Middle East Crisis Disrupts Global Used Car Trade

According to a report by Reuters, escalating tensions in the Middle East have begun to disrupt global shipping routes, creating big challenges for used car exporters in countries like Japan and South Korea.

Such disruptions highlight the broader fallout of instability around the Strait of Hormuz, a key maritime route connecting the Persian Gulf to global markets. The uncertainty has led to port congestion, shipment delays and operational disruptions across the used car export ecosystem.

Exporters report that some shipping companies have cancelled consignments altogether, while others have proposed rerouting cargo to alternate ports in Pakistan or China. In certain cases, additional financial guarantees have been demanded, increasing costs and risk for exporters. Some shipments may even be returned to origin due to the uncertainty.

Japan and South Korea together exported used cars worth approximately $19 billion last year, with the Middle East accounting for a significant share of demand. The UAE alone represented a major destination for Japanese exports, handling a substantial portion of volumes routed through Dubai.

In South Korea, the disruption has coincided with what is typically the peak demand season. Activity at key ports such as Incheon has slowed considerably, with a large share of vehicles remaining in storage due to halted or delayed shipments. Some vessels already en route have either paused operations or diverted to alternative destinations to avoid high-risk zones.

The situation has also pushed up logistics costs, with rising oil prices increasing freight rates. Exporters face additional pressure from currency fluctuations, weaker auction prices and limited flexibility in redirecting shipments to alternative markets.

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