China Ocean Shipping Co. (COSCO) has launched a new shipping route to bring Chinese manufactured vehicles to Israel. COSCO launched the route on May 9 when it set sail from Ningde port in Fujian province with 700 SAIC MG4 electric vehicles and 25 Golden Dragon electric buses on board. The ship will reach Eilat Port on May 31.
COSCO is one of the world's biggest shipping companies although its activities on routes to Israel has focused mainly on container traffic. The company only entered the RORO (roll-on/roll-off) cargo shipping market last year at the encouragement of the Chinese government following the dramatic jump in car exports from China in the past two years.
Challenging ZIM's power may cut prices
In recent months, the direct shipping line from China to Israel for vehicles has been controlled by Israeli company by ZIM Integrated Shipping Services Ltd. (NYSE: ZIM). Sources in the shipping industry believe that this is one of ZIM's most profitable lines due to high occupancy, which is booked almost a year in advance, at high prices.
ZIM said, "We are significantly expanding car shipping activities all over the world, including to Israel. ZIM is a major operator in routes to the State of Israel, including to Eilat. Zim always operates under conditions of competition and in a free market and this is not the first route where ZIM has competitors."
The price of transporting each car from China to Israel is currently around $2,000, up from less than $1,000 three years ago. Sources in the vehicle import industry expressed hope that the entry of the COSCO into the field will increase competition, reduce transportation times and, above all, lower prices, and even allow discounts to be passed on to consumers.
Sharp jump in car imports to Israel
Opening of the new direct car shipping line from China to Eilat is part of the growing importance that the Chinese car industry attaches to the Israeli market as a gateway to Europe. As previously reported by "Globes," in the first two months of 2023, Israel became China's third largest vehicle export market. In January-April 2023, almost 22,000 Chinese-made vehicles were delivered in Israel, up 309% from the corresponding period last year. The market share of China-made vehicle in Israel has risen to 17.47% of all deliveries, compared with only 4.8% last year.
Chinese brands dominate electric vehicle sales in Israel with a 70% market share of the segment (including Tesla). Industry sources estimate that the market share of vehicles made in China is expected to rise significantly in the second half of 2023 due to increased imports following the expected rise in purchase tax on electric and plug-in cars in 2024 from 20% to 35%.
In addition, the trade agreement between Israel and China, which is in advanced stages towards completion, is expected to accelerate the presence of Chinese shipping companies in Israel.
Published by Globes, Israel business news - en.globes.co.il - on May 16, 2023.
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