Korean exporters reroute Middle East shipments by land and sea as Strait of Hormuz stays shut

KOTRA checks conditions at trade offices across 13 Middle East nations

Air freight available to all 13 countries; alternative sea routes in use

Shared logistics center support cap raised 1.5 times for affected firms

Six months of conflict between the United States and Iran have reshaped the logistics landscape for South Korean exports to the Middle East. With access to the Strait of Hormuz severely restricted, exporters have turned to alternative ports and overland routes — but the workarounds have stretched delivery times to as long as several months and sent freight costs sharply higher.

As of early September, only 9 of the 24 major ports across the six Gulf Cooperation Council member states were operating normally, according to the Korea Trade-Investment Promotion Agency. The remaining 15 are either located inside the Strait of Hormuz or have had operations restricted or suspended, making them effectively inaccessible.

Ports still running normally include Khor Fakkan and Fujairah in the UAE; Sohar, Salalah and Duqm in Oman; and Jeddah Islamic, King Abdullah, Yanbu and Jazan in Saudi Arabia. By contrast, Jebel Ali and Khalifa Port in the UAE — long the central hubs of Middle East logistics — along with Dammam and Jubail in Saudi Arabia, Hamad Port in Qatar and Shuwaikh Port in Kuwait are no longer accessible under normal conditions.

In response, companies have been routing cargo through outer ports that bypass the Strait of Hormuz and then trucking goods to their final destinations across GCC countries. One common route runs from Khor Fakkan Port through Sharjah to Dubai and Abu Dhabi; another moves cargo overland from Oman's Sohar Port through the UAE and onward to other GCC states. Oman's Salalah Port, located 1,200 kilometers from the strait, is relatively safe but imposes heavy costs due to the long overland haul. Saudi Arabia's Jeddah and King Abdullah ports on the Red Sea coast are accessible via the Red Sea, though Houthi militant attacks remain a risk.

The shift to rerouted shipping has significantly extended delivery times. Shipments to the UAE via outer ports such as Khor Fakkan and Fujairah now take roughly 45 to 60 days, while cargo bound for Saudi Arabia via the Cape of Good Hope requires eight to 10 weeks. Deliveries to Oman through outer strait ports take around 30 to 45 days. Shipments to Algeria can take up to four and a half months.

Growing instability in the Red Sea has further narrowed viable alternatives. The route had been considered a fallback to the Strait of Hormuz, but clashes between Saudi forces and Houthi militants in the Bab el-Mandeb Strait intensified this month, pushing more Saudi-bound cargo onto the Cape of Good Hope route. The surge in traffic has created bottlenecks at alternative ports including Khor Fakkan, Sohar, Salalah and Jeddah.

Air freight has fared comparatively better. A survey KOTRA conducted through its trade offices in 13 Middle Eastern countries found that air delivery is currently possible within two weeks in all 13 markets. However, the high cost of air freight means it is largely reserved for urgent shipments or small samples. Some local buyers have been paying out of pocket to shift their regular sea freight volumes onto air cargo.

Rising logistics costs from the prolonged conflict are adding to the strain on South Korean companies. The Shanghai Containerized Freight Index stood at 3,409.6 in August, nearly 2.5 times its level from late February when the US-Iran conflict began. War-risk surcharges, fuel surcharges and port congestion fees are piling on top of base freight rates. Against that backdrop, South Korea's exports to the Middle East totaled $1.19 billion last month, down 15 percent from a year earlier.

KOTRA said it will expand support for exporters in anticipation of a prolonged disruption to Middle East logistics. The agency will raise the support ceiling for its overseas shared logistics centers — available to companies affected by the Middle East situation — by 1.5 times. The new limits are 36 million won ($26,700) per trade office for the United States and Japan, 30 million won for Europe and Canada, and 24 million won for China, Southeast Asia, the Middle East and other regions.

KOTRA also plans to help exporters find alternative markets to reduce their dependence on the Middle East. Working with Shopee, the agency will subsidize local logistics costs in Southeast Asian markets including Vietnam, Thailand, the Philippines, Malaysia and Singapore, with plans to extend the program to Brazil, the United States and Japan.

"The prolonged Middle East war has passed its peak, but companies continue to face difficulties and their burden is growing," KOTRA President Kang Gyeong-seong said. "We will do our utmost not only to restore access to the Middle East market but also to help exporters use this situation as an opportunity to diversify into new markets."

eyre@heraldcorp.com