Logistics bottlenecks – strikes in South Korea could exacerbate chip shortages

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Logistics bottlenecks – strikes in South Korea could exacerbate chip shortages

South Korean truck drivers are putting pressure on supply chains, which are already under pressure, with their strike over high fuel costs that has been going on for days. At the port of Busan – which handles 80 percent of the exporting country’s shiploads – container traffic fell to a third of normal levels on Friday.

In Incheon this was only 20 percent for the fourth day in a row, while container traffic in the port of the industrial center Ulsan came to a complete standstill. Production at Hyundai’s largest plant had previously been halved, while other companies such as steel giant Posco complained about delivery halts.

Chip shortage can worsen
The unions are now also targeting the battered chip industry. The supply of raw materials for the production of semiconductors made in Ulsan must be stopped, union official Park Jeong-tae told Reuters. Chip manufacturers Samsung Electronics and SK Hynix declined to comment.

South Korea has a strong international network thanks to global companies such as Samsung and is a major supplier of semiconductors, smartphones, automobiles, batteries and electronic items. Global supply chains are already under pressure after weeks of lockdowns in Chinese cities such as China. Chips are scarce worldwide, which is also the case with German car manufacturers. The South Korean Automobile Industry Association described the strike as “extremely selfish”.

The consequences will probably also be felt in Europe
According to the Kiel Institute for the World Economy (IfW), the disruptions in South Korea were also felt in Germany. “For the German economy, South Korea plays in the second division compared to its big neighbor China,” IfW trade researcher Vincent Stamer told Reuters. “But the country is Germany’s fifth most important trading partner outside geographical Europe and is therefore even more important than Mexico or Canada.” Particularly in the electronics sector, the country is very well integrated in global supply chains and therefore important for Germany.

About 35 percent of the drivers’ union members took part in the strike, which represented about 7,500 workers, according to the Ministry of Transport. The government estimates that about 6 percent of the country’s 420,000 truck drivers are unionized. The strikers are demanding higher wages given the sharp rise in fuel prices. President Yoon Seok Yeol warned strikers against violence.

Source: Krone

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