Prolonged Middle East crisis triggers corporate logistics emergency… freight rate spikes and shipping disruptions surge

As prolonged tensions in the Middle East continue to disrupt import and export logistics, a growing number of Korean companies are reporting shipping suspensions and surging freight rates. Calls for government support to ease the logistics cost burden are intensifying.

The Korea International Trade Association (KITA) said Sunday it has received 469 logistics-related complaints from 193 companies since the outbreak of the Middle East crisis. The top grievances were shipping suspensions and transit delays (129 cases) and sharp freight rate hikes and surcharges (117 cases), together accounting for more than half (52.4%) of all complaints.

Company A, which exports desalination plant components to the Middle East, was recently charged an emergency conflict surcharge of $2,000 per TEU (twenty-foot equivalent unit) by its shipping line. Given that standard freight rates had been in the $1,500–$2,000 range, the surcharge effectively more than doubled shipping costs. The surcharge was even applied retroactively to cargo already waiting to be loaded. "As shippers who must meet delivery deadlines, we have no choice but to accept whatever the carriers demand, including surcharges and insurance premium increases," a Company A official said.

The difficulties vary widely across industries and product categories.

Company B, a manufacturer of industrial plastic materials, faces similar challenges. With the Strait of Hormuz blockade causing cargo to be held up or forcibly unloaded at alternative ports in neighboring countries such as the United Arab Emirates and Oman, the company has been saddled with unexpected inland transport and storage costs. "If we want to move the unloaded cargo, we have to pay inland transport fees. If we want to store or return it, we have to pay storage or return shipping fees," a Company B official said. "Even when we try to arrange local transport, it is difficult to obtain basic information on port conditions, trucking companies and costs."

The petrochemical industry, already undergoing restructuring amid a prolonged downturn, is also feeling acute pain. Company C, based in the Yeosu Industrial Complex — Korea's largest petrochemical cluster — currently ships more than half of its export volume through the Port of Busan rather than the nearby Port of Gwangyang. While Busan offers roughly 70 deep-sea routes connecting the Americas, Europe and the Middle East, Gwangyang has only three routes to North America, one to Europe and two to India. "Shipping lines say they cannot add services to Gwangyang because of insufficient cargo volumes, while shippers bypass Gwangyang because of insufficient routes — it is a vicious cycle," Company C's logistics manager said. "If deep-sea routes from Gwangyang were expanded, it would significantly improve logistics efficiency for companies in the complex and boost the regional economy."

KITA activated an emergency logistics task force for exporters immediately after the crisis erupted and visited Yeosu and Ulsan — home to major petrochemical complexes — to hear firsthand accounts of the difficulties. The association has relayed the on-the-ground complaints and requests to government emergency response meetings on more than 10 occasions.

Reflecting industry voices, KITA has formally proposed to the government that it expand the scope of logistics cost support to cover inland transport, storage and return shipping fees, and temporarily ease policy financing eligibility requirements such as corporate credit rating thresholds. In particular, the association urged the government to secure sufficient budget so that companies are not excluded from aid even if their losses materialize later, noting that a one-month logistics bottleneck typically produces freight rate ripple effects lasting about three months. As support measures specifically for the petrochemical sector, KITA requested extending the free hazardous-materials storage period at ports nationwide from three days to five days, and increasing incentive budgets to encourage shipping lines to add container deep-sea routes from the Port of Gwangyang.

"Our own analysis shows that using the Port of Gwangyang instead of the Port of Busan could save approximately 84 billion won ($62 million) per year," KITA said. "Practical support measures for the industry, including revitalizing the Port of Gwangyang, must be put in place as soon as possible."