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Israel Shipping Report Q4 2011
Business Monitor International, Sep 2011, Pages: 95
Business Monitor International's Israel Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Israel's shipping industry.
BMI continues to be concerned by the state of the shipping industry. Container shipping companies are struggling to push through rate increases, and liquid- and dry-bulk operators are contending with some of the lowest daily returns in years. The cause is overcapacity, which looks unlikely to ameliorate anytime soon. There are fresh challenges on the way, including the fleets of mega-vessels being built by Vale and Maersk Line.
The two major developments in the Israeli shipping sector during the quarter involved the privatisation of the Israeli ports, which continues to move on despite worker's opposition, with APM Terminals (APMT) among those showing an interest, and the contagion spreading from Iran to Israeli shipping firms alleged to have had indirect involvement with the pariah state.
Headline Industry Data
- Port of Haifa total tonnage throughput to grow by 2.3%, and to average 4.1% to 2015.
- Box handling at Haifa will grow by 1.1% to 1.28mn TEUs. Growth projected to average 3.3% to 2015.
- The real value of Israeli foreign trade will grow at 6.7% in 2011 and will average 4.8% to the end of our forecast period.
Key Industry Trends
- APM Terminals Eyes Eilat Investment: APM Terminals (APMT), the terminals arm of Danish shipping and oil and gas conglomerate A.P Moller-Maersk, was rumoured in May to have sent representatives to Israel to look at tender conditions for operating the Israeli port of Eilat. BMI believes the company would help the port redevelop, and possibly turn around its decline in box throughput levels. Equally, APMT could stand to benefit from government investment in the southern Israel region. However, we note that the political risk of being involved with Israeli transport projects could potentially prove costly to the firm.
- First Non-Iranian Shipping Companies Hit By US Sanctions: In June the US Department of State began issuing penalties against companies for refined-petroleum trading under the Iran Sanctions Act of 1996 and its amendment, the Comprehensive Iran Sanctions, Accountability and Divestment Act (CISADA) of 2010. Seven firms have been hit by the sanctions for their dealings with the country's shipping lines. BMI notes that ignorance is no defence in the eyes of the State Department; companies must be extremely vigilant to ensure that they are not dealing even indirectly with the pariah state if they wish to continue enjoying access to US capital and markets.
- Haifa Port Deploys New TOS: Israeli port operator Haifa Port Company has installed the new Navis SPARCS N4 terminal operating system (TOS) to replace its 20-year-old container management system at the Port of Haifa during the quarter. Presently, the advanced TOS is operating at all container terminals of the port including Kishon, Eastern, Western and Carmel terminals. However, the new Navis system had faced several critical errors and stoppages in the week ended May 21 2011.
Key Risks To Outlook
Continued political turmoil in Israel's Middle Eastern neighbourhood, especially within Egypt and Syria, offers both up and downside risk to BMI's forecasts for Israeli macroeconomics and port throughputs. Further, the death of Osama bin Laden could see a heightened security threat from Islamist militants. Further weakness in the economies of the US and eurozone could depress external demand and constrain economic growth.
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