Will It Pass the National Assembly... Full-Scale Discussion on the 'Safe Freight Rate System' That Sparked the Cargo Solidarity General Strike

Cargo Solidarity Union Demands Abolition of Safety Freight Rate Sunset Clause... Calls for Expansion of Vehicle Types and Item Categories

[Image source=Yonhap News]

[Asia Economy Reporters Minyoung Kim, Hyunji Kwon] As the National Assembly's Special Committee on Livelihood Economy Stabilization begins full-scale discussions on the reform of the Cargo Truck Safety Freight Rate System, the key issues are expected to be whether to abolish the safety freight rate system and the expansion of applicable vehicle types and items. In particular, there are differing opinions between cargo truck owners and shipper organizations, as well as between the People Power Party and the Democratic Party of Korea regarding the continuation of the safety freight rate system, so it is anticipated that reaching an agreement will take considerable time. The Cargo Solidarity, which staged a transportation refusal movement last June, has warned that if the abolition of the safety freight rate system and the expansion of all items and vehicle types are not properly addressed, they will launch a general strike, raising concerns about a second conflict between the government and Cargo Solidarity.

According to the National Assembly on the 1st, the Special Committee on Livelihood Economy Stabilization held a plenary meeting at the National Assembly in Uijeongbu, Seoul on the 29th of last month to discuss the agenda related to the 'Cargo Safety Freight Rate System.' At this meeting, the ruling People Power Party advocated for the extension of the sunset clause, while the opposition Democratic Party of Korea demanded the abolition of the sunset clause, showing a difference in opinions.

The safety freight rate system was introduced with a three-year sunset clause and was scheduled to automatically expire after December 31 of this year. However, Cargo Solidarity demanded the abolition of the sunset clause and began a transportation refusal in June. The Ministry of Land, Infrastructure and Transport agreed to continue the 'Cargo Truck Safety Freight Rate System (Container·Cement)' and discuss item expansion, which led to the suspension of the general strike.

The Cargo Solidarity headquarters is demanding the abolition of the sunset clause, the institutionalization of the system, and the full expansion of safety freight rate items. The Democratic Party of Korea, together with Cargo Solidarity, is pushing for a legislative amendment to abolish the sunset clause and expand the applicable items of the safety freight rate system to include finished vehicles, steel products, petroleum and petrochemical products (tank lorries), grains and feed, and transshipment containers.

Regarding the continuation of the safety freight rate system, the positions of cargo truck owners and shipper organizations also differ. Cargo truck owners argue that the current freight structure makes it difficult to reflect oil prices in freight rates, whereas the safety freight rate system regularly reflects oil prices in freight rates, so it is necessary to expand it to other items.

On the other hand, shipper organizations argue that the current safety freight rate system restricts free contracts between companies and has no effect on improving traffic safety, which was the original purpose of the system, so it should be abolished. They point out that in major advanced countries such as the OECD, there are no cases where the state enforces cargo freight rates and punishes shippers, who are consumers of cargo transportation services, for violations. In particular, regulating freight rates between shippers and carriers, which are contracts between companies, and uniformly guaranteeing the carriers' share is against the principles of the market economy.

The cargo transportation industry generally agrees to maintain the current system to protect the cargo industry, but there are various opinions on item expansion. However, they unanimously agree that the carriers' share must be sufficiently guaranteed if the system is maintained.

The special committee, which is the discussion body, sees that since Cargo Solidarity demands the full expansion of the safety freight rate system to all items and shippers strongly oppose it, in-depth and sufficient discussions on whether to expand the items are necessary. Accordingly, they stated that they will approach this cautiously by comprehensively considering the evaluation of the implementation results of the currently applied items and the technical and practical applicability such as standardization and specification.

The special committee also decided to improve problems exposed in the operation of the system. First, they will review whether it is appropriate to enforce shipper freight rates, who are consumers of cargo transportation services and not direct contracting parties with cargo truck owners. In addition, considering that the current penalty level, which imposes a uniform fine of 5 million KRW per case regardless of the severity of the violation, is excessive, they will also consider introducing improvement order systems or phased imposition.

The cost calculation method will also be made more objective. They plan to review the appropriateness of cost calculation centered on surveys and consider securing objectivity in freight calculation by utilizing public data such as the oil subsidy management system, vehicle management system, and port container entry management system. Furthermore, when forming the Safety Freight Rate Committee responsible for these decisions, it will be composed of four public interest members and three representatives each from shippers, carriers, and cargo truck owners.