Crypto News: Supply Lines: Slowdown in South Korea

"Stop the distribution, change the world," is the marquee slogan used by a South Korean truckers' union that went on strike recently in the latest threat to global supply chains.

The union with about 25,000 workers holds outsized sway in a Korean economy that relies heavily on exports. The strike's timing came during a month of November when Korean exports fell by double digits, threatening to slow economic growth further. (Read the full story here.)

The labor unrest in Asia's fourth-largest economy has global implications because Korea serves as a key hub in international supply chains, producing cars, chips, ships, monitors, smartphones and steel. The trade ministry on Thursday partly blamed the strike for the exports decline.

The trade slump extends across the region and beyond high-tech industries, recent data show. Taiwan's export orders contracted in October at the worst pace in nearly three years, and Hong Kong's shipments abroad fell for a sixth straight month. Vietnam's exports in November posted their first monthly decline this year. Thailand's exports fell in October for the first time since February 2021.

With rising interest rates and weakening global demand, Korean manufacturers have been bracing for tough times already. The outlook among exporters fell to the lowest point since the beginning of the pandemic this quarter and industrial production has fallen for four months in a row.

At the center of Korea's weakening exports is a deterioration in semiconductor demand. Memory-chip prices remain under pressure as China's economy downshifts, damping demand for high-tech electronics and parts imported from elsewhere.

Not all is gloomy for Korean exports. Officials are heartened by Saudi Arabia's willingness to work with Korean businesses to build its new city, Neom. With growing geopolitical tensions, Korea's arms sales have also reached a record this year, according to the presidential office.

Still, domestic logistics should operate smoothly for the momentum to materialize and the truckers hold the key to it.

"Factory shipments can't even begin if distribution doesn't work properly," said Cho Chuel, an analyst at the Korea Institute for Industrial Economics & Trade. "This strike will likely have large impact on trade."

The Latest From Asia:

—Sam Kim in Seoul

Steady as She Goes | The number of references to the word "shortage" in the Federal Reserve's latest Beige Book report held steady at 26, hovering near the lowest level since early 2021, according to a Bloomberg tally. The Fed said the US economy grew only slightly through late November, with businesses reporting that high inflation and rising interest rates clouded their view of the economic outlook. (Read the full story here.)

Strike vote | The House passed legislation aimed at averting a crippling nationwide US freight rail strike, sending it to the Senate, which could take action as soon as this week.
Driving inflation | Strong demand for goods and services may be starting to overtake supply constraints — from the pandemic and the war in Ukraine — as the driver of US prices, according to new gauges built by Fed economists.
Softer stance | China's top official in charge of the fight against Covid-19 said the country's efforts to combat the virus are entering a new phase with the omicron variant weakening and more Chinese getting vaccinated. Separately, Beijing will allow some virus-infected people to isolate at home.
Plant curbs | Apple most important iPhone assembly plant remains in a closed-loop operation that curtails workers' movement on campus, potentially complicating the effort to resume full production.
Victory lap | President Joe Biden will help celebrate a landmark step in Taiwan Semiconductor Manufacturing's construction of a $12 billion facility in Arizona next Tuesday — its first advanced chip plant in the US.
Lower altitude | After rebounding to pre-pandemic levels last year, air traffic in China has sunk back down to 35% of what it was in 2019 as officials continue to impose restrictions on travel as part of their fraught battle with Covid.
Tech support | Microsoft EMEA president discusses how AI can improve supply chain efficiencies, China's covid-zero strategy, and tech sector layoffs. Watch the clip with Bloomberg's Francine Lacqua on "Bloomberg Surveillance: Early Edition."
Stephanomics podcast | This episode delves into the energy challenges facing Europe as it works to replace natural gas cut off by Russia.

Trade violation | The World Trade Organization said Indonesia's ban on exports of raw minerals including nickel ores violated international trade rules, according to a ruling published Wednesday.
No boost | Transpacific container rates keep falling and are now down 82% from a year earlier. There appears to be very little preventing them from moving even lower, Bloomberg Intelligence says.
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