SME Damages from Middle East War Spread... Reported Cases Surpass 600

Half of the Reported Cases Involve Transportation Disruptions
Increase in Damages Due to Rising Logistics Costs

As the war between the United States, Israel, and Iran drags on, the damage suffered by domestic export-oriented small and medium-sized enterprises (SMEs) is spreading. In particular, there has been a reported increase in cases of damage to companies exporting to countries outside of the Middle East as well.

According to the Ministry of SMEs and Startups on April 15, as of 12:00 p.m. on this day, a total of 618 cases of damages, difficulties, and concerns (including anticipated issues) related to the Middle East situation had been reported by SMEs. This represents an increase of 69 cases compared to the previous week. Since February 28, the Ministry has been accepting online submissions through its website and has also been collecting reports of damages and difficulties via phone or in person at 15 regional export support centers.

Hansung-sook, Minister of the Ministry of SMEs and Startups, is attending the 'K-Beauty Companies Meeting on the Middle East War' held on the 13th at Audin Futures in Chungju, Chungcheongbuk-do, listening to difficulties. Ministry of SMEs and Startups

Among the reported cases, there were 445 damages and difficulties, and 106 concerns. In terms of damages and difficulties (with multiple responses allowed), transportation disruptions accounted for 224 cases (50.3%), making it the most common type. This was followed by increased logistics costs with 164 cases (36.9%), contract cancellations or postponements with 154 cases (34.6%), other issues with 108 cases (24.3%), business trip disruptions with 87 cases (19.6%), and non-payment with 81 cases (18.2%).

For the concerns reported (with multiple responses allowed), transportation disruptions were the most common with 74 cases (69.8%), followed by other issues with 32 cases (30.2%), and loss of communication with 8 cases (7.5%). Notably, as the situation has continued, there has been a noticeable increase in the proportion of direct damages such as increased logistics costs and contract cancellations or postponements, rather than simply transportation disruptions.

By country, the highest number of reported damages and difficulties came from other Middle Eastern countries such as the UAE and Saudi Arabia, with 375 cases, rather than Iran or Israel. Iran accounted for 87 cases, and Israel for 78 cases. The number of cases from countries outside the Middle East also increased by 30 from the previous week, reaching 129.

Some of the major damage cases include an export SME that saw the unit price of packaging materials spike by more than 40% compared to before, as well as delayed arrival and uncertain delivery dates for already-ordered goods, resulting in direct disruptions to production line operations. Another company reported that 10 containers of goods were drifting at sea. This company also had six containers shipped out only to be returned and are now stored at the factory, while products that have already been packaged are also waiting at the factory.

One company exporting to Europe reported an increase in both sea freight and inland transportation costs, which in turn led to higher local consumer prices and a decrease in additional dealer orders, ultimately resulting in a roughly 25% decrease in new orders. Some companies are also experiencing shipping delays due to the war, with goods waiting in containers. One company’s Dubai local branch employee is staying on site to receive products but has been unable to return due to the shipping delays, resulting in continuous accommodation expenses.

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