June 10, 2022
SEOUL – Manufacturers in the fields of auto, steel and construction that rely heavily on supply deliveries via freight trucks expressed concerns over intensifying logistics disruptions caused by a unionized cargo drivers’ strike on Thursday.
According to the industry on Thursday, the country’s largest automaker Hyundai Motor Group has suspended operations of four factories inside its Ulsan plant due to delay in auto parts supply. Some 6,000 units of vehicles, including flagship models like GV80 and Ioniq 5, are built here on a daily basis. Some 11,000 trucks carrying auto parts arrive at the Ulsan plant daily.
The company said the unionized cargo truckers have been blocking entries of commercial vehicles carrying auto parts to the Ulsan plant since Wednesday afternoon.
As the automaker builds its product based on the just-in-time (JIT) supply chain model, a delay in a single auto part can cause problems in manufacturing vehicles. To prevent further delivery delays, Hyundai Motor Group’s sister company Kia has asked employees to drive finished cars like Kia SUV Sportage from its Gwangju and Gwangmyung plants to shipping yards. Vehicles are normally delivered to shipping yards via car carriers.
Supply disruptions have also hit the cement industry hard, with businesses suffering at least 30 billion won ($23 million) in sales losses since the protest began on Tuesday.
Sampyo Industry, a construction materials supplier, said all of its 17 ready-mixed concrete factories located in Seoul and outer region have suspended their operations.
The Korea Cement Association said Thursday that its shipment of cement dropped nearly 90 percent from 180,000 to 13,000 metric tons.
Construction companies also voiced concern, as it has become difficult for ready-mixed cement and steel pipes – which are key construction materials — to reach construction sites across the country.
Steelmaker Posco said a total of 35,000 tons of steel products were left behind at its manufacturing factories in Pohang and Gwangyang as of Thursday. The company official said the group has been discussing ways to make extra storage rooms at its factories to store the products, and emergency transportation measures to minimize risk.
Hyundai Steel has also completely stopped shipment of the 40,000 tons of steel products which are normally sent out in a single day.
Tire manufacturers have also been hit. Hankook Tire said tire shipments from its Daejeon factory has been reduced to 30 percent of the usual daily average. Meanwhile, Kumho Tire has stopped shipments from all three of its factories in the country.
According to the Korea International Trade Association, more than 100 complaints have been reported due to the unionized cargo truckers’ strike. Of them, 29 reports were about having to pay cancellation charges; 23 were about supply delivery for export delays; and 19 were about delays in securing raw materials. Others were about production suspensions, rise of logistics costs and issues with shipping.
On Tuesday, about 6,500 out of 22,000 members of the Cargo Truckers Solidarity began a general strike, demanding the government extend a freight rate system meant to guarantee their basic wages amid soaring diesel prices.