Eight out of ten exporting companies are exposed to the
risks of global supply chain disruptions
KITA conducted a survey on the knock-on effects of supply chain disruptions
posed to exporting companies and identified addressing logistical challenges
and stabilizing raw material prices are top priorities.
The necessity to strengthen year-round monitoring system was raised, which will
allow responding to potential supply chain abnormalities in a pre-emptive
a situation of at least eight out of ten Korean exporting companies being
exposed to the risks of global supply chain disruptions, a recently published
report highlighted the importance of the government’s role of introducing much
robust policies to support affected companies and the necessity of companies to
devise strategies to build up resilience to deal with supply chain disruptions.
Institute for International Trade (Head: Sanghyeon Cho) released a report
titled “The global supply chain crisis and Korean companies’ response” on May
3rd, which includes a survey result compiled by collecting relevant information
from 1,094 Korean exporting companies. According to the survey, 85.5% of
respondents are experiencing problems stemming from supply chain disruptions.
Among those experiencing problems, 35.6% pinpointed logistical disruptions,
including shipping delays, skyrocketing shipping costs as the biggest type of
risk, followed by rising raw material prices (27.8%) and disruptions triggered
by lockdown measures in certain regions (16.9%).
chain disruptions have been a chronic issue with the prolonged Covid pandemic
and the war between Russia and Ukraine. The report found out that companies are
devising ways to minimize the knock-on effects of supply chain disruptions.
35.9% of respondents said they are securing alternative supply sources of key
items and 17.8% of respondents said they are a building up safety stock.
However, it was revealed that a quarter of companies are not properly prepared
to respond to the ongoing disruptions, with 12.4% of respondents saying they
are not equipped with any strategies and 15.3% saying that they are temporarily
suspending or rolling down production.
39.4% of affected companies picked addressing logistical challenges as the most
urgently needed support from the government, this clearly indicated a) securing
freight space on container ships in order to resolving delays in logistics and
b) providing shipping cost subsidy are critically needed. Aside from addressing
logistical challenges, 20.8% of affected companies stressed the need to
introduce a supply chain early warning system, which will allow them to manage
and respond to risks in a pre-emptive manner.
Park, the Head Researcher at KITA, said, “The ongoing supply chain risk is not
only a complicated issue involving a wide array of issues, including,
international situation, resource nationalism and climate change, but also
became an issue of having a greater influence on industries.” The Researcher
also advised, “The government should focus on resolving logistical problems to
overcome the risks accompanied by supply chain disruptions and support
companies to build up resilience to deal with disruptions, along with its
effort to strengthen year-round monitoring on potential abnormalities, which
will help companies to pre-emptively respond to surfacing risks.”