The Ministry of Land, Infrastructure and Transport has extended a ban on new mixer truck registrations, which has been in place for 16 years, by an additional two years, leading to predictions that there will be a worsening supply shortage of ready-mixed concrete.
According to the construction industry on the 4th, the Ministry of Land, Infrastructure and Transport held a 'Construction Machinery Supply Adjustment Committee' meeting on the 27th of last month and decided to maintain supply control for ready-mixed concrete mixer trucks from 2026 to 2027. This decision means that new registrations for ready-mixed concrete mixer trucks have been prohibited for 18 years since 2009.
The Ministry of Land, Infrastructure and Transport noted that it decided to maintain supply control for mixer trucks based on the assessment that demand for ready-mixed concrete would not increase in the next two years due to the prolonged slump in the construction industry.
The construction machinery supply adjustment system, introduced in August 2009, is designed to protect construction machinery lending businesses and stabilize the lending market. Ready-mixed concrete mixer trucks, dump trucks, concrete pump trucks, and small tower cranes fall under this supply adjustment system. In the case of dump trucks, some new registrations (3% annually) were allowed two years ago, and concrete pump trucks were excluded from the supply adjustment system.
However, there has not been any increase in the number of operating ready-mixed concrete mixer trucks since the establishment of the system in 2009. In addition to commercial use, there are privately owned mixer trucks by ready-mixed concrete companies, but these private mixer trucks must also receive approval from the National Ready-Mixed Concrete Transport Association for new registrations.
As the increase in ready-mixed concrete mixer trucks is restricted, transportation costs have surged significantly compared to prices. According to the ready-mixed concrete industry, the price of ready-mixed concrete rose 62.6% from 56,200 won in 2009 to 91,400 won this year after the implementation of the construction machinery supply adjustment system. In contrast, transportation costs for ready-mixed concrete increased by 150%, from 30,313 won to 75,730 won during the same period.
With the sequential demolition of ready-mixed concrete plants in the metropolitan area, there are expectations that a supply shortage of ready-mixed concrete will soon occur.
Hanil Cement's Yeongdeungpo plant in Seoul closed in 2017, and Sampfyo Industry's Seongsu plant in Seoul ceased operation in 2022. Sampfyo Industry's Pungnap plant in Seoul is also expected to close by the end of this year. Starting next year, only two ready-mixed concrete plants will remain in Seoul: the Jangjidong plant of Shinil Cement and the Segokdong plant of Cheonma Concrete Industries.
Due to the successive closures of ready-mixed concrete plants, the production of ready-mixed concrete in Seoul has been decreasing every year. According to the Korea Construction Industry Research Institute, the estimated annual production of ready-mixed concrete plants in Seoul decreased from 7.02 million cubic meters in 2017 to 5.88 million cubic meters in 2022, representing a 16.2% decline over five years. This year's provisional production is anticipated to drop to 3.72 million cubic meters, and next year, it is expected to decrease to 2.88 million cubic meters.
As the scale of domestic construction orders is set to increase in the future, demand for ready-mixed concrete is also expected to rise. According to a report titled 'Changes and Prospects of the Future Construction Industry' released by the Korea Construction Industry Research Institute on the 19th of last month, the scale of domestic construction orders is projected to exceed 300 trillion won annually by 2040.
Based on the average annual growth rate over five years, it is expected to be 2.4% from 2025 to 2030, 3.7% from 2030 to 2035, and 3.1% from 2035 to 2040. The annual scale of domestic construction orders is projected to reach 304.7 trillion won by 2040, which represents an increase of about 58% compared to this year's 193.3 trillion won.
Park Sang-heon, a deputy researcher at the Korea Construction Industry Research Institute, said, 'As ready-mixed concrete plants in Seoul are being demolished one after another, the decrease in ready-mixed concrete production may lead to gaps in supply chains.' He also analyzed that 'demand for ready-mixed concrete is likely to surge significantly between 2027 and 2038.' Park added that 'diverse portable batch plant development and distribution, along with support policies for sales channels, are necessary to solve the supply shortage of ready-mixed concrete.'