According to a report released by the South Korean ** Association on February 28, due to the Houthi blockade of the Red Sea shipping lane, South Korean merchant ships were forced to detour to the Cape of Good Hope in South Africa, resulting in a sea freight rate from South Korea to the EU in February compared with October last year**2501%, and the freight time was also delayed by 12 to 14 days. Also, due to the Panama Canal drought, sea freight **has been **since the end of last year**.
The crisis has plunged many Korean companies into a cost crisis. According to South Korea's KBS TV on February 27**, an auto parts company in Busan had to air transport some materials from Germany to the United States and Europe, resulting in an increase in freight costs by more than 10 times.
The latest report from the International Monetary Organization** shows that the EU's monthly imports have rapidly decreased following the Houthi blockade of the Red Sea shipping lanes. After the outbreak of the Red Sea crisis in the fourth quarter of last year, the decline in EU imports was even more pronounced.
South Korea, which relies heavily on sea freight for most of its exports to the EU, has been hit hard. According to the Jingxiang News, as of 2023, 804% of South Korea's exports to the EU and 497% of imports are made by sea, which means that the cost of sea freight** will have a negative impact on the relationship between South Korea and the EU**, especially for goods that are highly dependent on sea freight, such as automobiles and petrochemicals.
At the same time, Chinese companies are able to reduce the extent of the impact by using rail alternatives such as the China-Europe freight train compared to South Korean companies. Igor Tambaka, executive director of Dutch railway bridge freight company, said bookings for China-Europe freight trains increased by 37 percent in January, and the disruption of the Red Sea route led to a "surge in demand for rail transport."
If the high freight costs between South Korea and the EU are reflected in the export of goods**, South Korean companies may gradually lose the EU market. Last year, China accounted for 791%, compared to only 113%。Some analysts believe that if the Red Sea crisis continues, the gap between South Korea and China's share of the EU market may further widen.
To sum up, the global logistics crisis caused by the blockade of the Red Sea shipping lanes by the Houthi forces in Yemen has had a severe impact on South Korean companies. In order to meet this challenge, Korean companies need to actively look for alternative transportation solutions, and at the same time, they should also strengthen policy support in the field of logistics to improve the competitiveness of Korean companies. In the transformation of the global logistics chain, South Korea needs to constantly adjust its strategy to adapt to the challenges of the future. What other strategies do you think Korean companies can take to deal with the logistics crisis?