Intro/Outro (00:01):
Welcome to dial P for procurement, a show focused on today’s biggest spin supplier and contract management related business opportunities. Dial P investigates, the nuanced and constantly evolving boundary of the procurement supply chain divide with a broadcast of engaged executives, providers, and thought leaders give us an hour and we’ll provide you with a new perspective on supply chain value. And now it’s time to dial P for procurement
Kelly Barner (00:31):
In late January of 2022 hundreds of heavy duty trucks headed for Ottawa, Canada. They parked in front of the national legislature building and in nearby streets, period, they parked those drivers shut down most of central Ottawa for 23 days in protest of the nation’s vaccine mandates and related requirements. Dubbed the freedom convoy. These drivers seized and held the world’s attention for nearly a month. Now let’s consider a few surrounding details. Ottawa in January is not exactly a balmy place. Average temperatures range between six and 22 degrees Fahrenheit the imagination of the world, not to mention their attention and their funds were seized. And part of that actually fed into the energy of the movement. Crowdfunding efforts turned away and money was returned to donors, creating additional debates and locals tried to get involved by bringing in gas and food to help the convoy stay in place as long as possible.
Kelly Barner (01:44):
Now say what you will about the disruption, the inconvenience or the driver’s position, but there is nothing more powerful than individuals willing to put it all on the line for what they believe in these drivers were not wealthy. They were not unionized. We know they weren’t comfortable. And yet for 23 straight days, they changed how the world saw supply chains at the individual human level. Now I’m positive. I wasn’t the only person in the world wondering what kind of precedent the convoy might set. It certainly changed how the world saw drivers in supply chains, but I suspect it changed how drivers and supply chains saw themselves. And yet the convoy faded from the headlines, like everything else. The world moved on to Russia’s invasion of Ukraine, the baby formula shortage, and the Amber heard Johnny Depp trial of all things until a couple of weeks ago, I was reading the wall street journal and I came across some images that grabbed my attention.
Kelly Barner (03:04):
They had a familiar nature to them and although they were a little bit less colorful than the pictures of the freedom convoy in Canada, they were scenes of a driver’s strike taking place in South Korea in early June, a much quieter strike, much further away from the United States than Canada is brought together between seven and 8,000 south Korean truck drivers, their strike, which lasted eight days threatened a number of domestic industries and companies as well as global industries and supply chains. In my opinion, those drivers in South Korea were actually more successful in getting what they wanted than the Canadian drivers were. So the question that I’m left with is why didn’t the south Korean driver strike garner more attention. And what can we as business people, supply chain professionals learn from how it was resolved. I’m Kelly Barner. I’m the owner of buyers’ meeting point. I’m a partner at art of procurement.
Kelly Barner (04:15):
And I’m your host for dial P here on supply chain. Now I’m constantly scanning the news for interesting complex articles we can discuss. And of course, to see what we can learn from these news stories. Before I continue, I have a quick favor to ask. We’re building out dial P’s independent following. So if you like what you hear today, please, first of all, go explore other episodes. This is just the beginning. Give us a review, a comment, maybe some stars, maybe share an episode. I’m incredibly grateful for your interest and attention. And I definitely wanna hear what you think. So thank you in advance for sharing your time. All right. Now, where was I? Let’s talk about the start of the strike on June 7th nationwide, south Korean drivers went on strike over two very core issues, fuel costs and wages. They didn’t necessarily park in the streets the way the freedom convoy in Canada did, but they did refuse to drive.
Kelly Barner (05:27):
Now, one of the key differences that we see right off the bat between Canada and South Korea is that the south Korean drivers were unionized. The cargo truckers solidarity union represents specialized drivers. They focus on transporting containers and cement. Now the strike actually started with a failed attempt to occupy a liquor plant in ancient, South Korea. And I think it’s fair to speculate that if they had been successful, their strike might have ended up looking a little bit more like the Canadian one, but let’s take a look at the numbers. There are between 22 and 25,000 drivers in the union, depending on what source you consult. 30% of their members reportedly showed up to demonstrate at various locations throughout South Korea. And as I mentioned, this was all about wages and fuel. These are fundamental workers’ rights issues. Fuel currently represents between 30 and 50% of the total driver transport fees.
Kelly Barner (06:34):
And just like in America, fuel costs are way up in South Korea. They’re actually up 50% year over year. Now wages is a slightly different issue between 2020 and 2022 South Korea established a two year minimum wage plan because of COVID 19. They called it the safe wage system. And it was put in place to prevent the drivers from being tempted to engage in risky practices. So overloading their trucks, driving too many hours, generally doing unsafe things in order to get by and cover not only their operating costs, but also their costs of living. So we know from that, that this is an industry and a group of workers that have been receiving attention, least in South Korea. And we also know they don’t have enormous margins, the drivers and, and this is interesting. According to the BBC, there are 420,000 drivers in South Korea, and they’re nearly all considered self-employed workers.
Kelly Barner (07:46):
So they’re independent contractors, which means they are not eligible for the same job protections as other workers are. In addition to that, they’re expected to invest in their trucks to meet the sustainability standards of corporations worldwide. Now, one of the interesting little complications about the negotiations that would follow between the drivers union and the south Korean government is that the government did not recognize the cargo truckers solidarity union as an official trade union. And so it actually led to a delay in communications, starting the macroeconomic conditions in South Korea clearly come into play here. We’ve talked about the minimum wage protections because of COVID 19, we’ve talked about surging fuel rates, and of course we know worldwide supply chains are already disrupted and they’re struggling to come back. Online inflation in South Korea is currently at a 25 year high of 4.8%. And their national growth forecast has been cut this year from 3% to 2.7 from an industrial standpoint.
Kelly Barner (08:59):
I think some of the industries that are strong in South Korea will sound very familiar. We’re talking about automotive steel, cement tires and petrochemicals, which if you are like me, that might not be familiar to you, but think semiconductors, think memory chips. Now that’s starting to resonate. Overall. South Korean exports actually fell 13% year over year during the eight days of the driver’s strike. 90% of national cement shipments simply stopped. 90% of those petrochemicals from 32 companies stopped threatening an overwhelming majority of the world’s memory chips, a related statistic, wireless communication device exports fell by 27%. Now I also mentioned a couple of other industries, steel production, more specifically steel wire and cold rolled steel 450,000 tons were delayed as was the delivery of well over 5,000 vehicles. The export of cars from South Korea fell by 35% and those are broad industries. There were also some specific companies that were impacted.
Kelly Barner (10:31):
In fact, it’s interesting. The labor union specifically targeted not only industries, but companies because they knew where they could have the greatest impact on the economy and the world shares of Hyundai. Stock fell by 5.4% semiconductor company production halved. In fact, one company, south Korean semiconductor pro producer, high Nicks. They were forced to store inventory in parking lots and eventually stop some of their operations. Now, a more familiar name, Samsung their production lines for solid state memory were affected or were they, I found an article in the guardian little insider tip, always read to the bottom to see if there’s a correction. Sometimes the corrections are the most interesting part about an article. One of their articles was amended on June 14th to remove a reference to Samsung electronics. After the Korean international trade association contacted the site and asked them to issue a correction saying that Samsung’s production had not been affected.
Kelly Barner (11:46):
So don’t worry about us world. We’re all set. All of the drivers have stopped driving, but we are good, no problems here. Now the drivers didn’t go as far as they actually could have. If they had engaged in a complete blockade, it would’ve included them stopping shipments of coal to the country’s power plants. So they stopped short of that. And we’ll talk about public opinion in a minute, but that may have been a key component. These drivers in their union have been very savvy. A few of the key events in the timeline on Sunday, June 12th, South Korea enterprises foundation, and 30 other business groups spoke publicly about needing to end the strike. The next day, Monday, June 13th, 44 of the striking truckers were detained. Although only two were actually arrested on Tuesday, June 14th. The day that the strike was actually resolved 6,800 truckers rallied at various sites across South Korea.
Kelly Barner (12:54):
And two more drivers were detained. The total fallout in terms of cost was about 1.2 billion us dollars. The country’s 12 major ports dropped to one third of their normal operating pace and bus on port. One of the world’s 10 busiest, which accounts for 80% of south Korea’s container activity while their dwell time increased from three to four days on average to 11 to four days, that’s four X the wait time. Mostly this strike had a domestic impact, but it certainly threatened global industries and supply chains. Now I mentioned that I thought the south Korean drivers were more successful than their Canadian counterparts. What did they get in terms of concessions from the government or the transport ministry? It took five rounds of negotiations in total, but they got an agreement from the government to keep the minimum wage agreement in place. Now, an interesting thing is that it’s government agreed, but shipper funded, they’re willing to review the expansion of government paid fuel subsidies to help with those additional costs.
Kelly Barner (14:10):
And there’s a possibility that going forward talks may allow for these terms to extend to other kinds of drivers. In other words, beyond containers in cement and beyond this specific union. And of course you don’t deal with something this large without the politicians getting involved. So how did political leaders in South Korea deal with these truckers? South Korea has a relatively new president UN Souk U, and he was hesitant to extend those minimum wage guarantees on Don K an economics professor at soul national university said the following. And this is interesting as well. Quote, the big companies are not foolish. They may hire truckers on their own if this kind of strike resumes or employ other shipping companies whose truckers are not union members. So interesting, not in the government, but a prominent academic. That certainly sounds like a threat. And if you need something, that’s a slightly more explicit threat transport minister, Juan.
Kelly Barner (15:20):
He young warned that the government might step in and either force the drivers to return to work or put them in jail. Now, this is starting to tread into the area of where public perception plays an important role in the outcome of the strike. And of course like any other issue, it really depends on which opinion or source you read or listen to in terms of how the public perceived the strike. There is also a division between how the union was perceived and how individual drivers were perceived as part of the action keeping in mind that these are all independent contractors. You’re really looking at one of the things that has to be resolved as the gig economy grows. So on the one hand, they do need some type of collective bargaining power in order to hold their own with large companies, global industries, governments, but those companies are also looking for these independent contractors to bear the costs of their high visibility sustainability initiatives.
Kelly Barner (16:25):
Now, if I look at this as a driver and I’ve actually featured a quote from a driver on today’s episode, page notes, here’s what he said. All we are asking for is to remove the uncertainty in our lives. When I think about that on an individual level, I can also see extensions for the relationship between large corporations and the much smaller suppliers that they often do business with. You don’t have to be an independent contractor to desperately want to remove the uncertainty in your business life. And of course, threats of jail are never a great look. I do think that social media played an important part in the south Korean driver’s strike, as it did up in Canada. With those drivers, the images were very different, but they were still powerful. That was originally what called my attention to this news story. There are pictures of south Korean drivers sitting neatly in rows and columns or walking near their parked trucks with flags flying up on bamboo poles.
Kelly Barner (17:36):
Now it struck quite a contrast between South Korea and Canada. Canada looked pretty. Rockus maybe fun, depending on what time of day you were there. There were publicized images and videos of the drivers singing the national Anthem and certainly making a mess, but something that both of these strikes have in common, they actually share with Russia’s invasion of Ukraine that has been called the first social media war. And I would argue that these two driver strikes equally leveraged the power of social media to get the world’s attention, even if they couldn’t convince everyone in the world to share their point of view. These drivers, again, especially in South Korea are customers of the companies that expect them to drive as independent contractors. We’ve talked about Samsung consumer electronics are an enormous global market, and many of these drivers would have contracts directly with the company to move the goods that they as consumers and that their families and their community members would want to purchase bigger picture.
Kelly Barner (18:50):
We continue to learn more and more about our supply chains. First and foremost, they are designed to keep rolling no matter what they don’t stop and start very well. And it doesn’t take a whole lot to create a bubble in supply. This is especially true and can be leveraged if like the truck drivers union in South Korea, you’re smart enough to target specific companies or industries. They knew that Samsung was the way to get attention. They knew that focusing on semiconductors and automotive would get the world’s attention more quickly. And maybe we’re not as global as we think with Canada being just on the other side of the Northern us border, you couldn’t look at the news and not at the latest on the Canadian driver strike, but I would be willing to bet that the south Korean driver strike escaped a lot of people’s attention.
Kelly Barner (19:52):
Now, maybe we missed the story or maybe the south Korean driver’s union was just that effective. Remember it only lasted eight days compared to the 23 that we saw in Canada. And of course we saw the Samsung correction. No, no, we’re good. No problems here, no need to worry world. Now at the end of the day, I think you can agree or disagree with vaccine issues, wage issues, where fuel costs should be born. But we’re always going to have challenges where small companies or individual contractors are trying to figure out how they can develop and wield leverage to represent themselves and their interests when dealing with large companies. And I happen to think that both Canada and the south Korean drivers provide excellent lessons for us to study and consider. Now, that’s my point of view. Anyway, I’m sure that many of you listening in or reading summaries of this later will hold very differing and passionate opinions about these two driver strikes this like so many of the other issues that we cover here on dial P is complex.
Kelly Barner (21:07):
And there’s no simple answer, but that’s why it’s so important that we stop and read and get the facts and think about the implications that each of these situations has on our decisions, our companies and our industries, after all, we don’t know where the next driver strike will be. Do we, there’s a chance that South Korea was inspired by Canada, who will be inspired by South Korea for that. We’re just going to have to wait. Thank you so much for listening to this episode of dial P for procurement, but please don’t just listen, join the conversation and let me know what you think let’s work together to figure out the best solution until next time I’m Kelly Barner. And I’m your host for dial P here on supply chain. Now
Intro/Outro (22:04):
Thank you for joining us for this episode of dial P four procurement and for being an active part of the supply chain now community, please check out all of our shows and events@supplychainnow.com. Make sure you follow dial P four procurement on LinkedIn, Twitter, and Facebook to catch all the latest programming details. We’ll see you soon for the next episode of dial P for procurement.
