Indian Transport & Logistics

Israel-Palestine war: Maritime industry cautious

Hostilities beyond the borders could introduce risks to two vital shipping choke points - Suez Canal & Strait of Hormuz

Israel-Palestine war: Maritime industry cautious

Haifa Port

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The Israel-Palestine war has seen leading international companies issue cautionary advisories and adapt their operations in the region, according to the latest update from Container xChange.

Maersk is keeping a close eye on the ongoing situation in Israel "to ensure the safety of its personnel and minimise any potential disruption to customer supply chains."

Israel’s major ports continue to function normally, "including out of our key terminals in Ashdod and Haifa. Likewise, inland services – both road and rail – are fully operational in and around the country."

MSC is monitoring and assessing the developing situation in Israel to ensure the safety of its personnel and minimise disruption to customer supply chains.

"At this time, Israel’s major ports continue to function, including key terminals in Ashdod and Haifa, however there is currently congestion at Ashdod due to increased security checks and labour shortages, leading to increased waiting times. Inland services – both road and rail – are fully operational in and around the country. "

Specific impact on individual ports tells a compelling story, according to Container xChange:

Port of Ashdod: The port, a mere 50 kilometres from the Gaza border, operates in an "emergency mode" only, subject to potential missile attacks. Furthermore, restrictions on vessels carrying hazardous materials (HAZMAT) remain in effect.

Port of Haifa: The port of Haifa, encompassing the Haifa Bay port and Israel shipyard, continues with business as usual, undeterred by the conflict.

Port of Ashkelon: Located 15 kilometres from the Gaza border, the Port of Ashkelon is severely impacted, rendering it incapable of normal operations due to missile threats. Vessels can only discharge cargo while moored at sea buoys, highlighting the risk and necessity for adaptive measures.

Port of Hadera: The port of Hadera, in comparison, carries on without disruption, maintaining its regular functions.

Port of Eilat: The port of Eilat similarly remains operational, showcasing the industry’s commitment to ensuring the flow of maritime trade.

“We are closely monitoring the action on ground which is concentrated in South Israel whereas Haifa port is situated in the North,” according to a spokesperson of Adani Ports and SEZ, which owns 70 percent stake in Haifa Port. “We have taken measures to ensure the safety of our employees and all of them are safe. We remain fully alert and prepared with a business continuity plan that will enable us to respond effectively to any eventuality.”

The overall contribution of Haifa in APSEZ’s numbers is relatively small (three percent) of the total cargo volume, the spokesperson added. “For the current financial year (Apr 23-Mar 24), we have guided for Haifa cargo volumes range of 10-12 million tonnes and APSEZ’s total cargo volume guidance of 370-390 million tonnes. In the initial six months (Apr-Sep 23), APSEZ’s total cargo volume was ~203 million tonnes of which Haifa’s share is six million tonnes. We stay confident of APSEZs business performance.”

Israel trade story

The United States is a critical trade partner for Israel with a strong focus on exports. Israel exported goods worth $18.67 billion to the U.S. in 2022 including high-tech products and defence-related items.

While Israel’s exports to China are substantial ($4.68 billion), the conflict may disrupt trade flows, particularly concerning Israel’s high-tech exports. The disruption could affect Israel’s exports and potentially hinder access to China’s vast market, the update added.

"India is another crucial trading partner for Israel with $3.94 billion in Israeli exports. The conflict could have an impact on bilateral trade, potentially leading to disruptions in Israel’s exports to India."

Christian Roeloffs, Co-Founder and CEO, Container xChange says: “The Israel-Palestinian conflict serves as a reminder of the uncertainties facing ambitious trade projects like the India-Middle East-Europe Economic Corridor (IMEC), positioned as a western counterpart to China’s Belt and Road.”

IMEC, involving railways, ports, and green energy, aligns with the G7’s plans to mobilise $600 billion by 2027 for global infrastructure investments, the update added. "To fully realise IMEC, a reliable link between Saudi Arabia and Israel is essential. However, the ongoing regional complexities make it riskier for Saudi Crown Prince Mohammed bin Salman to normalise diplomatic relations with Israeli Prime Minister Benjamin Netanyahu."

Roeloffs adds: “In the case of the conflict in Israel, any expansion of the hostilities beyond the country’s borders could introduce risks to two vital shipping choke points. The Suez Canal, a critical waterway for various commercial vessels, including container ships, may face disruptions. Similarly, the Strait of Hormuz, a backbone for oil and gas shipping, could be affected. However, the extent of these effects will largely depend on the conflict’s expansion and duration.”

It’s worth noting that Israel itself represents a relatively small market for container shipping with its primary ports of Ashdod and Haifa accounting for just 0.4 percent of global throughput, the update added. So, the threat of disruptions to container trade flow through the Mediterranean region remains limited.

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