The number of casualties in the region is mounting every day, and uncertainty persists as to how long it will last. The developments affect shipping operations as it has influenced many other fields. Until October 12, here is a compilation of updates about shipping from the region.
Ports of Israel and Gaza
In Israel, the main ports are Ashdod, Haifa, and Eilat. Almost 50% of Israel’s containerized freight is still handled by the Port of Haifa and its container terminal. Haifa Port Company stated that it handled over 2.5 million tonnes of bulk cargo and close to 1.5 million TEU in 2021. One of the biggest cruise and passenger terminals in the nation is run by Haifa Port.
Port of Ashdod is located about 40 kilometers south of Tel Aviv but also not too far from the conflict zone. In 2017, it processed 1.525 million TEU. At Ashdod, ships delivering supplies to the Gaza Strip dump their cargo as well.
Additionally, there is a tiny harbour close to Gaza City’s Rimal neighbourhood. It serves as both the base of the Palestinian Naval Police, an arm of the Palestinian National Security Forces and the home port for Palestinian fishing boats. The Oslo II Accord limits the Palestinian Naval Police’s operations to a distance of six nautical miles from the coast. As part of a blockade of the Gaza Strip, Israel has maintained a naval blockade on the Port of Gaza since 2007.
Conditions of Ports After Conflict
Activity at Israel’s ports is decreasing following attacks on cities near Gaza, and the cost of insurance premiums for Israeli cargo is rising as food supplies are becoming more scarce.
Industry sources stated that shipping and maritime security companies are evaluating their operations for Israel, even though the two main Israeli ports—Ashdod, located farther up the coast, and Haifa, located in the north—remain open.
According to British marine risk consultancy and security firm Dryad Global, Noah Trowbridge stated that “Israeli ports are deemed to be at heightened risk. With continuous rocket barrages expected from Gaza, alongside the potential for a protracted conflict, the damage to port infrastructure becomes increasingly probable.”
According to Reuters, Israel’s oil terminal and Port of Ashkelon have been evacuated due to the ongoing conflict. The port is the closest to the conflict, 10 km north of the Gaza Strip’s border, which is now under bombardment by Israel Defence Forces.
According to Ashdod Port, routine operations are carried out in spite of the rise in violence.
Also, Israeli military strikes on the Gaza port have reportedly resulted in the destruction of fishing boats.
Effects on Supply Chain and Economy
The prospect of more geopolitical escalation, oil sanctions, and supply chain disruptions following offensive actions has caused the price of crude oil to rise by 3% already.
The bombs over the weekend have already had an effect; Israel has stopped production at its Tamar natural gas field, which US oil giant Chevron runs.
Ajay Banga, the World Bank president, said in an interview that the impact of the Middle East attacks on the world’s economy was more limited than the war in Ukraine.
Although neither Israel nor Palestine are significant oil producers, expert Vandana Hari told CNBC that the dispute is situated in a larger, vital oil-producing region and that it could go further. According to Hari, the violence is still “on the doorstep of an important oil-producing and exporting region” even though it has no direct effect on oil supply or output.
Israel is home to two oil refineries that can process nearly 300,000 barrels of oil per day. As per the Energy Information Administration (EIA) of the United States, the nation produces “virtually no crude oil and condensate.” According to EIA data, there is no oil produced in the Palestinian territory.
War Risk Insurance
Although a definitive announcement about maritime trade has not been made, the Israeli parliamentary finance committee announced that it will discuss whether to approve state guarantees for Israeli airlines to purchase war risk insurance.
The government has requested that the finance committee give insurance companies a governmental guarantee of $5 billion to pay the costs and obligations of war risk policies in order to keep aircraft operating.
Israel’s accountant general requested that the committee’s debate remain private due to the delicate nature of the subject.
The three Israeli airlines are continuing to operate flights to bring back stranded Israelis, some of whom are returning as military reserves, despite the cancellation of other international airlines from Tel Aviv.
Opinions of Companies
Maersk declared that all of its port operations at the main ports in Israel are still running well. Bookings to and from Israel will thus still be accepted, and Maersk promised to handle cargo that has already been scheduled to or from Israel “as normal.”
Inland services, including rail and road, are fully functioning in and around the region, according to Maersk’s report.
“As of 9 October, we continue to deliver cargo to/from Israel,” MSC said in a manner that was equivalent to that of the prior press release.
According to a business statement, MSC “will continue to monitor the impact of the security situation on trade, follow advice from the government, and review its service network accordingly.”
Hapag Lloyd AG, a German container shipping company, informed Reuters that Ashdod port had placed limitations on the loading or unloading of hazardous cargo, such as combustible, explosive, or poisonous materials. The company also said that it was keeping an eye on its shipping operations to Israel.
Shipbroker BRS stated that security has been increased at Israeli ports and that rockets fired from Gaza and “hostile forces” on Israeli soil as a result of Hamas fighters infiltrating the nation pose the biggest threats to shipping into Israel. “Since Gaza has a coastline, direct threats to shipping inside Israeli waters cannot be ruled out,” BRS stated.
Maritime Security Issues
Shipowners operating out of Israel and Lebanon are advised to proceed with extreme caution.
Members sailing in the vicinity have received a “Security Level 3” warning, the highest level, from a significant shipowners’ organisation. As for the security levels, when ships and port facilities conduct their regular business, the first level, referred to as “normal,” is in force.
“Security level 3-Extraordinary” denotes the level used when there is a possible or immediate risk of a security incident, whereas “Security level 2-Enhanced” denotes an enhanced risk of a security incident.
Cruise lines have already started rerouting their ships to avoid Israel, particularly the port of Ashdod. The Celebrity Apex cruise liner was scheduled to dock in Ashdod concurrently with the outbreak of hostilities in the area. Rather, the enormous vessel altered its path and made landfall in Limassol, Cyprus. Likewise, Nieuw Statendam skipped its scheduled port stop at Ashdod to sailing to the Turkish port of Alanya.