Hyundai Motor announced on Friday that its exports to Europe and North Africa, which usually pass through the Middle East, are facing disruptions due to ongoing conflicts in the region. This situation highlights the increasing pressures on global supply chains.
The turmoil is obstructing vital shipping routes, leading to escalated logistics expenses, delayed shipments, and exerting additional strain on the automaker and its suppliers.
As the world’s third-largest automotive manufacturer by sales, alongside its affiliate Kia Corp, Hyundai Motor cautioned that even a swift resolution to the war in Iran would not mitigate the consequences immediately. Kim Dong-jo, a senior vice president at Hyundai Motor’s Global Policy Office, stated that restoring supply chains would be a lengthy process. “The rebuilding and restoration of existing supply chains will require significant time, even if the conflict ceases,” Kim remarked during a meeting at Pyeongtaek-Dangjin Port, located southwest of Seoul, where government officials, logistics companies, and automotive representatives convened to evaluate the war’s ramifications.
The meeting occurred at a port where numerous vehicles were positioned on the wharf, ready for shipment on a large vehicle carrier destined for the U.S. west coast, capable of accommodating approximately 4,900 vehicles. Kim noted that escalating logistics costs and raw material shortages associated with the conflict were also placing pressure on parts suppliers and production processes. He added that Hyundai is collaborating with suppliers and the government to minimize disruptions.
Hyundai Motor Group’s logistics division, Hyundai Glovis, reported a current inability to access certain Middle Eastern routes, necessitating the temporary storage of cargo in alternative locations until conditions improve.
The automaker indicated that while routes to North America’s western and eastern coasts have remained relatively unaffected thus far, restricted access to the Middle East and rising fuel prices are hindering operational efficiency.
South Korea’s Trade Minister Yeo Han-koo informed attendees at the meeting that some shipments are being rerouted to intermediate hubs like Sri Lanka, where cargo is being held while companies evaluate when transport can resume.
Last month, it was reported that some used car exports from Japan faced entry issues into Sri Lanka due to port congestion caused by the diversion of cargo from Dubai amidst the Middle Eastern conflict. Although South Korea’s exports in March experienced their most substantial growth in nearly four decades, shipments to the Middle East dropped by 49%. Auto exports remained relatively stable as supply disruptions countered strong demand for eco-friendly vehicles.
On Thursday, Hyundai Motor reported global sales of 358,759 vehicles for March, reflecting a 2.3% decline compared to the previous year, with domestic sales down by 2.0% and international sales falling by 2.4%.
Following this news, shares of Hyundai Motor and Hyundai Glovis experienced declines of 1.2% and 0.7%, respectively, in contrast to the 2.7% increase in the benchmark KOSPI index.
