Jerusalem / Anadolu Agency
The Chairman and owner of the Port of Eilat, Avi Hormero, issued a warning letter to the Israeli Minister of Transportation, requesting Benjamin Netanyahu’s government to financially rescue the port due to the suspension of shipping traffic.
Hormero wrote in the letter published by the Israeli economic website Calcalist that the port is experiencing a “critical situation” due to the consequences of the war in the Gaza Strip and the Houthi group’s attacks on the Red Sea.
** Houthi attacks
The Houthi group’s attacks on ships traversing the Red Sea led to the suspension of ship movements departing from and arriving at the port located in southern Israel.
According to navigation data released by the port administration, maritime trade has been halted for eight months, specifically since the beginning of Houthi attacks on ships passing through the Red Sea.
The Eilat Port Authority is threatening to lay off 50 to 60 of its 120 employees if the state does not provide financial assistance to the port.
In the two years preceding the outbreak of the Israeli war on Gaza, the port of Eilat served as a gateway for vehicles entering the Israeli market.
** Commercial portal
Port data indicates that 150,000 vehicles were unloaded at the port of Eilat in 2023, but during the first half of this year, the port did not witness any unloading of vehicles. Instead, they were diverted to the ports of Ashdod and Haifa on the Mediterranean.
While the port administration bears the burden of continuing ongoing maintenance work of the port and paying worker wages for the past eight months, it has reached a critical stage where a bailout from the Israeli government is required.
Over the past decades, the port of Eilat has been a hub for trade flowing in and out of Israel, particularly with Asian and African countries. It has been a hub of increasing importance amid geopolitical tensions with Lebanon’s Hezbollah.
The port has also become a center for trade with China, along with the Haifa port, which is co-managed by a Chinese company. However, it has lost momentum since November, coinciding with the Houthi attacks.
In “solidarity with the Gaza Strip,” which has been facing a devastating Israeli war since October 7 with American support, the Houthis are targeting Israeli or Israeli-linked cargo ships in the Red Sea with missiles and drones.
Since the beginning of this year, a US-led coalition has been launching raids targeting “Houthi sites” in various areas of Yemen in response to its attacks in the Red Sea. The group has responded intermittently.
Following the intervention of Washington and London and the escalation of tensions in January, the Houthi group announced that it now considers all American and British ships military targets.
** Establishment of the Port
Established in 1952, the Port of Eilat is a major player among Israeli ports, facilitating trade, particularly with countries in the Far East. Its pivotal role is to provide a direct route for Israeli shipping to the Indian Ocean, bypassing the Suez Canal.
The port’s historical importance extends to conflicts, particularly during the Egyptian naval blockade of the Strait of Tiran in the early 1950s and during the Six-Day War in 1967.
Since then until today, the port has been patrolled by the Israeli Navy’s 915th Patrol Boat Squadron, confirming its strategic importance to Israel’s national security.
After the war on Gaza revealed the port’s potential to be affected by geopolitical events, a plan dating back to the last decade calls for the port to be moved to a dug-out northern area, accessible via a waterway along the border with Jordan.
Not far from the port of Eilat, construction of Rimon Airport was completed in 2019, along with a railway line that Israel aspires to connect westward with the Mediterranean to transform the region into a logistics hub.
** Threat of Nationalization
Last March, the first threat was issued by the Eilat Port Administration to lay off up to 60 employees and workers. The Knesset Economic Committee responded by threatening to nationalize the port if the workers were fired.
The port of Eilat was privatized in 2013 for a total value of 122 million shekels ($33.4 million) under a concession agreement extending until 2028.
In press statements last April, Eilat Port CEO Gideon Golber said, “Unfortunately, since the end of November until today we have only had 2-3 ships carrying bulk cargo.”
** Suez Canal
Egypt’s Suez Canal revenues declined by 23.5 percent during the last fiscal year ending in June, recording $7.2 billion, due to the Red Sea crisis.
In a statement issued by the Suez Canal Authority on Thursday by its Chairman Osama Rabie, he confirmed that navigation movement passing through the canal was severely affected by the repercussions of the Red Sea crisis.
Rabie said: “The traffic movement through the canal was severely affected by the repercussions of the Red Sea crisis, as the security challenges prompted many ship owners and operators to take alternative routes to the canal, which negatively affected the rates of ships passing through the canal.”
He added: “The decline is reflected in the navigation statistics during the fiscal year 2023/2024, which recorded the passage of 20,148 ships with a total net tonnage of one billion tons and revenues of $7.2 billion.”
He continued: “But in the previous fiscal year 2022/2023, 25,911 ships crossed, with a total net tonnage of 1.5 billion tons, achieving revenues of $9.4 billion.”
He considered that the impact of the current tensions in the Red Sea “not only affects the Suez Canal, but also the maritime transport market, trade movement, and global supply chains.”
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Eilat Port Faces Financial Crisis Amid Red Sea Tensions
The Port of Eilat, a vital trade hub for Israel, is facing a critical financial situation due to the suspension of shipping traffic caused by Houthi attacks in the Red Sea. The port’s chairman and owner, Avi Hormero, has issued a warning letter to the Israeli Minister of Transportation, urging the government to intervene and provide financial support to save the struggling port.
Houthi Attacks Cripple Maritime Trade
Since the start of Houthi attacks on ships passing through the Red Sea eight months ago, the movement of vessels to and from Eilat has been halted. This has resulted in a significant decline in the port’s activity, with no vehicles being unloaded in the first half of 2023. This is in stark contrast to the previous year, when 150,000 vehicles were unloaded at the port.
The Houthi group’s actions are seen as a response to the ongoing Israeli war on Gaza, with the attacks targeting Israeli or Israeli-linked cargo ships. The United States and the United Kingdom have responded to the attacks with airstrikes once morest Houthi sites in Yemen, escalating tensions in the region.
The Port’s Historical Significance and Strategic Importance
The Port of Eilat, founded in 1952, has played a crucial role in Israeli trade, serving as a gateway for goods moving between Israel and Asian and African countries. It is also strategically important for Israeli national security, providing a direct route for shipping to the Indian Ocean, bypassing the Suez Canal. The port has been stationed by the Israeli Navy’s 915th Patrol Boat Squadron, highlighting its significance.
Eilat Port’s Future in Uncertain Times
The current crisis has highlighted the port’s vulnerability to geopolitical events. A plan to relocate the port to a dug-out northern area accessible via a waterway along the border with Jordan has been in discussion for several years. This relocation would aim to create a more secure and efficient logistics hub for Israel.
The Port’s Financial Struggle and Potential Nationalization
The Eilat Port Authority has been struggling to maintain operations, facing a critical financial stage. The port has been unable to unload ships, and its income has dwindled. In March 2023, the port administration issued a threat to lay off up to 60 employees, prompting a response from the Knesset Economic Committee. The committee threatened to nationalize the port if workers were fired.
The port was privatized in 2013 for a total value of 122 million shekels ($33.4 million) under a concession agreement extending until 2028. The current crisis puts the future of the port in jeopardy, as the government’s decision on whether to intervene with financial aid will determine its fate.
Impact on the Suez Canal
The Red Sea crisis has also had a significant impact on the Suez Canal, with revenues declining by 23.5 percent in the last fiscal year ending in June 2023. The Suez Canal Authority attributes this decline to the security challenges in the Red Sea, which have prompted many ship owners and operators to take alternative routes to the canal. This demonstrates the widespread impact of regional instability on global trade and maritime transport.
Key Takeaways
* The Port of Eilat is facing a critical financial crisis due to the suspension of shipping traffic caused by Houthi attacks in the Red Sea.
* The port’s importance for Israeli trade and national security is jeopardized by the current situation.
* The Israeli government is facing pressure to intervene and provide financial aid to save the struggling port.
* The crisis has highlighted the vulnerability of ports and maritime trade to geopolitical events, with significant implications for global supply chains.
