Gasoline prices in North Korea have shot through the roof recently, with the phenomenon emerging in areas near the Chinese-North Korean border. Despite the trend, we have not seen a proportionate rise in the cost to hire a servicha – North Korean-style logistics vehicles used to transport products and people.
The cost of a single kilo of gasoline in areas like North Hamgyong Province and Yanggang Province is around 18,050 KPW. That represents a 3,000 KPW rise compared to last week’s price point. The sudden jump sparked fears among North Koreans that servicha services would also get much more expensive, but this has not eventuated.
“Even though gasoline prices have risen, the cost of servichas, which are all over the country, has not changed dramatically,” said a North Hamgyong source in a telephone conversation with Daily NK on July 7.
Another source from Ryanggang Province reported similar findings, noting, “I went to Wonsan in Kangwon Province for a business trip and the servicha fee was similar to what it has been in the past, despite the rise in gasoline costs.”
Asked how the drivers are able to offer such rates, the source explained, “The drivers are restricting the amount of luggage accepted and taking on more passengers to economize.”
In the past, servicha operators charged a fixed rate for either people or luggage. Now, the operators are preferring to take on more passengers with a smaller amount of luggage. This allows them to extract the greatest profit per unit of space.
“Some servicha operators are shifting towards deals with state enterprises to transport large cargo boxes. This allows them to reduce the economic impact of rising gas and diesel prices,” he said.
Since May, when prices began to rise, servicha companies and sole proprietors have become better at adapting and economizing in order to avoid losses.
Merchants are also taking the rising costs into consideration. For instance, some are double-packaging items in order to reduce transport costs.
According to the source, rumors from Chinese contacts began to swirl around two weeks ago in the marketplace that gas prices would climb. “As word caught on among Chongjin traders that gas prices would continue to rise day-by-day, some of the vendors decided to suspend sales of gas and diesel,” a North Hamgyong source said.
“Considering that smuggling is suspended during the mourning period for Kim Il Sung (July 7 and 8), it is unlikely that gas prices will depreciate anytime soon. Because of this, farmers are already becoming concerned that these inflated prices will make it harder to effectively reap the autumn harvest in two month’s time, an activity that requires gasoline to fuel the machinery.”
