North Korean Freight Carriers Suffer Growing Losses Under Sanctions

Trucks now run empty to the border with China and charge reduced rates for carrying goods on the return trip.

A truck enters a bridge connecting China (top) with North Korea at the Rason Special Economic Zone, Nov. 21, 2017.

North Korean freight carriers hit hard by sanctions on cross-border trade are now running empty trucks to the border with China before returning with full loads, leading to further costs for the already struggling companies, sources working on the border say.

Previously, North Korean trucks with empty containers would not make the trip, even with cargo waiting to be picked up to bring back, a trader working in China’s port city of Dandong told RFA’s Korean Service.

“But now, an average of 20 empty trucks come to China every day,” RFA’s source said, speaking on condition of anonymity. “The number of empty vehicles coming to the border has never been this high.”

In a further bid to save money for their cash-strapped firms, North Korean truckers now offer drastically reduced rates for carrying Chinese goods back to North Korea, RFA’s source said.

“The fees charged by North Korean freight carriers used to be higher than the fees charged by Chinese firms, but now they have lowered their rates in order to get more goods to carry back,” he said.

Speaking separately, a second source in Dandong said that North Korean truckers are operating in “a less arrogant manner than in the past.”

“It is still not easy for them to secure goods to carry back on their return trip, though,” he said.

Even still, North Korean drivers “ask too much,” sometimes arranging for personal goods to be included in the restricted amounts of material still allowed under sanctions for transport to China, the source said.

“If these things are discovered at Chinese customs posts, the truck’s entire cargo will be seized, and a large fine will be imposed, leading to financial losses for the North Korean trading firm’s Chinese partners,” he said.

Chinese trading firms will then demand that their North Korean partners take responsibility for the costs, insisting that the North Korean firms not send any more trucks without first informing them, the source said.

Investors also hit

Meanwhile, Chinese businessmen with investments in North Korea are also suffering heavy losses as China tightens sanctions on the nuclear-armed state in response to its provocative weapons tests and missile launches, sources in the region say.

In December, Pyongyang’s longtime ally China backed U.N.-approved bans on the export to North Korea of crude oil and refined oil products essential to the country’s economy, adding to the restrictions already in place on trade in a wide range of other products.

Lim Kang Taeg, a senior research fellow at the Korea Institute of National Unification in Seoul, told RFA that the impact of sanctions is clearly being felt in North Korea.

“China reinforced sanctions in the second half of last year, and we are seeing the impact,” he said. “Most daily necessities and raw materials in North Korea usually come from China,” said Lim.

“There is a strong possibility that the market price will rise for the items that are sensitive to this year’s sanctions.”

Stung by what it sees as Beijing’s betrayal, North Korea has been stirring up anti-China sentiment among ordinary citizens as the closed, authoritarian country’s economy continues to be hit by the tough new sanctions supported by its traditional longtime ally, sources in the country say.

Reported by Joonho Kim for RFA’s Korean Service. Translated by Leejin Jun. Written in English by Richard Finney.