The naval blockade that may be created on Israel as a result of the Houthi threat is liable to cause extensive damage to the Israeli economy.
It seems that this is a growing phenomenon, after an incident of damage to the ship occurred yesterday as well. According to reports, an anti-ship cruise missile was launched from Yemen at the commercial tanker that was en route to the port of Ashdod and carrying a chemical substance.
Houthi rebel militiaman in the background of a ship in the Red Sea, Photo: AP
Chen Herzog, chief economist of BDO, a consulting firm, explains the implications of the escalation in the Red Sea in a conversation with Israel Hayom: "First, we are talking about an increase in sea freight prices to Israel, as a result of extending the travel route by about 30 days for ships that will continue to arrive in Israel from the east, on a long route that bypasses Africa, instead of passing through the Bab el-Mandeb Strait and the Suez Canal."
"Second, shipping lines that decide to completely forgo passage through Israeli ports, and as a result, delivery times and product availability will be disrupted, and prices will increase due to supply chain shortages. Most of the movement of ships in the world is carried out by ships that sail on orderly lines that visit a large number of ports along the way. It is reasonable to assume that because of the great risk, some of the companies will prefer to give up the station at Israeli ports.
"This means that goods destined for Israel from the East will have to be sent to an alternative port in Europe, and from there to be loaded onto a smaller ship that will take them to Israel. In other words, it is the cost of double charging and extending the duration and cost of arrival in Israel."
Chen Herzog, Photo: Nati Hadad
A third consequence that Herzog notes is damage to imports to the port of Eilat, to the point of shutting it down. "The port of Eilat is actually under a naval blockade, which may prevent ships from reaching it.
Although overall traffic at Eilat Port is relatively small, it is very significant for vehicle imports and potash exports from the Dead Sea. About 50% of vehicle imports to Israel are made through the port of Eilat."
The bottom line is that Herzog estimates that "a naval blockade of imports to Israel will cause damage amounting to NIS 80 billion a year, and the danger of a total shutdown of the port of Eilat. This is in addition to the negative impact on Israeli exports to eastern markets, amounting to about NIS 15 billion a year."
Ashdod Port Warns
Houthi fire on merchant ships and fuel tankers threatens world trade, and Ashdod Port has not remained indifferent to this threat. "The risk of shipping lanes by the Houthis is a strategic threat to global shipping routes in general and maritime traffic to Israel in particular, and has broad political and economic effects," Ashdod Port said.
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