Hyundai has announced that exports destined for Europe and North Africa, which normally transit through maritime routes in the Middle East, have been interrupted by the conflict in the region. The Korean company explained that the blockage of the main transit routes is causing delivery delays and an increase in logistics costs, with ripple effects on suppliers and production. A meeting was held at the port of Pyeongtaek-Dangjin between government representatives, logistics operators, and car manufacturers. The image of cars waiting to be loaded onto a container ship of about 4.900 vehicles bound for the US West Coast is a tangible sign of the operational difficulties underway.
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Hyundai and the difficulties caused by the war
Kim Dong-jo, senior vice president of Hyundai’s Global Policy Office, stressed that even an immediate cessation of the conflict in Iran would not instantly solve the problems. The reconstruction and restoration of supply chains will take time. The Korean manufacturer reported that Hyundai Glovis, its logistics unit, cannot access some routes in the Middle East. And it is therefore forced to temporarily store goods in alternative hubs. The increase in fuel costs and limitations in the supply of raw materials related to the crisis are also putting pressure on component suppliers.
Delivery delays and increased costs
The economic repercussions are already visible. Despite South Korean exports in March marking the strongest growth in nearly forty years, shipments to the Middle East fell by 49%. And Hyundai’s global sales in March decreased by 2,3% year-on-year (358.759 vehicles). Some shipments have been diverted to intermediate hubs such as Sri Lanka, where they accumulate while waiting to resume their journey. Previous reports have highlighted port congestion due to goods diverted from Dubai.
