Israel's Ashdod port sees strategic risk from China during Gaza war

Freightos

26/01/2024 12:38

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      Ashdod is the last remaining state-owned port in Israel
    

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      China's SIPG port in Haifa says it acts under Israeli law 
    

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      Israel's shipping authority sees risks from accusations 
    

  
    By Ari Rabinovitch and Jonathan Saul
       JERUSALEM/LONDON, Jan 26 (Reuters) - Israel's
government-run port of Ashdod has complained that a rival
Chinese-run terminal at the northern port of Haifa has become a
strategic risk during the Gaza war.
    In a letter seen by Reuters, the chairman of the southern
Israeli port warned the head of Israel's shipping and ports
authority about the actions of countries designated by the West
as an "axis of evil", and said China was among them.
    Though close to Gaza and in range of rockets fired by the
Palestinian militant group Hamas, Ashdod port has stayed open 
during the war in the coastal enclave.
    But it suffered minor disruptions at the start of the nearly
four-month-old war, and three ports in Haifa, one of which is
run by China's SIPG, have received any extra cargo during the
conflict.
    Chinese container shipping lines COSCO and OOCL have
suspended trade with Israel since Yemen's Houthis said they were
targeting ships in the Red Sea linked to Israel, Britain or the
United States in a show of solidarity with Hamas.
    "In practice it (China) is maintaining a trade boycott on
Israel," Shaul Schneider, chairman of the board of directors of
Ashdod Port, said in the Jan. 17 letter.
    He said Ashdod Port would halt information-sharing with the
SIPG terminal and would no longer be a full partner in the
sector's "sensitive situational assessments" that discuss
emergency scenarios and "strategic threats." 
    The decisions taken by COSCO and OOCL in the past few weeks
dealt a blow to Israel's position as an international trade hub.
Should others follow suit, it could seriously harm the Israeli
economy, which relies heavily on seaborne trade. 
    Israel's shipping and ports authority chief replied to
Schneider's letter the following day. In his response, also seen
by Reuters, he said he was surprised by the letter and called it
"inaccurate to the point of being wrong." 
    It could cause "serious damage to Israel's seaborne trade
and foreign relations and even damage the war effort", he said.
    He said his authority cooperated with all Israeli security
agencies and that SIPG's local subsidiary was a regulated
Israeli company. COSCO's decision to halt Israel operations, he
said, was "a business decision".
    Israel's transport ministry, which oversees the ports, has
previously said it us seeking to clarify COSCO's move.
    
    CONCERN ABOUT CHINESE INVESTMENT
    Israel has brought in global operators in recent years to
run some of its ports in an efficiency drive designed to attract
new trading partners. Ashdod is the last to remain state-owned. 
    While Ashdod and Haifa ports have been vying for market
share, their rift highlights Israeli maritime concern about
whether the Chinese investment is a security risk. The United
States has expressed concern over the investment. 
    Haifa's Bayport Terminal, controlled by SIPG, told Reuters
it "follows clear rules during an emergency, as other port
terminals in Israel, and acts under the instructions of the
Israeli authorities".
    Asked whether it received any instructions during the war
from the Chinese government, Bayport said its "business
activities and goals are guided by its management and board of
directors."
    "The cargo volume in Israel is significantly affected by the
current situation and the security risks. We obviously can’t
estimate when things will get back to normal," it said, adding
that the terminal "stands ready to support shipping companies,
importers, exporters, and the Israeli economy, both in times of
prosperity and crisis."
    Regarding the Ashdod Port chairman's letter, Bayport had
earlier said: "Unfortunately, there are those who are exploiting
the situation these days to hurt competition and return the
seaports in Israel to the days of a government monopoly."
    COSCO and SIPG in China did not respond to requests for
comment. Hong Kong based OOCL separately did not respond to a
request for comment. 
    "China has always supported its companies and citizens in
conducting normal trade exchanges with all countries including
Israel," China's foreign ministry said in a statement.
    China avoids being a direct party in any military conflicts,
but has called for an authoritative Israeli-Palestinian peace
conference and a timetable to implement a two-state solution.
        
    SWELLING COSTS
    The Israel-Hamas war began after gunmen from the Palestinian
militant group killed about 1,200 people and took about 240 in
an attack in southern Israel on Oct. 7, according to Israeli
tallies. Palestinian health officials say more than 26,000
people have been killed in Israel's retaliatory military
campaign in Gaza, which it says is intended to wipe out Hamas. 
    Denmark's A.P. Moller Maersk and Switzerland's MSC, the
world's biggest container lines, continue to sail to Israel.
Taiwan's Evergreen line has temporarily halted "accepting
Israeli cargo". 
    Some merchant ships sailing close to the Red Sea are saying
on their tracking positions that they have no relation to Israel
or the United States, shipping data showed.      
    An Israeli official told Reuters the ports were protected by
air defense systems, adding: "All the missiles that passed the
(U.S.-led) coalition (warships protecting shipping), we took
them out in the Red Sea."
    He said Hamas strikes had not had a huge effect on Israeli 
infrastructure but that it would be "a very different story" if
the Lebanese militant group Hezbollah "joins the party".
    Ashdod has also faced other challenges. 
    Both it and another port in Haifa saw their traffic cargo
drop in 2023, while traffic cargo more than doubled at the SIPG
controlled terminal in Haifa.
    Since the start of the year, ocean freight rates had almost
doubled by Jan 22 for a 40-foot container sailing from Shanghai
to Ashdod, according to global freight platform Freightos.
Unions have warned about the risk to mariners at sea.

 (Reporting by Jonathan Saul in London and Ari Rabinovitch in
Jerusalem, additional reporting by Brenda Goh in Shanghai and
Laurie Chen in Beijing; editing by Kate Holton and Timothy
Heritage)
 ((jonathan.saul@thomsonreuters.com; + 44 207 542 4357 ; Reuters
Messaging: jonathan.saul.thomsonreuters.com@reuters.net))