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Close multiple ports! What is the impact of the Israeli-Palestinian conflict on international shipping?
Oct 17,2023
Since a new round of military conflicts broke out between Israel and Palestine on the 7th, so far, the conflict has caused more than 2000 deaths on both sides.
At the same time, the situation on the border between Lebanon and Israel is becoming increasingly tense, and the military presence in the border area is rapidly being strengthened, and the two sides are increasing their troops to the Israeli-Lebanese border. The situation seems to be getting worse. As a result, Israel's important ports have been closed, casting a shadow over the market outlook.
Major ports closed
Recently, according to Reuters, since last Saturday's attack on towns near Gaza, activity in Israeli ports is slowing down, and the cost of insurance premiums for Israeli goods has soared because of the tightening of food inventory supplies.
Israel has nine ports, of which four are the main ports: Ashdod, Ashkelon, Haifa and Tel Aviv.
Among them, the temporarily closed Ashkelon port location is extremely important, is the famous "trans Israel oil pipeline".
The Port of Ashdod, which is in an "emergency situation," said in a statement that workers continued to work. "The berths in the port are open as needed and we are providing a response that meets all of Israel's needs".
In addition, the port of Haifa, Israel's largest port, is still in normal operation. But shipping and maritime security companies are reviewing their operations to Israel.
According to the World Bank's 2023 Global Container Port Performance Index,The comprehensive ranking of Haifa Port is 56th in the world.
"Israeli ports are considered to be at higher risk," said Dryad Global, a UK-based maritime risk advisory and security firm. "With the ongoing rocket fire in Gaza, coupled with the possibility of a protracted conflict, the destruction of the port infrastructure has become increasingly likely.
The ship division has successively expressed its position.
On the 9th, Maersk issued an announcement stating that at present, the port operations of Israel's main terminals continue to operate normally, and it is expected that the main hubs of Ashdod and Haifa will not be significantly affected. Bookings to and from Israel will therefore continue to be accepted.
Then, the Mediterranean shipping announcement said that due to the normal operation of the main terminals in Israel, as of October 9, continue to carry goods in and out of Israel. The impact of the security situation on trade will continue to be monitored.
Meanwhile, Hapag Lloyd said Haifa Port is operating normally and Ashdod Port has imposed restrictions on the loading and unloading of dangerous goods, including flammable, explosive or toxic substances, adding that the company is monitoring its shipping services to Israel.
Impact on international shipping
A few days ago, affected by the escalation of the Palestinian-Israeli conflict, the share price of the Adani Port and Economic Zone Company under the Adani Group has fallen by 4.5. Investors are very wary that the Palestinian-Israeli conflict may continue to escalate.
The company quickly issued a statement saying that it was paying close attention to the Palestinian-Israeli conflict and had prepared relevant business plans.
This year, on the occasion of US President Biden's visit to the Middle East, India's largest port developer Adani Group and an Israeli company jointly participated in the bidding and won the ownership of Haifa Port by a large margin, obtaining 70% of the shares.
Adani Group founder Adani said the deal was of great strategic and historical significance.
The company believes that the port of Haifa will become a link between Europe and Asia, and through the port to open up new trade channels with Asia, will become an increasingly important Eastern Mediterranean shipping hub.
In addition, a senior overseas freight forwarder said that for global freight and trade, the Palestinian-Israeli conflict mainly affects short-term oil prices and related transactions.
In the short term, it has little impact on other trade varieties. The ports in the Palestinian-Israeli region have limited impact on world shipping, and the future impact depends on whether more countries will "end up".
Recently, the chief economist of the World Bank, Gill, said that the conflict may increase the growing risks facing the global economy, including trade fragmentation.
She went on to say that the (risk) of particular attention is that conflicts lead to supply chain delays, which have led to price increases during the outbreak, which is a very trade-sensitive part of the world.
Industry insiders predict that in general, a war in a coastal country may have the following effects on domestic shipping companies for reference only-
Shipping disruption.Shipping companies may face disruptions to some routes, as the Israeli war may lead to disruptions to maritime traffic, especially if the war affects the Mediterranean region. This can lead to delays and supply chain disruptions.
risks and insurance costs.War and conflict usually increase the risks and insurance costs of international trade. Shipping companies, as well as cargo owners and freight forwarders, may need to increase insurance coverage to deal with possible threats to cargo during war.
Safety of assets and vessels.During the outbreak of war, shipping companies may need to take measures to protect the safety of their assets and ships. This could include moving ships to safer locations or working with the military to secure routes.
Government support.Shipping companies may seek government support to meet economic and transportation challenges during and after the war. The government may provide financial assistance or other forms of support to help maintain the shipping business.
In general, the Palestinian-Israeli conflict has created certain uncertainties and challenges for shipping companies and Israel's international trade and transportation industry.
However, shipping companies may take a number of measures to address these challenges, including working with international partners to ensure the safe and smooth transport of goods.
At present, there is little impact on global shipping routes outside the Israeli region. But it also illustrates the vulnerability of international trade and shipping to geopolitical events and conflicts.
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