Oil price shock hits hard... 84% of Jeju export companies see worsening management

The impact of geopolitical risks originating from the Middle East has been shown to be increasing the management burden for Jeju export companies. Particularly, there are concerns that rising raw material prices and logistics costs could lead to a prolonged period of double-digit inflation. According to a survey conducted by the Jeju branch of the Korea Trade Association from the 6th to the 10th targeting 44 domestic export companies, 84.1% of the responding companies reported experiencing negative impacts on their management. Among these, 45.5% responded that the impact was "very significant," and 38.6% responded that it was "somewhat significant." The factor that companies cited as the biggest obstacle was the "rising raw material prices" at 63.6%. This was followed by "rising logistics costs" at 54.5% and "increased exchange rate volatility" at 47.7%. The military tensions in the Middle East region leading to energy price increases and maritime logistics instability are analyzed as having increased the cost burden. Particularly, the impact on major export sectors such as food and cosmetics was found to be significant. Due to the surge in naphtha prices following the rise in oil prices, the prices of PET bottles and other packaging materials have increased by up to 50%, and the increase in maritime freight rates has further worsened the profitability of exports. Some companies reported that they are experiencing difficulties in cash flow due to simultaneous occurrences of rising raw material prices and delivery delays. The outlook is not bright. 94.7% of the responding companies predicted that management difficulties would persist for a long time even if the war ended. This is due to the combined effects of delays in normalizing the supply chain, the time lag in adjusting raw material prices, and delays in collecting export payments. Accordingly, companies have identified "urgent operational funds and financial support" (56.8%) and "logistics cost support" (52.3%) as the top policy tasks. Jeju Branch Director Kim Dong-wook said, "Regardless of whether there is a ceasefire, the trend of raw material supply instability and high logistics costs is likely to continue for the time being," and emphasized that companies need to take preemptive measures such as securing inventory, diversifying trading lines, and managing exchange rate risks.

The impact of geopolitical risks originating from the Middle East has been found to be increasing the management burden of export companies in Jeju. Particularly, there is concern that rising raw material prices and logistics costs could lead to a prolonged period of double inflation. According to a survey conducted by the Jeju branch of the Korea Trade Association from the 6th to the 10th among 44 local export companies, 84.1% of responding companies reported experiencing negative impacts on their management. Among these, 45.5% responded that the impact was "very significant," while 38.6% said it was "somewhat significant." The factor cited by companies as the biggest obstacle was the "rise in raw material prices," accounting for 63.6%. This was followed by "increase in logistics costs" at 54.5% and "increased exchange rate volatility" at 47.7%. The military tensions in the Middle East are analyzed to have led to increased costs due to energy prices and maritime logistics ...