Middle East Conflict Impacts 962 South Korean SMEs: Rising Supply Costs and Logistics Disruptions

Domestic small and medium-sized enterprises (SMEs) continue to face ongoing challenges, including logistics disruptions and a decline in export volumes, due to the conflict in the Middle East.

According to the Ministry of SMEs and Startups as of noon today (June 26), the total number of reported cases of damage, difficulties, and concerns related to the Middle East conflict reached 962, an increase of 16 from the previous week.

Of these, 744 cases were classified as actual damage or difficulties, up by 13 from the previous week, while 148 cases were categorized as concerns, an increase of 3.

Among the types of damage and difficulties reported (with multiple responses allowed), logistics disruptions were the most common at 290 cases (39.0%), followed by rising logistics costs (38.3%), contract cancellations or suspensions (31.7%), travel disruptions (16.5%), and non-payment (13.0%).

Regarding concerns, worries over logistics disruptions also accounted for the largest share, with 96 cases (64.9%).

By country, damage and difficulties related to Middle Eastern nations, including the United Arab Emirates (UAE) and Saudi Arabia, totaled 622 cases (69.7%).

Of these, cases related to Iran and Israel accounted for 101 (11.3%) and 96 (10.8%), respectively.

In one major case, a company placed an order for packaging materials after the unit price rose by 30 to 40 percent, only to be notified by the supplier that delivery was impossible.

Another company exporting to Oman and Saudi Arabia faced business disruptions due to additional maritime freight costs caused by the Middle East conflict, as well as complications in transporting goods inland via ports.

Furthermore, some companies reported that follow-up export negotiations with Middle Eastern buyers have been suspended, with order schedules and contract talks put on hold due to the instability in the region.
※ Please note: This article was translated by AI and may contain errors.