Hyundai and Posco’s operations hit by intensifying South Korea trucker strike

The operations of Hyundai Motor and steelmaker Posco are suffering supply chain disruptions as thousands of South Korea’s truckers escalated a strike on Friday.

About 7,800 members — or roughly a third of the truckers’ union — are expected to join the four-day strike, according to Seoul’s transport ministry, piling pressure on the country’s ports and container depots.

The truckers are demanding that President Yoon Suk-yeol’s new government extend temporary rules that guarantee freight rates amid higher fuel prices. The rules, which were established two years ago, are set to expire at the end of 2022.

The widening strike threatens to put further strain on global supply chains snarled by China’s coronavirus lockdowns and the war in Ukraine. South Korean shipments of raw materials for semiconductors and petrochemical products, as well as automobiles, steel and cement, are expected to be sharply curtailed.

“We are refusing to deliver products regardless of the industries and are seeing broader effects as the strike goes on for days,” said Park Gui-ran, an official with the Cargo Truckers Solidarity union. About 6 per cent of the country’s 420,000 truckers belong to the union, according to government estimates.

Experts said the strike could last for weeks, slowing industrial activities in Asia’s fourth-largest economy. Operations at the country’s Busan and Ulsan ports have also been slowed by the strike, the transport ministry said.

Hyundai Motor has already suffered partial production disruption at its plants in Ulsan as unionised truckers refused to deliver parts and assembled vehicles.

The company is “closely monitoring the situation and we hope to normalise production soon to minimise the impact on our customers”, Hyundai said in a statement.

Steelmaker Posco said it has been unable to ship about 35,000 tonnes of steel products a day because of the strike, about a third of its usual daily shipments.

Analysts warned of bigger production losses if the strike was protracted. “It is too early to talk about the scale of disruption but production losses could become serious if the strike lasts more than a week,” said Chung Sung-yop, an analyst at Daiwa Capital Markets.

President Yoon has urged strikers not to use violence and said he “will handle any illegal activities by workers by the law”. Police have arrested about 30 union members for disrupting product deliveries. The government has mobilised state and military vehicles to minimise the disruption to logistics.

“It looks difficult to reach a compromise soon because union members are adamant about their demands while the government stresses law,” said Lee Hang-koo, an adviser at the Korea Automotive Technology Institute.