The ongoing conflict in the Middle East, triggered by U.S. and Israeli strikes on Iran, is sending shockwaves through global shipping routes and dealing serious blows to the used-car export industries of Japan and South Korea, according to Antigua News Room.
Umar Ali Hyder Ali, who has lived in Japan for two decades, ships used cars from his adopted home to South Asia, the Middle East and Africa. The vehicles are highly sought in those markets for their durability and relatively good condition, a product of Japan's strict regulations requiring regular inspections and maintenance.
Days after the conflict erupted, Hyder Ali learned that a shipment of more than 500 cars was stranded at sea. The vessel could not enter Sri Lanka because the port had filled up with cargo diverted from Dubai. "The cars that we already shipped to Sri Lanka were kind of idling in the ocean, waiting to enter because there was no space," he said. The vehicles were eventually offloaded at Hambantota port, more than 10 days late.
Hyder Ali's Yokohama-based company, Kobe Motor, ships around 18,000 cars a year, primarily to Sri Lanka, where compact Toyotas and Hondas are especially popular. He also has around 50 secondhand luxury vehicles — including Rolls-Royces, Lamborghinis and Ferraris — stranded in Sri Lanka and China after ships were unable to reach Dubai, where Middle Eastern customers were waiting.
The port congestion has sparked panic among some Japanese shipping companies, some of which cancelled shipments outright. Others proposed diverting cargo to ports in Pakistan or China, while one company demanded a $5,000 deposit per car. Some of Hyder Ali's vehicles may ultimately be brought back to Japan.
The disruption centres on the Strait of Hormuz, a narrow shipping lane between Iran and Oman that serves as a critical bottleneck for cargo routed through Dubai. If the conflict drags on, exporters face compounding pressures — including higher oil and freight costs, currency swings, weaker auction prices and possible cuts to shipping routes.
Japan and South Korea together exported a combined $19 billion worth of used cars last year, with Japan accounting for slightly more than half. The UAE was Japan's single largest destination, absorbing 224,000 units — roughly 15% of total used-car export volumes — according to Japanese finance ministry data.
In South Korea, the conflict has effectively halted shipments during what is typically the industry's busiest season. Demand normally peaks between March and September, driven by travel and construction activity in the Middle East and elsewhere.
At a vehicle storage complex in the port city of Incheon — where around 80% of cars are normally bound for the Middle East — activity has slowed sharply. Kang Tae-yang, a shipping company official, said more than 70% of his vehicles are currently stuck in storage, while vessels already at sea are pausing or diverting rather than proceeding to their original destinations.
"Whenever war breaks out, we have no choice but to go into a wait-and-hold mode," said Jin Jae-woong, president of used-car dealership Automobile International. Jin noted that the conflict erupted just as prices would normally begin to rise, and that his company is spending approximately 40 million won per month to store vehicles already purchased in South Korea. He plans to use the downturn to pre-purchase inventory, betting that demand will rebound once the conflict ends.
More than a third of the 883,000 used cars South Korea exported last year went to the Middle East, trade data showed. Popular models with Middle Eastern buyers include Hyundai's Avante MD and Kia's K3.
Some exporters are exploring alternative markets, but options are limited. "You can't just simply redirect shipments to Africa or Latin America," said Yun Seung-hyun, president of Ventus Auto, noting those markets lack the demand to absorb additional sales. Containers his company shipped in late January, bound for Dubai's Jebel Ali port by early March, remain delayed, with vessels stuck near Mumbai on India's west coast. Rising oil prices have also pushed freight rates higher.
With more than half of Ventus Auto's 6.6 billion won in annual revenue tied to the UAE, Yun described the disruption as a major risk. "There's effectively no solution right now," he said.
