after its arrival at Busan Port due to the nationwide general strike by the Cargo Solidarity of the Public Transport Workers' Union under the Korean Confederation of Trade Unions. Company A is facing unavoidable delays in timely pharmaceutical supply due to production delays and is expected to incur losses amounting to 3 billion KRW.

Company B, which produces IPA used for semiconductor wafer cleaning and exports it to China, is currently experiencing disruptions in semiconductor production due to recent delivery delays. The company’s exports of approximately 90 tons, equivalent to about one week’s supply, have been blocked due to the Cargo Solidarity strike.

The strike by the Cargo Solidarity has brought the logistics lifeline to a halt, causing disruptions across various industries. Side effects such as delivery delays and production stoppages due to logistics disruptions are emerging rapidly, prompting President Yoon Suk-yeol to order the preparation of multifaceted countermeasures. However, with negotiations between the government and the Cargo Solidarity proving difficult to break through, concerns are rising that the strike may be prolonged.

According to industry sources on the 14th, POSCO, which had some suspension of wire rod and cold-rolled steel sheet production at its Pohang Steelworks starting the previous day, is currently experiencing production disruptions of about 24,000 tons of wire rod and cold-rolled steel sheets. Products that could not be shipped over two days amount to 70,000 tons. Hyundai Steel has also completely halted product shipments. Since the strike began on the 7th, a total of 320,000 tons of products have not been shipped from five plants including Dangjin, Incheon, and Pohang, where the usual daily shipment volume is about 40,000 tons. A Hyundai Steel official explained, "If the Cargo Solidarity strike continues, it will be inevitable to adjust inventory by controlling production volume due to limitations at the product sites."

In the automotive sector, production disruptions are occurring due to improper parts supply, and sales staff are directly moving vehicles themselves. The automotive industry task force (TF) responding to the Cargo Solidarity’s collective transport refusal estimated that production losses in the domestic finished car industry from the 8th to the 11th reached 5,400 units. The TF stated, "Production disruptions are accumulating due to parts supply shortages caused by the Cargo Solidarity’s collective transport refusal. Although road transport and alternative equipment are being deployed, if the strike prolongs, problems will arise in vehicle delivery and exports, raising concerns about comprehensive adverse effects on the automotive industry."

The cement and ready-mixed concrete industries are reaching a point where they can no longer endure the damage. The cement industry has no place to stockpile cement inventory and is forced to halt factory operations, while the ready-mixed concrete industry is pushed to the brink of a complete stop.

As of the day before, the eighth day of the Cargo Solidarity general strike, the cumulative losses in the cement industry were estimated at 91.2 billion KRW. Cement shipments were 23,700 tons, only about 13% of the approximately 180,000 tons shipped on a typical weekday during peak season, with shipment disruptions reaching 156,300 tons, resulting in losses of 14.5 billion KRW. The cumulative loss reached 91.2 billion KRW just seven days after the strike began, and it was expected to exceed 100 billion KRW today.

If the strike does not end by this weekend, some cement plants are expected to cease operations. Although efforts are being made to minimize inventory increases at production plants by converting domestic volumes to exports due to limited storage capacity, this too will reach its limit by this weekend.

The ready-mixed concrete industry, which has already stopped factory operations nationwide, is estimated to be incurring daily sales losses of 50 billion KRW. All plants of Sampyo Industry and Aju Industry have ceased operations, and only one out of 24 plants of Eugene Corporation is shipping normally.

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