A shipment of 500 used cars was stuck offshore in Sri Lankan waters because the country’s Port of Colombo was clogged up by vessels diverted away from the Persian Gulf conflict, illustrating how the 90%-plus closure of the Strait of Hormuz is affecting supply lines.
According to the owner of Kobe Motors in Japan, Hyder Ali, the shipment was idling at sea for at least ten days before it finally berthed at the Port of Hambantota.
The lion’s share of the shipment, he said, consisted of run-arounds, mostly Toyotas and Hondas, but at least 50 of them were luxury vehicles – Lamborghinis, Rolls-Royces and Ferraris.
Having made a lucrative living for at least two decades by shipping used cars from Japan to his native Sri Lanka, Ali said the impact of the Gulf conflict was one of the worst spells of supply chain disruption he had endured.
He said although airfreight was an option for some clients, it was too costly for most and he fears what the long-term impact of the current conflict could be on his business, built on exporting at least 18 000 cars a year.
The effect that his delayed shipment has had on the used-car export industry in Japan has caused some shipping lines to ask for a deposit of US$5 000 per unit, fearing that shipments to destinations like Sri Lanka may be diverted to Pakistan and China.
Tuoi Tre News in Ho Chi Minh City, Vietnam, reports that Japan is not the only country whose robust exports of used-cars have been affected by the war in the Middle East.
“In South Korea, the conflict has halted shipments during what is usually the busiest season for used-car dealers, as demand usually peaks in March-September due to travel and construction activity in the Middle East and elsewhere.”
Shipping line owner Kang Tae-yang said earlier this week that about 70% of used cars bound for the United Arab Emirates was stuck in storage at the Port of Incheon.
He said the slowdown in getting used cars out to the UAE meant that those units intended for loading were sitting at the port because roll-on roll-off carrying units were not moving because of bottlenecking at points of destination.
The data of combined used-car exports adds weight to fears of what a prolonged conflict could mean for Japan and South Korea’s used car market.
Last year the two countries exported $19 billion worth of units, with Japan accounting for just over half of that, Tuoi Tre News reports.
“More than a third of the 883 000 used cars South Korea exported last year went to the Middle East, trade data showed.
“The UAE was Japan's single biggest destination for used cars last year, accounting for 224 000 units, or about 15% of total used-car export volumes, finance ministry data showed.”
