POSCO's plan to launch logistics affiliate causes stir
Choi Doo-young, left, head of the Korean Federation of Port & Transport Workers' Union, speaks at a press conference to discuss POSCO's plan to launch a logistics affiliate, at the Four Seasons Hotel Seoul on May 19. Yonhap
By Lee Min-hyung
POSCO's plan to launch a logistics affiliate is drawing a severe backlash from the shipping industry.
The conflict has arisen from the steelmaker's planned establishment of POSCO Global Smart Platform (GSP) by the end of the year. Initially, the company was supposed to finish launching the affiliate by July, but decided to delay the move amid fierce opposition from the local maritime logistics industry
The industry is concerned that POSCO will pose a serious threat to existing logistics and shipping companies. It argues that POSCO's expansion into the sector will weaken the industry and provide ammunition for other conglomerates to join in.
But POSCO is remaining unwavering in its position, with the aim of turning the firm into an advanced logistics platform based on artificial intelligence. The company said it does not have any intention of hurting other firms. It also argues the move is part of its efforts to cut the logistics costs by creating a subsidiary to handle all logistics for POSCO and its affiliates.
Last year alone, POSCO spent about 3 trillion won transporting 160 million tons of products.
“POSCO reported its first deficit in the second quarter, and concerns are the firm is in its worst crisis,” an official at the Korea Ship Owners' Association said. “POSCO is apparently seeking to shift such a burden to the domestic logistics industry by seeking to launch the subsidiary.”
Unions at local shipping and logistics companies are also stepping up criticism of POSCO. They will stage a protest in Seoul unless the steelmaker drops the move.
But POSCO said the decision was “inevitable” at a time when the company and its major affiliates are spending too much on transportation contracts.
“The logistics function is dispersed among various affiliates, such as POSCO International, SNNC and POSCO C&C,” the company said. “By integrating the logistics into a single company, POSCO aims to promote efficiency and improve expertise while eliminating redundancy and dissipation.” POSCO also pledged to build a cooperative logistics environment with its partners.
“The affiliate is to institute a direct contract method with freight owners as a measure to promote fair competition and shared growth,” it said. “A mobile platform will be introduced where freight owners can directly participate in the bidding, and settle freight transportation and shipping charges.”
Under the Maritime Transport Act, freight owners cannot tap into the shipping industry unless they receive consensus from a third-party consultative party consisting of industry experts.
Amid strong opposition from the industry, POSCO CEO Choi Jeong-woo also reaffirmed it does not have any plans to tap into the shipping industry. But the logistics industry is concerned that POSCO will take advantage of a legal blind spot and eventually expand into shipping and transportation.
The ship owners' association is also teaming up with the Korean Federation of Trade Unions and other logistics associations nationwide to stop POSCO from launching the subsidiary.