Blocked "Air and Sea Routes"... Logistics Emergency for Korea's Exports Amid Hormuz Strait Closure Fears [US-Iran War]

Home Appliances and Automobiles Face Surging Logistics Costs Due to Maritime Detours
Semiconductor Sector Closely Monitors Macroeconomic Fallout
Experts: "Korea's Heavy Manufacturing Reliance Exacerbates Impact"

As military clashes between the United States and Iran have simultaneously blocked the "sea routes" of the Strait of Hormuz and the "air routes" over the Middle East, leading domestic export-focused companies, such as those in the automotive and semiconductor sectors, have been placed on high alert. The home appliance and automotive industries have been hit hard by extended shipping periods and skyrocketing logistics costs due to maritime transport paralysis. Meanwhile, the semiconductor industry, which relies heavily on air freight, is closely monitoring the macroeconomic aftershocks caused by suspended flight routes and surging oil prices.

Dubai Route Suspension Heightens Export Uncertainty

According to related industries on March 3, the combination of warnings from Iran’s Islamic Revolutionary Guard Corps (IRGC) about potential attacks on vessels and Korean Air’s suspension of its Dubai route has pushed export uncertainty to its peak. In particular, if the Strait of Hormuz-which handles 9% of the global finished vehicle shipping volume-is blocked, it is expected that logistics costs will increase exponentially due to the need to use alternative routes.

The sectors expected to be hit hardest by this situation are the home appliance and automotive industries, which have a high proportion of sea container shipping. As these industries mainly transport large volumes by ship, if the Strait of Hormuz is blocked and alternative routes must be used, the shipping period will be extended by at least 15 to 20 days, and logistics costs will soar exponentially.

A source in the home appliance industry stated, "Sea logistics are core for home appliances, so the impact is very significant." He added, "For now, we can sustain operations thanks to long-term contracts, but if the war drags on and coincides with contract renewal periods, the burden of logistics costs will become very heavy." In particular, he expressed concern that rising raw material costs due to soaring oil prices would further erode profitability.

The automotive industry is also raising its level of alert. The Hyundai Motor Group, which is currently building a joint factory in neighboring Saudi Arabia, is closely monitoring the local situation. A Hyundai Motor representative said, "We do not have direct business in Iran, but we are watching closely for potential logistical disruptions in the Middle East, especially regarding the construction of our plant in Saudi Arabia, a neighboring country."

Signs of paralysis in air logistics are also becoming clear. Korean Air has decided to suspend flights on the Incheon-Dubai route until March 5. If airspace restrictions in the Middle East are extended, the suspension period is expected to be prolonged. Local employees have also switched to working from home for safety.

However, there is a prevailing view that the semiconductor industry is relatively less directly affected. Semiconductors are mainly shipped by air, and their supply chains are structured primarily around Asia and the Americas, making them less vulnerable to disruptions in Middle Eastern logistics. A semiconductor industry official explained, "At present, there is almost no volume being shipped towards the Middle East, so the direct logistics impact is not significant." However, he added, "We are closely monitoring the macroeconomic impact of the Hormuz situation, especially regarding how rising oil prices and inflation may drive market changes."

Will Increased Logistics Costs Become the New Normal? Corporate Profitability Under Threat

Experts have diagnosed that the rise in logistics costs caused by this crisis could become entrenched, rather than being a temporary phenomenon. Jang Sang-sik, Director at the International Trade & Commerce Research Institute of the Korea International Trade Association, said, "At present, this is not a complete blockade, but rather a situation where passage is limited due to perceptions of a high-risk area." He analyzed, "Container shipments to Europe already routinely detour around the Cape of Good Hope, but for shipments to the Middle East, war-risk surcharges are being added, driving up costs."

He also predicted that the next one to two months, when logistics costs will be reflected in product prices, will be a critical juncture. Director Jang warned, "Korea has a high proportion of manufacturing sensitive to delivery deadlines, so the perceived impact could be even greater. Delays in logistics will postpone revenue recognition, but costs such as insurance premiums will be incurred first. If inventory increases at the same time, small and medium-sized exporters will face severe working capital pressure."

Tae-gyu Lee, Head of the Global Risk Team at the Federation of Korean Industries, also assessed, "For Korea, where manufacturing accounts for a large share of the economy, the shock from rising oil prices could be more significant than in countries centered on the service industry." He continued, "Core industries such as automobiles will face pressure on both costs and export prices." He pointed out, "Small and medium-sized enterprises, which have weaker cash flow than large corporations, will be more vulnerable to delayed orders, delivery disruptions, and the burden of increased logistics costs."

This content was produced with the assistance of AI translation services.