[News Terms] What Is the 'Safe Freight Rate System,' a Key Issue in the Cargo Solidarity Strike?

On June 7, when the Cargo Solidarity of the Korean Public Service and Transport Workers' Union under the Korean Confederation of Trade Unions went on a general strike, trucks belonging to the Cargo Solidarity that had stopped operating were lined up in front of the Hite Jinro Icheon Plant in Icheon-si, Gyeonggi-do. [Image source=Yonhap News]

The Cargo Solidarity Headquarters of the Public Transport Union under the Korean Confederation of Trade Unions (KCTU) announced that it will begin a general strike starting at midnight on the 24th. The reason the Cargo Solidarity, which also went on a general strike once in June, is striking again is due to conflicts with the government and cargo owners over the 'Safe Freight Rate System.' The Safe Freight Rate System, which has functioned as a de facto minimum wage for the freight transport industry over the past three years, was introduced as a sunset system and was set to expire at the end of this year. Although the government has stated it will extend the Safe Freight Rate System for another three years, the Cargo Solidarity demands the abolition of the sunset clause to make the system permanent and the expansion of applicable items.

Government-Labor Relations at an Impasse over Safe Freight Rate System's 'Sunset Clause' and 'Scope of Application'

The Safe Freight Rate System legally guarantees the minimum freight rate (transportation fee) that cargo truck owners receive. Simply put, it can be seen as the minimum wage for the freight transport industry. Cargo owners who violate this are fined 5 million won. This system was introduced to improve the labor conditions of cargo truck owners who previously suffered from low wages without legally guaranteed minimum freight rates. The purpose is to guarantee a certain freight rate to prevent overwork, overloading, and speeding. It was led by the ruling Democratic Party during the Moon Jae-in administration in 2018 and implemented starting in 2020.

In fact, the Safe Freight Rate System has been shown to improve the labor income of cargo truck owners. According to data analyzed by the Korea Transport Institute on the effects during the two years after the system's implementation, the monthly net income of container truck owners rose from 3 million won in 2019 to 3.73 million won last year, an increase of 24.3%, while cement truck owners saw their income rise from 2.01 million won to 4.24 million won during the same period, a 110.9% increase. A reduction in labor hours for cargo truck owners was also observed. The average monthly working hours decreased by 15.6 hours and 42.6 hours, respectively.

The problem is that the Safe Freight Rate System was introduced temporarily as a three-year sunset system. Accordingly, unless a separate legal amendment is made, the system will be abolished on December 31. In response, the Cargo Solidarity launched a general strike in June, six months before the system's expiration, demanding the abolition of the sunset clause, expansion of applicable items, and an increase in transportation fees from the government. At that time, the government and labor agreed to continue the Safe Freight Rate System, and the strike ended after eight days. However, the Cargo Solidarity insists on abolishing the sunset clause, while the government and ruling party emphasize extending it, leaving the spark for another strike.

Ruling Party and Government Push for '3-Year Extension' of Safe Freight Rate System... Cargo Solidarity Criticizes as Merely Trying to Prevent General Strike

The Cargo Solidarity announced it will begin an indefinite general strike starting at midnight on the 24th. They are demanding the abolition of the sunset clause and the expansion of the Safe Freight Rate System, which currently applies only to export-import containers and cement, to include steel, oil tankers, automobiles, and other sectors.

After the June general strike ended, discussions related to the Safe Freight Rate System were held once on September 29 at the Special Committee on Livelihood Economy and Safety. However, the discussions were sluggish, and the Ministry of Land, Infrastructure and Transport has not clearly stated how it will operate the system going forward. The government maintains that the effectiveness of the Safe Freight Rate System and its impact on traffic safety have not been verified. On the 22nd, the ruling party and government concluded through a party-government meeting that they would pursue a '3-year extension' of the system but that expanding the applicable items is impossible.

The Cargo Solidarity insists it will proceed with the general strike as planned. About 25,000 Cargo Solidarity members will participate in the strike, blocking major logistics hubs including Pyeongtaek Port, Busan Port, Gwangyang Port, and the inland container depot (ICD) in Uiwang. The Cargo Solidarity criticizes the ruling party and government's conclusion as a mere stopgap measure to prevent the general strike.

On the 23rd, Park Yeon-su, Policy Planning Director of the Cargo Solidarity, said in an interview with MBC Radio, "There was no dialogue until now, and now threatening us to call off the strike is just a statement desperate to prevent the general strike," adding, "The biggest reason for this general strike is the government's breach of the June general strike agreement."