[News Terms] 'Pyojun Unimje' to Replace 'Hwamulcha Safe Unimje'

Changing the Name as a Pretext for the Cargo Solidarity Strike
Removing Punishment Clauses for Shippers and Announcing Guidelines Annually

[Asia Economy Reporter Jo In-kyung] The government is pushing to introduce a 'Standard Freight Rate System' with reduced enforceability to replace the 'Cargo Truck Safety Freight Rate System,' which sparked last year's Cargo Solidarity strike.

Earlier, after the 16-day-long general strike by the Cargo Solidarity ended, the Ministry of Land, Infrastructure and Transport (MOLIT) formed a 'Logistics Industry Development Council' involving cargo owners, transport companies, and cargo truck owners from the 20th of last month to discuss the revision of the Safety Freight Rate System. Based on this, a de facto government proposal was unveiled on the 18th at a public hearing hosted by MOLIT and the Korea Transport Institute.

The Safety Freight Rate System guaranteed a minimum transportation fee to cargo truck owners to prevent overwork and speeding, and imposed a fine of 5 million KRW on cargo owners (companies commissioning freight transport) who paid less than that. The Moon Jae-in administration promoted this as a national agenda and introduced it with a three-year sunset clause in 2020 for cement and container freight.

The newly devised Standard Freight Rate System is a kind of guideline without enforceability, unlike the Safety Freight Rate System. Freight rates from cargo owners to transport companies are not mandatory, and the standard freight rates are announced annually. Cargo owners can autonomously set freight rates and enter into transport contracts without being bound by government-set rates. However, the freight rates that transport companies pay to cargo truck owners remain mandatory as before.

Penalties for transport companies that do not comply will be eased by first issuing correction orders and then gradually increasing fines. However, if cargo owners and cargo truck owners enter into direct contracts, correction orders will be issued and fines may be imposed on the cargo owners. Additionally, cargo truck owners whose income exceeds a certain level will be excluded from the Standard Freight Rate System. The government plans to introduce the Standard Freight Rate System with a three-year sunset clause limited to cement and container freight and will review its continuation after performance analysis.

The government is also pursuing measures to phase out consignment companies, known as jibip companies, which receive consignment fees without providing transport work, from the market. Jibip companies have been criticized for engaging in so-called 'license plate trading,' charging 20 to 30 million KRW for license plate usage fees and 200,000 to 300,000 KRW monthly consignment fees. MOLIT plans to impose minimum transport obligations on transport companies and manage their performance, reducing the number of cargo trucks if transport is not properly conducted. Recovered license plates will be given to cargo truck owners who had been renting them from the respective transport companies.

The government plans to push forward an amendment to the Cargo Truck Transportation Business Act containing these measures through parliamentary discussions. However, fierce opposition from cargo truck drivers and transport companies, as well as unclear consent from the opposition Democratic Party of Korea, is expected to make the bill's passage difficult.