Israel shipping costs rising as Red Sea attacks worsen

Israel shipping costs rising as Red Sea attacks worsen
With the Houthis attempting to impose a blockade on Israeli ships in the Red Sea, the price of shipping goods to Israel is skyrocketing.
3 min read
18 December, 2023
In recent weeks, the Houthis have hijacked and attacked commercial vessels allegedly linked to Israel [Getty]

The cost of shipping goods to Israel by sea has risen in recent days as some container lines pull out while others impose new surcharges, adding to the country's supply chain pressures amid its war in Gaza, shipping sources said.

Israel, whose economy relies on seaborne trade, said in October it would provide compensation for ships damaged due to its war on the Palestinian enclave, although it has not detailed whether it will cover additional shipping costs.

Iran-backed Houthi militants in Yemen have stepped up attacks on vessels in the Red Sea to show support for Palestinians following the start of Israel's military offensive in Gaza.

Some shipping companies have responded by either re-routing their sailings around the Cape of Good Hope or suspending transits through the Red Sea. The attacks have also put more strain on companies still providing sea transport to Israel.

"The Houthis have broadened their target profile of what constitutes ‘affiliated’ from flag, ownership, operatorship, and management, to include the destination of Israel," British maritime security company Ambrey said in a note on Monday. "They, and their Iranian backers, have mistakenly targeted vessels that were no longer associated with Israel."

Ocean freight rates to Israel from various Chinese ports rose to over $2,300 for a 40-foot container by Dec. 12, from around $1,975 at the end of November, according to analysis from global freight platform Freightos.

"For ships heading to Israel from Asia, the route around Africa is significantly longer -- about 7,000 nautical miles and 10-14 days – than via the Suez Canal. This route also incurs higher fuel costs," Freightos CEO Zvi Schreiber said.

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"Since the start of the war ocean rates from China to Israel’s ports have increased 46%-58%," Schreiber said.

Taiwanese container shipping group Evergreen Line said on Monday that it had decided to "temporarily stop" accepting Israeli cargo with immediate effect.

On Saturday, Hong Kong-headquartered container group OOCL said that "due to operational issues," it would stop accepting cargo to and from Israel until further notice.

Others such as Denmark's A.P. Moller-Maersk said on Monday it would apply an "emergency risk surcharge" for all cargo discharged at Israeli terminals.

Israeli container line Zim said it had "witnessed an increase in the level of the threat," prompting higher surcharges on its ships which included rates to Israeli ports from Asia.

The new rates "are necessary in order to maintain our current level of services and reflect the steps we take to ensure the safety of our crews, vessels, and customers’ cargo", Zim said in a Dec. 14 advisory.

Ships still willing to call at Israel's biggest ports of Ashdod in the south and Haifa in the north have been switching off their tracking transponders to avoid detection, shipping sources said.

"Ship operators which have called, or plan to call, Israeli ports should limit information access," an advisory issued by leading global shipping associations said on Friday. "Published information could be used by the Houthis."