First mega vessel marks Bay Port opening

Container ship Cosco Shipping Alps docking at Bay Port, Haifa  credit: Ibrahim Joubran, AG Measurements Ltd.

The Cosco Shipping Alps is of a size never before seen in Israel. Will the opening of the new port bring consumer prices down?

Giant container ship Cosco Shipping Alps, which was built in 2018 and can carry some 14,500 containers (TEU 14,568), reached Israel's shores on Saturday and is about to make a small piece of history. This is the first mega vessel to visit the new Bay Port in Haifa, operated by SIPG of Shanghai. The huge size of the ship, which is currently moored at a quay in the new port, brings home for the first time the potential of the port to deal with ships like this, and even larger ones, that have never before been seen in Israel. The port can handle ships carrying up to 18,000 containers, a service that no port in Israel has been able to provide up to now.

Starting in low gear

Although this is no longer a trial run for the port such as we have seen in recent weeks, but real commercial activity, the Cosco Shipping Alps will only help to clear some of the tens of thousands of empty containers that have piled up in Haifa. The timing of its arrival has an additional motivation however: the ship will serve as a backdrop to the festive opening of the port on Wednesday, to which about a thousand guests have been invited. Unfortunately, because of the rise in the rate of Covid-19 infections in Israel, the ceremony will take place online, without the physical presence of an audience.

For all the festivities, the management of the new port has yet to sign agreements with the major shipping lines. A shipping industry source explained to "Globes" that this was partly because the shipping companies set their schedules for periods of a year, which prevented the inauguration of new lines at present. This is planned for the start of 2022. SIPG therefore estimates that until the end of the year two to four ships will dock at the port each month.

In 2015, SIPG (Shanghai International Port (Group) Co., Ltd.) won a tender published by Israel Ports Company, which is responsible for the project on behalf of the state. Enquiries by "Globes" revealed that the new port will employ 250 workers, 25 of them Chinese and the rest local.

A temporary advantage

The Bay Port is designed to handle container ships only, at least initially. It has a quay (Quay 6) that is 800 meters long and that will be operated completely automatically, which should ensure high efficiency in handling the containers and in manpower.

The uniqueness of the port's ability to handle giant ships will not last long, as the second private port under construction in Israel, the South Port in Ashdod that is due to open in the coming months - will have a deep water quay. In addition, Ashdod Port is working to deepen one of its quays in order to be able to provide a berth for giant ships in the future.

Infrastructure not ready

Something else that will be a damper of the festivities is the cold wind blowing from the host city, Haifa. Haifa mayor Einat Kalisch-Rotem opposed the project in the past, saying that she preferred to promote another infrastructure project, an airport for the city. The Haifa Municipality would not deal with the construction of access roads to the area of the new port, a task that was taken over by Israel Ports Company. The Municipality refrained from commenting to "Globes" on the matter.

The result is that the access road to the new port is partly paved, but the general transport system planned to surround the port and serve the thousands of trucks that will visit the place every week will be ready only in two years' time. Construction of the logistical area behind the port that is part of Israel Ports Company's plan has also been delayed. The Kishon River Authority has petitioned the Haifa District Court against proceeding with construction on the site, claiming that it will cause environmental damage.

Cheaper prices on the way?

99% of the goods entering Israel do so via the seaports, and the opening of an additional port should raise competition. On the other hand, at a time when import costs are mainly affected by global shipping prices, which have reached enormous heights (about $18,000 for a container from the East), the opening of a new port will not cut costs for importers in the short term. Importers and exporters will however benefit from greater certainty over the arrival and dispatch of goods, which is very important in serving customers, and could lead to lower prices to some degree.

In the past few months there has been talk of a traffic jam at Israel's ports, referring to the number of ships anchored off Haifa and Ashdod, mainly because the slowness of the ports in dealing with the number of ships reaching Israel. There is also another jam: the pile-up of empty containers.

Thousands of empty containers have accumulated in Israel belonging to shipping giants like Cosco and MSC, which creates a logistical problem, chiefly for the shipping companies, which have to pay tens of thousands of dollars a day for storage and haulage, while in other ports there are shortages of containers. The pile-up has occurred for two reasons. One is the coronavirus pandemic, which brought many ports to a halt, mainly in China, in a way that disrupted the international shipping system. A second reason is the shortage of ships, leading to higher shipping costs.

These factors have caused the cost of transporting a container from the East to Israel to rise to $18,000, instead of $2,000 a year ago. When ships come into port, their owners prefer to load full containers rather than empty ones, which are less profitable. So a ship can arrive in Israel and offload 500 containers, but load only a few dozen empty containers, so that more and more empty containers are accumulating in Israel.

Published by Globes, Israel business news - en.globes.co.il - on August 31, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Container ship Cosco Shipping Alps docking at Bay Port, Haifa  credit: Ibrahim Joubran, AG Measurements Ltd.
Container ship Cosco Shipping Alps docking at Bay Port, Haifa credit: Ibrahim Joubran, AG Measurements Ltd.
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