Container Shipping in Israel Stable Despite Security Risks

Date: Tuesday, October 17th, 2023
Source: Sourcing Journal

The Israel-Hamas war has already impacted air cargo logistics, as well as retailers on the ground. But for global ocean freight titans, business is largely operating as usual.

Mediterranean Shipping Co. (MSC) and Maersk, the biggest largest container shipping companies by cargo volume, told clients they’ll continue to accept bookings to and from Israel.

Israel’s major ports continue to function, including key terminals in Ashdod and Haifa, the companies said in separate advisories to customers. In Thursday’s update, MSC noted congestion at Ashdod due to increased security checks and labor shortages that were driving up wait times.

Inland services via road and rail are fully operational in and around the country.

Circumstances are subject to change “at very short notice,” both advisories said.

Restrictions on vessels carrying hazardous materials remain in effect at the Port of Ashdod, just 30 miles from the Gaza Strip. MSC said it can’t create new bookings for restricted cargo.

“Where affected cargo is already in transit, contingency plans are in place to discharge at alternative locations and we will keep customers well informed of any changes to their cargo’s destination,” the service alert said.

According to a report from container logistics platform provider Container XChange, missile threats are keeping the Port of Ashkelon, just 10 miles from the Gaza border, from operating as usual. Vessels can only discharge cargo while moored at sea buoys.

In contrast, the ports of Haifa, Eilat and Hadera are largely unaffected by the conflict. But security at Haifa is risky, according to the Container XChange report.

“In light of recent developments in the Middle East, including the outbreak of war in Israel and its vulnerability to missile attacks and the incursion of opposing militias, the security of transporting goods through the port of Haifa has become uncertain,” said Hossein Norouz Fashkhami, a senior marketing expert Container XChange cited in its report. “The transit of containers, especially hazardous materials, and the arrival of commercial vessels greatly emphasize the importance of security on this route. Such insecurity or potential terrorist attacks could lead to a shift in the transportation of goods.”

Israel-based container shipping company ZIM is directly impacted by instability in the country.

While the firm continues to operate and accept bookings to and from Israel, a new “war risk” premium charge applies to new bookings and on-water cargo. They range from $50 to $120 per 20-foot equivalent unit (TEU).

“In light of the war situation, insurers have imposed an additional insurance premium of war risk on all vessels calling Israeli ports, which we are now obligated to pay to maintain service to and from Israel,” ZIM said in a customer advisory.

Israeli authorities may issue safety updates on short notice that could interrupt service, ZIM said.

Israel represents a relatively small market for container shipping on a global scale, with the ports of Ashdod and Haifa accounting for just 0.4 percent of global throughput, according to Container XChange.

This means there’s a limited threat of disruption to container trade flow through the Mediterranean region.

The India-Middle East-Europe Economic Corridor (IMEC) is marked by uncertainty, according to Christian Roeloffs, co-founder and CEO of Container XChange. IMEC is a proposed economic corridor aiming to improve economic development and strengthen trade ties between India and Europe via railways, ports and green energy. According to Roeloffs, the plan aligns with the G7’s vision to mobilize $600 billion by 2027 for global infrastructure investments.

Roeloffs aired concerns about the Suez Canal, the primary trade route for goods from India to Europe.

“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,” Roeloffs said. “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.”

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