With Israel in its fourth week of a war with the Hamas terror group, and even though the country’s main ports remain fully operational, local industry executives are worried over the increased risk perception by international shipping lines, which in turn could affect food and other crucial supply lines.
Last week, Taiwanese container shipping line Evergreen Line became one of the first to declare force majeure relating to a shipment bound for the port of Ashdod on Israel’s southern coast, citing the “persisting unsafe situation” due to the war with the Hamas terror group. Instead, the vessel was diverted to the Haifa port in the north. The company later announced that all its ships would be diverted.
Israel has been fighting Hamas since October 7, when some 2,500 Gazan terrorists burst into the country by land, sea, and air, killing over 1,400 people, a majority of them civilians, in their homes and at an outdoor music festival. Hamas and allied terrorist factions also dragged at least 239 hostages — including some 30 children — back to the Gaza Strip, where they remain captive.
Israel says its offensive is aimed at destroying Hamas’s military and governance capabilities, and has vowed to eliminate the entire terror group, which rules the Strip. It says it is targeting all areas where Hamas operates, while seeking to minimize civilian casualties.
Rockets continue to be fired from Gaza at Israeli towns and cities. There has also been sporadic rocket fire in the north from the Lebanese Hezbollah terror group and its allies.
The Ashdod port, located some 40 kilometers from the Gaza border, is responsible for about 40 percent of Israel’s total maritime-bound trade including imports and exports. The port, which is equipped with protective shelters and protected by the Iron Dome air defense system on land and at sea, has taken an economic hit since the outbreak of the war.
Haifa in the north is the country’s main port, where around 30 million tons of cargo pass through annually. It receives shipments of grains, oil and petroleum, and raw material.
“Because Israel is adamant to keep the ports open there’s a lot of protection of the ports,” including by the Iron Dome system and the Navy, which is responsible for keeping the international shipping lanes open, Yoni Essakov, managing director of Israeli cargo shipping company Coral Maritime Services Ltd., told The Times of Israel.
“Still, now, with the war, we are seeing shipowners who are more reluctant to call Israel [meaning to offload cargo at a port] and we are seeing suppliers who have become more and more cautious of sending ships here.
“Shipowners and mainly the crews are a bit concerned about calling Ashdod, where there are sirens just about every other day… and for this reason, they are diverting ships to Haifa, but for now we are okay,” added Essakov, who also sits on the executive committee of the Israeli Chamber of Shipping.
The Transportation Ministry sent out a message dated October 25 to reassure the global maritime industry that the country’s ports were “highly protected strategic facilities.”
“Steps have been taken by the government to minimize risk levels for calling ships” and the Iron Dome defense system had “proven to be super effective,” it said.
On Saturday a rocket launched from the Gaza Strip caused damage to property in the coastal city of Ashdod. Footage from the scene showed that the rocket landed on a street, damaging nearby cars and homes.
“In the chaos of the first week of the war, we saw around a dozen ships skipping the Ashdod port, but now the number is much lower and I believe within a week we will be back to the level of activity that we are used to,” said Shaul Schneider, executive chairman of the Ashdod port. “We are working and operating round-the-clock, doing longer shifts to support shipping companies and the Israeli economy.”
“Our message to shipping companies is that they can feel safe to call the Ashdod port, protected by the Iron Dome defense system, as much as the Haifa port and that it is not as dangerous as they think,” Schneider added.
Shay Karni, managing director of Konmart, a ship agent for maritime services in Israel, said that Israeli ports have remained open during past military conflicts and thus have experience in operating under rocket attacks.
“However, this time with social media, everything gets around immediately and instantly there is a chaos of information, and foreign shipping lines think Ashdod is in Gaza when the city is located south of Tel Aviv, and the port is one of the most protected in the world,” said Karni, a director at the Israel Chamber of Commerce.
Essakov, whose shipping company mainly deals with the supply of raw materials including grain and cement, emphasized that is vital for Israeli ports to remain open as the country is highly dependent on imports, and failure to do so would spark a supply crisis in food, raw materials, diapers, baby food, and other basic products.
“Even though let’s say milk, and eggs, and poultry, and bread are manufactured in Israel, they rely on the import of raw materials, including grain,” said Essakov. “In Israel, more than 99% of all materials are imported by the sea and that’s why it’s imperative that the country keeps the ports open and operating at any cost.”
Essakov, who also acts as deputy chairman of the Israel Grain Association, said that the Haifa port is now working at a higher capacity because of the ships that are diverted from Ashdod.
“They’re working overtime due to an increase of about 30% of activities in the port,” he said. “This means that so far, there has been no shortage of supplies or lack of services in the ports.”
“If something develops in the north and the Haifa port and surrounding areas are affected, then we will see less ships willing to call Israel,” he cautioned. “That could result in some shortage, but we are not there yet.”
With the onset of the war, almost all global insurance companies and maritime insurance firms have imposed what they call an extra war risk premium. Israeli shipping firm Zim announced that it is applying a new war risk charge on its cargoes as its insurers have imposed this premium on all vessels calling Israeli ports, which the firm needs to pay in order to maintain service to and from Israel.
“As a result, eventually we will see an increase in the prices of basic products and consumer goods, such as TVs and furniture, because most of it arrives on container ships,” Essakov said. “I’m not sure exactly how much prices will rise because it could be that suppliers or the local distributors will take this price increase and absorb it themselves.”
Essakov called on the government to cover the cost of the extra war risk premiums to ensure the continuous supply of goods. “It’s a big expense, but in order to maintain stability in the economy, I believe it’s an expense that is worthwhile,” he said.
Another issue that the government needs to address during the ongoing war, according to Essakov, is the transportation of goods once they are discharged at the ports, especially as some supplies are now arriving at the Haifa port instead of Ashdod. There is a shortage of truck drivers due to the massive call-up of military reservists.
The Israel Defense Forces expanded its ground incursion inside the Gaza Strip over the weekend, though it has been delaying an expected wide-scale operation.
“If the ground invasion carries on for a couple of months, then we will definitely need a plan for business continuation to make sure that not only the ports are open, but that the end users will get their products from the ports,” said Essakov. “The railway could be used more to transfer goods from place to place.”
Essakov noted that initially, shipowners were reluctant to call Ukraine ports.
“But after a month or so at the right price, ships are calling Ukraine and they are exporting and importing,” said Essakov. “The situation there is actually much worse than it is here because there are lots of attacks on ports.”