Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
Prolonged truckers' strike feared to worsen trade deficit
Containers are stacked at a logistics center belonging to Hankook Tire in Daejeon, as cargo transport has been suspended due to a nationwide strike of unionized cargo truckers since Nov. 24. Yonhap
By Yi Whan-woo
By Yi Whan-woo
A nationwide strike by unionized cargo truckers is adding to concerns over Korea's worsening trade balance as the protest is hurting the nation's exports, which fell for the second straight month in November, according to industry officials Sunday.
The concerns come as the trade balance has remained in the red for the eight consecutive month in November for the first time since the 1997-1998 Asian financial crisis.
The Korea International Trade Association (KITA) said it has been receiving complaints from exporters over increases in domestic shipping costs, the disrupted supply of raw materials and suspensions of production since the strike began on Nov. 24.
In particular, they are being asked to pay penalties to overseas buyers for failing to deliver goods on time, and in some extreme cases, are losing customers, KITA noted.
Such business obstacles come amid speculation that Asia's fourth-largest economy is likely to see exports continue to decline in December due to the unfavorable global trade environment.
Korea's exports shrank 14 percent year-on-year to $51.91 billion in November, following a 5.7-percent drop to $52.48 billion in October, in the midst of dwindling global demand for semiconductors ― a staple export item ― as well as China's growth slowdown.
With surging energy prices, imports have exceeded exports since April and resulted in a trade deficit of $7.01 billion last month.
It was the first time since 1997 that Korea posted a trade deficit for the eighth month straight.
The trade deficit for the first 11 months of 2022 totaled $42.6 billion, which already surpassed the record-high yearly shortfall of $20.62 billion logged in 1996, according to the Ministry of Trade, Industry and Energy.
“Under the circumstances, exports may suffer again in December if unionized truckers continue to refuse transporting cargo,” International Trade and Investment Deputy Minister Moon Dong-min warned last week, noting that outbound and inbound shipments at ports across the country have been falling steeply.
He also expressed concerns that the trade deficit may reach $50 billion by the end of this year during the peak trading season.
“The government thus regards the $42.6-billion trade deficit very seriously, and correspondingly, the strike should end to normalize exports as quickly as possible,” Moon added.
The government and KITA estimate that the strike inflicted a loss of over 1.6 trillion won ($1.22 billion) so far for major industries.
Steelmakers are believed to have suffered the most, with an estimated loss of 130 billion won.
The daily estimated amount of loss is 68 billion won for petrochemical companies and 18 billion won for cement manufacturers.
Carmakers say they are losing “billions of won” every day by having to store finished cars for an indefinite period of time.
They suffered combined financial damage of 257.1 billion won for four days in June during the last strike waged by the Cargo Truckers' Solidarity.
KITA said it is considering filing a suit against the union and is consulting with the affected industries.