China’s COSCO, the world’s fourth-largest container shipping line responsible for about 11% of global trade, has suspended its service to Israel, the Israeli financial news website Globes reported on Sunday. The company’s decision, which did not include details behind the move, came as shipping lanes in the Red Sea have been disrupted by attacks carried out by Iranian-backed Houthi militants in Yemen. The halt to COSCOs’ service to Israel could have significant implications for trade.
The decision, which was made for security reasons, has also impacted the company’s cooperation with Israeli shipping line ZIM, which will now have to operate more ships on its Far East routes, according to Globes. The company’s decision will likely impact Haifa Bayport, which is operated by the Chinese state-owned Shanghai International Port Group (SIPG). The port depends on many COSCO ships.
During an interview with Calcalist Ron Tomer, president of the Manufacturers Association of Israel, they warned that more shipping giants might follow COSCO’s lead and suspend service to Israel. In particular, the decision by COSCO could prompt other shippers to make similar moves to ensure their safety, Tomer said. The president of the Manufacturers Association of Israel added that companies that are not in compliance with Israeli regulations and whose ships sail to Israel risk being fined or even shut down.
According to Israeli media, the decision was made after COSCO executives met with officials of the Ministry of Economy in late December. The meeting was reportedly focused on the current situation in the Red Sea and a possible solution for the tensions.
The Israeli government has yet to comment on the decision by COSCO, and the company has not released an official statement. According to the newspaper Globes, representatives of the shipping firm have declined to respond to requests for comment. Israeli port officials said they were checking the report.
The decision by COSCO comes after a growing number of significant shipping firms halted service to ports in the Red Sea, including Danish giant Maersk and German carrier Hapag-Lloyd. Oil giant BP also temporarily ceased its operations via the Suez Canal after Yemeni forces began attacking commercial vessels.
As a result of the growing attacks, shipping rates between Asia and Europe have soared in recent months. On top of that, several other problems have impacted the liner industry. Orient Overseas International Ltd (OOCL) recently released its Q3 operational data, indicating severe financial challenges.
