Israel Readying Port Alternatives to Counter Dockworkers' Strike

Transportation Ministry grants small private ports soft loans to buy portable cranes to unload shipping containers.

Avi Bar-Eli
Avi Bar-Eli
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Avi Bar-Eli
Avi Bar-Eli

Beneath the seemingly quiet process of reforming Israel's seaports, the government is taking the first step in an emergency program aimed at keeping the ports open in the event of a strike by protesting dock workers in Ashdod and Haifa.

Officials at the Transportation Ministry have reached an agreement with the country's two privately owned ports in Eilat and at Israel Shipyards in Haifa Bay, under which the government is financing the purchase new harbor cranes that will be used if the two big state-owned ports are shut by a strike.

The government is gearing up for a battle with port workers over its plans to award tenders to operate major new private ports in competition with the state-owned facilities in Haifa and Ashdod.

Officials say that inefficiency and corruption at the government-owned ports raises the costs of bringing goods into the country and makes prices higher for businesses and consumers. Unions contend that the private ports will underpay their workers.

Negotiations between the government and the Histadrut labor federation together with the ports' workers' committee was scheduled to resume last night after a week's hiatus. Last week National Labor Court Judge Yigal Plitman rejected a Histadrut petition to launch a strike at least until a further hearing at the end of the month.

The two sides have reached an impasse in negotiations that have been urged by the court, but are scheduled to meet at least three more times before the next hearing. The government refuses to negotiate with labor leaders over how the two new private ports will be operated and insists on limiting the discussions to any impact they will have on the state-owned operations.

Under the agreement, the government-owned company Israel Ports offered the private ports a soft loan — 10 years at the Libor rate plus 1.25 percentage points — to buy three mobile cranes at a total cost of NIS 44 million. Two of the cranes have already been installed at the Eilat facility in recent days.

The cranes, produced by Terex Gottwald, cost some three million euros apiece. They are capable of handling containers, general and bulk cargoes and project loads, and have a lifting capacity of up to 200 metric tons.

The government has given the two private port operators another sweetener: They are entitled to a refund on the cranes as long as they are used for moving container cargo, a move aimed at providing an incentive for them to go after the government-owned ports' main operations. The private operators will be entitled to five euros back for every container they move, sources said.

This is not the first time the government has recruited a private port to help fight its battles with the state-owned ports' powerful unions. In 2005, the government offered loans to Israel Shipyards to buy similar cranes in expectation of a strike at the state-owned ports. It also helped Israel Shipyards build an additional wharf at a cost of NIS 90 million.

"If the Israel Ports Company can give equipment to the [state-owned] Haifa and Ashdod Ports for free, it is certainly entitled to grant loans to the smaller ports to help them compete," said one source affiliated with the private ports, who spoke on condition of anonymity.

The Israel Shipyards port was sold by the government in 1995, to the Shlomo Group headed by Shlomo Shmeltzer, whose other interests include auto leasing, insurance and real estate. It accounts for just 4% of all the goods coming in and out of Israel. The rights to operate Eilat Port for 25 years were sold last year to the Nakash brothers, a family who grew rich in the United States making Jordache designer jeans and has expanded its interest to real estate and other businesses.

Other elements of the Transportation Ministry emergency program call for container ships delivering goods to Israel to be diverted to ports in Greece, Cyprus and Turkey. There they would be unloaded and the goods moved onto smaller freighters that could be unloaded at Hadera or even at Jordan's Aqaba Port. From Aqaba, the goods would be shipped by land to Israel.

Meanwhile, Transportation Minster Yisrael Katz and Finance Minster Yair Lapid have a November 3 deadline to decide on a critical facet of the ports' tenders, namely whether they issue a tender for two facilities or for just one, for the time being.

Officials at the treasury, and more recently the Transportation Ministry, are concerned that developing two ports would see capacity outstrip demand. Treasury officials are also worried about the NIS 8 billion in costs that will be imposed on the budget to help construct the two ports. For now, however, Katz favors going ahead with both ports simultaneously.

The first cracks in the union front opposing ports reform could be heard last week among rank-and-file Haifa Port workers, who complained that the labor slowdown imposed by the workers' committee has cut sharply into their incomes. A large part of their salaries comes from "premiums" they get for working extra hours that the slowdown bars them from doing.

The so-called "Italian strike," an unofficial labor action, has been underway for about a month.

The Eilat port.Credit: Mori Chen.

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