BMI View: We expect positive growth at the two primary Israeli ports of Haifa and Ashdod in 2015 and 2016, although at Eilat, where throughput is often erratic, we now forecast that gross tonnage volumes will decline in 2015. The ports will for the most part benefit from the base effects of a rebound in economic growth following disruption caused by the Operation Protective Edge conflict in 2014. The port of Haifa will return to growth following two years of decline in its container throughput. The Israeli ports sector is undergoing a state of flux, with the major ports set to be expanded with new, privately operated, terminals, which will be able to handle the larger vessels that are becoming the norm on the key Asia-Europe trade route on which Israel stands. However, the se developments face strong opposition from current port workers and unions , which is impacting throughput . The latest strike at Haifa and Ashdod was held at the end of May 2015.
Headline Industry Data
20156 port of Haifa total tonnage throughput to grow by 0.3%, and to average growth of 3.0% to 2019.
2015 box handling at Haifa will expand by 5.7% to 1.26mn twenty-foot equivalent units (TEUs). Positive growth projected to continue in 2016 and average 4.4% from 2015 to 2019.
Israel's total trade is forecast to see real growth of 4.5% in 2015, from a 5.0% expansion in imports and a 4.0% growth in exports. Total trade growth will average real growth of 4.7% over the medium term.
Key Industry Trends
Ashdod Port Management Issues Letter For Workers Amid Slowdown: The management of Israel's Ashdod port issued a letter asking port workers to return to work, as disruptions at the port continued for a second day straight on June 2. 'There have been major delays in the service provided to customers of the port. Ships that are due to dock at the port are choosing to obtain services at another port, which endangers our contracts with customers and could cause other serious damage, much of which would be irreversible,' stated the letter. BMI notes that continued industrial unrest at the primary Israeli ports of Haifa and Ashdod pose risk to our throughput forecasts. We expect that the issue will continue until well after the launch of the new, privately operated facilities being developed, which port workers at the established ports fear will threaten their livelihoods.
Militant Threats To Israeli Port: In May it was reported that jihadist militants in the Egyptian Sinai Peninsula had threatened an attack on the Israeli port of Eilat, which is situated at the northeast corner of the peninsula. While the attack did not materialise, such threats can deter shipping companies from calling at the port, posing risk to growth in throughput.
New Terminal Concessions Awarded: In April 2015, it was reported that Israel Ports Company had granted two concessions to operate and maintain Ashdod's Southport terminal and Haifa's Bayport terminals to Terminal Investment Limited and Shanghai International Port Group, respectively. The winners will complete the development of their respective terminals, and operate and maintain the facilities for 25 years from 2021. The terminals will have two quays with a total length of about 1,600m and maximum waterside depth of 17.3m. The concessionaires will also procure and install operational equipment such as vehicles, cranes, information management systems and other equipment required. The initial capacity for both terminals is expected to be 800,000 twenty-foot equivalent units.
Further to the new facilities being developed, which will be able to handle the largest ships afloat, there are plans in place to develop a railway which will link the two new terminals with the Red Sea port of Eilat. While Eilat's container handling is negligible at present, the hope is that the railway will provide an alternative route when the Suez Canal suffers from congestion, something which is expected to increase over the long term.
Key Risks To Outlook
The major risk to our projections at present remains the uncertainty over industrial action at the ports of Haifa and Ashdod. Workers at the existing ports are unhappy over the plans for new, private, terminals. Other risks come from regional unrest in neighbouring Egypt and Syria, and doubts over the tentative recovery we forecast in the eurozone, a key trade partner for Israel.