From SCDigest's On-Target e-Magazine
May 11, 2011
Global Supply Chain News: Shanghai Truckers Strike Mostly Fizzles, but Brings Internal China Logistics System Back into Focus
Just as elsewhere, Independents There Feel Pain of Rising Fuel Costs; Strike Ends Quickly with Only Minor Concessions; Trucking Pressure Increasing with Manufacturing Moving Westward
SCDigest Editorial Staff
Just like independent truck drivers in the US and elsewhere, Chinese owner-operators have been feeling the sharp pinch of rising diesel prices, compounded there by a number of seemingly arbitrary and rising fees associated with moving goods.
So, in late April, some but by no means all independent trucks serving to move goods from around the region to the ports of Shanghai staged a mini-strike to protest their deteriorating economic conditions, as not only fuel prices but overall inflation is running hot in the country, up more than 5% in March, for example.
SCDigest Says: |
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| Trucking costs in China�s two biggest export regions � the Yangtze River Delta region near Shanghai and the Pearl River Delta around Hong Kong � are $2.50 to $3 a mile. |
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What Do You Say?
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One year ago, labor actions at several Chinese manufacturing sites were fairly broadly reported in the country and led to the minimum wage in some provinces rising by more than 20%, leading to concern about the costs of manufacturing in China. However, the trucker strike in Shanghai mostly fizzled within a week. The action was barely reported on the state run media, and as a result the strike did not spread to other areas of the country, or even that widely in the Shanghai region.
China also jailed some of the striking truckers, and in the end all the strike achieved was a minor reduction in some trucker/container fees, saving the owner-operators maybe a couple of dollars a day but not having any meaningful change in the status quo. City officials also pledged to eliminate fees deemed to be abusive.
In reducing some of those fees, the Shanghai port authority did not mention the strikes, saying only that the fee cuts were aimed at “easing rising inflation and cost pressures on transport companies”.
“We’re paying a lot more money for fuel than we did three years ago, but what we get paid for freight has stayed the same,” the New York Times reports one independent Chinese truck driver near a Shanghai port as saying. “How am I supposed to survive?”
Interestingly, however, Chinese truckers and consumers actually pay less in fuel costs than most of the world due to government subsidies to reduce out of pocket costs for both groups. Chinese truckers currently only pay $1.05 per liter of diesel fuel, about 35% below the international market price, for example.
Many drivers wanted to stay on strike until a better deal was reached, but as some drivers accepted what the government offered and get back in their trucks, the holdouts reluctantly had to do the same.
Though several hundred truckers were said to be involved, the Shanghai-area strike never moved beyond selected container-handling terminals. The limited action never really threatened the city's overall logistics system that serves the large manufacturing region of the Yangtze River Delta, the most say port activity did slow down noticeably during the strike. Some contain ships were reported to be leaving port less than fully loaded.
Some unloaded containers were also said to be sitting in storage lots longer than usual awaiting to be moved, but It's back to business as usual now and that backlog should clear up soon.
Some observers wonder about the timing of the strike, which occurred at a relatively low point in terms of container shipping activity.
Duncan Innes-Ker, China analyst at the Economist Intelligence Unit, told Reuters that "If it had happened three months later, then I think people would be a lot more worried because the smallest disruption at that time could have ripple effects throughout the supply chain."
(Global Supply Chain Article Continued Below)
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