"Fuel Surcharges Up Over 50%"... Reports of Middle East War Damages to SMEs Surpass 700 Cases

Cumulative Reports of Damages Reach 733 Cases

"Fuel surcharges have risen by more than 50%, and with most direct routes from Korea to Middle Eastern countries blocked, we are forced to use detour routes, which has doubled our logistics costs." This is the plea of a representative of a small and medium-sized enterprise (SME) exporting to the Middle East. The prolonged conflict between the United States and Israel on one side and Iran on the other continues to widen the impact on Korean exporting SMEs.

According to the Ministry of SMEs and Startups on April 29, as of noon that day, a total of 733 cases of damages and difficulties (including concerns) related to the Middle East situation had been reported by SMEs. This is an increase of 56 cases compared to the previous week. Since February 28, the Ministry has been receiving online reports through its website, as well as phone and in-person submissions at 15 regional export support centers.

Of the reported cases, 547 were actual damages or difficulties, and 116 were concerns. Among the types of damages and difficulties (allowing for multiple responses), transportation disruptions accounted for 256 cases (46.8%), making this the most common issue. This was followed by increased logistics costs with 199 cases (36.4%), contract cancellations or suspensions with 187 cases (34.2%), others with 172 cases (31.4%), business trip disruptions with 100 cases (18.3%), and delayed payments with 87 cases (15.9%). For the concern category (also allowing for multiple responses), transportation disruptions were again the most reported with 79 cases (68.1%), followed by others with 38 cases (32.8%), and loss of contact with 8 cases (6.9%).

By country, the number of damage and difficulty reports was highest for other Middle Eastern countries such as the UAE and Saudi Arabia, at 432 cases, rather than Iran or Israel. Iran accounted for 93 cases and Israel for 87 cases. In addition, 188 cases were reported from countries outside the Middle East.

Looking at major cases, one SME that imports raw materials from Iran saw production costs rise by 25–30% compared to before, and an order placed in February has still not been received. The company has not received any notification regarding the delay.

There are also companies that have been unable to recover payments from buyers in the Middle East. Due to restrictions in the foreign exchange and financial systems of those countries, overseas remittances have been delayed or have become virtually impossible. In another case, buyers from the United States and India had planned to visit Korea in April, but their trips were canceled because of the war, and the number of people sent on overseas business trips was also reduced due to the burden of higher airfares.

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