Strikes start to appear in logistics sector

Developed economies are experiencing a wave of strikes amongst workers in the logistics sector.

The truck drivers’ strike in South Korea continues, with talks over the weekend apparently not having made much progress. The drivers’ demand is for their income to be protected in the face of rising fuel costs, something which the government in Seoul appears reluctant to become involved in. However, the strike is beginning to have serious effects on the South Korean economy and may be starting to add to the world’s supply chain problems, especially in the electronics sector.

Germany might be seeing similar problems shortly. It appears that local members of the Ver.di union called symbolic ‘warning strikes’ at the Northern German ports including Hamburg and Bremerhaven last week. These were connected with pay negotiations between the union and the employers association at the German ports. The offer from the employers was described by Ver.di as “far below the real wage security demanded by ver.di in view of the current rate of price increases of 7.9 percent and is unacceptable for the employees”. The employers’ organisation, ZDS, described the warning strikes as “absolutely irresponsible”, citing the problems of congestion at ports worldwide. It seems clear that inflation is having a significant influence on the attitudes of both sides.

There are even rumours that American longshoremen are thinking about some form of strike action. Historically reluctant to strike due in great part to a painful history of not-always-successful industrial action, they are engaged in talks with employers about pay but also about automation technology. The latter in particular is a sensitive issue not least as there has been criticism of the productivity levels at US ports, something many logistics service providers and shippers link to old-fashioned work methods. The likelihood is that some sort of agreement will be reached as the economic and political stakes are too high for even limited industrial action to be tolerated by either side.

The causes of these problems seem to be driven by the inflationary effects of monetary policy during the COVID-19 crisis. The combination of inflation and congestion in logistics and its impact on areas such as oil prices have concentrated inflationary forces disproportionately on the logistics sector. Expect continued disruption of this type for the next half-year at least.

Source: Transport Intelligence, 14th June 2022

Author: Thomas Cullen