[One Week of Cargo Solidarity Strike] 'Railway' Paralysis Sparks Comprehensive Crisis in Industry (Comprehensive Report 2)

More Than Half of Construction Sites 'Closed for Business'
Automobile, Shipbuilding, and Home Appliance Companies Also Take a Direct Hit

[Image source=Yonhap News]

[Asia Economy Reporters Choi Dae-yeol, Kim Min-young, Jung Dong-hoon] As the Cargo Solidarity Union's strike enters its second week, logistics disruptions are spreading across national key industries. More than half of construction sites face the risk of 'temporary closure,' and due to logistics transport disruptions, the container storage rate (the ratio of containers actually stored to the container storage capacity at ports) at ports nationwide is approaching saturation.

According to the business community on the 13th, POSCO has suspended operations at the wire rod mill and cold rolling mill of its representative domestic steel manufacturing plant, the Pohang Steelworks, starting today. A POSCO official said, "With land transport shipments completely halted, the product warehouses within the steelworks are nearly full," adding, "From 7 a.m. today, operations at the wire rod and cold rolling mills of Pohang Steelworks have been stopped." Currently, due to a shortage of product warehouse space at the wire rod mill of Pohang Steelworks, products are being stockpiled in the steelworks' parking lots and roads. Based on daily production, a reduction of about 8,000 tons of wire rod products and about 4,500 tons of cold-rolled products is expected, totaling approximately 13,000 tons.

As steel products are not delivered on time, the automobile, shipbuilding, and home appliance industries have also been directly hit. This is affecting the entire manufacturing sector, including automotive steel plates, shipbuilding heavy plates, and home appliance color steel plates.

Electronics companies such as Samsung Electronics and LG Electronics are also facing logistics disruptions. Although they operate their own logistics systems, the situation is widespread and showing signs of prolonged disruption, causing some setbacks.

In particular, the automotive industry, already struggling with a shortage of vehicle semiconductors, is suffering further as the logistics strike hits, causing daily production to plummet and sales losses to snowball. In the case of Hyundai Motor Company, it was reported that daily production at the Ulsan plant has decreased by about 2,000 vehicles.

[Image source=Yonhap News]

To respond to the general strike by the Cargo Solidarity Union of the Korean Confederation of Trade Unions, the automobile industry formed a joint task force (TF) and began operations on this day. Samsung Electronics and LG Electronics also faced production and logistics disruptions in home appliances. The TF is led by Kim Joo-hong, head of the Automobile Industry Association Policy Research Institute, and includes five domestic automakers such as Hyundai Motor and Kia, the Korea Automobile Industry Cooperative, the Automotive Parts Industry Promotion Foundation, and parts industry groups affiliated with each automaker.

The association stated, "Due to the strike and logistics obstruction, parts supply is disrupted, leading to delays in finished vehicle production, which in turn reduces parts demand, creating a vicious cycle," adding, "We will monitor the supply situation of finished vehicles and parts daily, assess on-site damage such as production and export disruptions, and identify recommendations for the government."

According to the industry, Hyundai Motor's Ulsan plant is unable to produce about 2,000 vehicles daily due to delayed parts supply. Considering the plant's average daily production of about 6,000 vehicles, this means only about two-thirds of normal output is being produced. Along with this, at Kia's Gwangju plant, finished vehicles cannot be sent to the delivery center, so sales headquarters staff are personally driving the cars to move them. With semiconductor shortages already causing significant delivery backlogs, the strike's impact is expected to further delay customer deliveries.

According to the Korea International Trade Association, as of 9 a.m. on this day, 160 cases of difficulties caused by the Cargo Solidarity Union strike were reported. Of these, 55 cases (34.4%) were related to imports, including 25 cases (15.6%) of raw material procurement disruptions, 15 cases (9.4%) of production stoppages, and 15 cases (9.%) of increased logistics costs. Export-related cases totaled 105 (65.6%), accounting for more than half.

Meanwhile, according to the Ministry of Land, Infrastructure and Transport, as of 10 a.m. on this day, about 6,600 members, representing 29% of the total union membership (approximately 22,000), participated in the strike. The container storage rate at ports rose slightly to 72.2% from 71.5% the previous day, indicating a shortage of space to stack containers. The container storage rate is most efficient around 70%, and rates above 80% are considered saturated.

Regarding the Cargo Solidarity Union's claim of negotiation breakdown, the Ministry of Land, Infrastructure and Transport stated, "The Cargo Solidarity Union proposed alternatives regarding the abolition of the sunset clause on the Safe Freight Rate System and expansion of applicable items, but after review, acceptance was difficult, leading to a halt in talks," adding, "We plan to continue dialogue with the Cargo Solidarity Union to promptly resolve this situation," keeping the door open for negotiations.