Eilat, a significant port located on Israel’s southern coast along the Red Sea, serves as a vital link between the country and Asia, as well as the Indian Ocean. This connection allows goods to transport without having to transit the tumultuous Suez Canal. Despite experiencing a sharp spike in activity during Q4 2022 that saw the facility handle 124,000 tonnes — a remarkable doubling of its Q1 levels that year, the port has suffered a significant decline in its volumes. During a recent meeting held on 7 July with the Knesset’s Economic Affairs Committee, CEO Gideon Golbert reported that the port had unfortunately experienced no activity for the past eight months, resulting in a lack of revenue generation.
Eilat port, mainly handling bulk cargoes, potash and car imports and some containers, although smaller in comparison to the country’s Mediterranean SHIPPING CONTAINER PORTS OF ASHDOD AND HAIFA, plays a significant role in Israeli trade. However, the recent Houthi attacks have severely impacted operations.
On a grander scale, the Houthi actions have necessitated container vessels to undertake a far longer journey, approximately 4,000 miles around the African SHIPPING CAPE to Europe. Although this increases fuel costs and emissions, a silver lining has been the significant boost provided to the second-hand container ship market according to Alphaliner.
In the first half of 2024, container sale and purchase deals saw a notable surge. Vessel operators were on a quest to acquire “every available ship” in a bid to cope with the demand for services travelling around the Cape of Good Hope and maintaining weekly schedules. Interestingly, this surge followed a slump in transactions during the latter half of 2023.
In the period between January and June, Alphaliner reports that 141 ships of 572,600 teu were traded, averaging 23 units per month, compared to only 15 sales per month during H2 2023. Although carriers were initially hesitant, believing the disruption to Red Sea shipping would be fleeting, they eventually responded to the surge in rates towards the end of 2023.
Interestingly, despite the massive newbuilding capacity of 1.6 million teu in the first half of 2024, carriers sought even more tonnage in the second-hand market. This move aimed to fulfil schedule gaps and capitalise on firm rates. As proof of this trend, Alphaliner reports that virtually every available ship is now actively deployed, pushing the idle fleet down to 0.4% in May. Even with a minimal increase in the idle container fleet during the last six weeks, the number of unemployed ships still remains below 1% of the total fleet.
Despite the challenges faced by Eilat port and the shipping industry as a whole, experts believe that there is hope for recovery. With the recent opening of Israel’s new Haifa Bay Port, which has advanced facilities and infrastructure, it is expected to provide stiff competition to Eilat port. This will likely lead to increased investments and growth in both ports, benefiting the country’s trade sector.
Additionally, efforts are being made to find alternative routes for goods transport in case of future disruptions in the Red Sea. One such route is through the newly expanded Suez Canal which can accommodate larger vessels and shorten travel time between Asia and Europe.
Moreover, advancements in technology have also played a crucial role in mitigating the impact of the Houthi attacks. Real-time tracking systems and data analytics have allowed shipping companies to efficiently plan routes and make adjustments in case of any disruptions, minimizing losses.
In conclusion, while the recent Houthi attacks have caused significant challenges for Eilat port and the shipping industry as a whole, it has also sparked innovations and developments that will lead to more resilient and efficient trade routes in the future. With the continuous advancements in technology and ongoing efforts to improve infrastructure, it is expected that both Eilat port and Israel’s overall trade sector will recover from this setback and continue to thrive in the global market. Thus, it is imperative for all stakeholders to work together towards building a more robust and sustainable trade network. Overall, this situation serves as a reminder of the importance of diversification and preparedness in times of crisis to ensure the smooth functioning of global trade. As we move forward, it is crucial for countries and industries to learn from these experiences and adapt accordingly to create a more resilient and interconnected world.
Furthermore, it highlights the need for diplomatic resolutions to conflicts that can disrupt vital trade routes, emphasizing the significance of maintaining peaceful relations between countries for economic stability. Ultimately, Eilat port’s plight serves as a microcosm of the larger impact that geopolitical tensions can have on international trade and reinforces the importance of finding peaceful solutions to such issues. In the end, it is only through cooperation and understanding that we can ensure a prosperous future for global trade and economic prosperity.
So while Eilat port may have faced significant challenges in recent times, it also serves as a symbol of resilience, innovation and hope for a better tomorrow in the ever-changing landscape of international trade. So let us continue to support and invest in the development of ports like Eilat, recognizing their vital role in connecting nations and driving economic growth. And let us also strive towards finding peaceful solutions to conflicts that threaten these crucial links that keep our world moving forward. Together, we can build a stronger and more interconnected global community for generations to come.