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Transport update

One of Asia’s largest shipping companies is facing the imminent threat of workers’ strikes, which may further disrupt global supply chains that are already struggling with soaring costs and shortages of containers and computer chips.

After the crew and dock workers voted in favor of a strike last month, South Korea-based HMM will hold talks with the company’s union on the issue of wage increases on Wednesday afternoon, demanding a substantial increase in wages as the group’s profits soar.

Analysts say the strike may cause Further destruction To the global technology and automotive supply chains, which are due to shortages of materials and parts and Port bottleneck Due to restrictions and staff shortages related to the coronavirus.

Shinyoung Securities analyst Uhm Kyung-ah said: “If they do strike, it will have a knock-on effect on international shipping.”

The management of HMM proposed an 8% salary increase and a six-month salary bonus, but the union rejected the proposal.

A spokesperson for HMM said that workers “request the company to normalize wages, and the company hopes to gradually increase wages” and acknowledged that wages have not increased in the past eight years.

HMM believes that the possibility of a strike is very low, and management hopes that it can reach an agreement with the union on Wednesday to “avoid sea movement.”

The supply chain is still vulnerable to even minor disruptions. Chinese ports closed International trade has been hit this year, and the shipping deadlock will continue the turmoil in the supply chain into next year.

HMM estimates that the three-week strike will cause approximately US$580 million in operating losses to the company and other shippers that have formed alliances with it.

The global shortage of raw materials and freight capacity has also led to the weakening of industrial activities in South Korea and some of its trading partners.

Due to the global spread of the highly contagious Delta Coronavirus variant and the slowdown in demand growth for important export products such as semiconductors, the growth of factory activity in South Korea in August slowed for the first time in a year.

According to data from IHS Markit, the country’s seasonally adjusted purchasing managers’ index fell from 53.0 in July to 51.2 in August, or slightly above the 50-point line between expansion and contraction.

Although Korean manufacturers expect that the supply chain situation will improve once the pandemic subsides, Asian exporters Race to ensure transportation capacity As the logistics group strives to cope with the shortage of containers and insufficient port berths.

The container shipping group is enjoying unprecedented profits Surge in demand Since the second half of last year, freight rates have increased.

HMM reported that operating profit in the first half of the year reached a record 2.4 billion won (2.1 billion US dollars), compared with 136.7 billion won in the same period last year. In the same period, its revenue almost doubled to 530 million won.

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