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Uncertainties cloud Middle East markets for Korean beauty, foods
Olive Young N Seongsu in Seoul's Seongdong District hosts a pop-up for Mise En Scene, Feb. 20. Courtesy of CJ Olive Young
By Ko Dong-hwan
Strait of Hormuz closure complicates export logistics
Iran’s closure of the Strait of Hormuz has created a barrier for Korea’s major beauty and food firms exporting to the Middle East and other regions accessible through the key maritime shipping channel.
With the region emerging as a rising global market for these companies, firms are striving to maintain supplies as the crisis causes unavoidable shipping delays.
The U.S.-Israeli war against Iran also risks increasing costs for Korean companies that rely on imports for a significant portion of their manufacturing ingredients.
Korea’s largest beauty product platform, CJ Olive Young, posted a notice Sunday on its global e-commerce site saying that customers in certain countries may experience delivery delays due to the war. The affected countries include Bahrain, Qatar, Israel, the United Arab Emirates and Saudi Arabia.
All products ordered through the platform depart from ports in Korea and are shipped to each destination country, where local logistics firms handle last-mile delivery to customer doorsteps.
“In accordance with our delivery carriers’ policies, shipments to these countries are expected to experience significant delays … We kindly ask that you take the potential delays into consideration before making a purchase,” the notice says.
Olive Young Global has also temporarily suspended deliveries to Cyprus, Finland, Greece and Tanzania due to the Strait of Hormuz closure.
Samyang Foods, the maker of the globally popular Buldak instant noodles, is currently seeking alternative routes to reach the region. Skirting Oman or transferring cargo from ships to land transportation are being considered as possible options, the company said.
The company anticipates that if logistics routes across the Middle East remain closed, ships bound for its European markets could also be affected. This may reduce cargo loads on vessels docking at European ports and increase maritime transportation costs.
Samyang Foods' global Buldak promotion campaign with BOYNEXTDOOR released Feb. 9 / Courtesy of Samyang Roundsquare
The firm, which entered the Middle Eastern market by exporting to the United Arab Emirates in 2021 before expanding to 10 neighboring countries, said the situation does not pose an immediate threat.
“The noodles remain in good condition for a long time before expiration, so we’re not in a hurry. In addition, after military conflict in the region restricted access to the Suez Canal in 2023, we have been rerouting vessels south of Africa for the past two years. There are multiple alternative options for us besides Hormuz,” Park Joong-seok, head of public relations for the company, said.
Korea’s beauty and food industries are also concerned that the Iran-U.S. war could drive up production costs. The Hormuz closure has heightened concerns that crude oil prices will rise, potentially increasing transportation costs for imported goods in Korea. West Texas Intermediate crude in New York on Tuesday (local time) closed at $74.56 per barrel, up 4.67 percent from the previous day and marking its third consecutive day of gains.
Iran’s Revolutionary Guard on Monday (local time) said the country would block all outbound oil shipments through the Strait of Hormuz, aiming to choke global supply and push crude oil prices to $200 per barrel.
The strengthening of the U.S. dollar and weakening of the Korean won have intensified since the onset of the war on Saturday, pushing the exchange rate to 1,506.5 won per dollar on Wednesday. The 1,500 won per dollar level was last breached during the 2009 global financial crisis. The strong dollar is disadvantageous for Korean food companies, which import about 70 percent of their manufacturing ingredients, including wheat, soybeans, corn and raw sugar.
K-beauty exports to the Middle East reached approximately $350 million last year, marking a 50 percent increase from the previous year. The United Arab Emirates, the largest market, imported $260 million worth of products, up 70 percent. Exports to Saudi Arabia rose 31 percent year-on-year, while shipments to Kuwait jumped 81 percent and those to Israel surged 110 percent.
K-food exports — including instant noodles, sauces and ice cream products with halal certification — totaled $412 million in the region last year, according to the Ministry of Agriculture, Food and Rural Affairs. The figure represents a 22.6 percent increase from the previous year.