Top European Firm Bidding to Run Private Israeli Ports

Eurogate vies to run private ports planned for Haifa and Ashdod.

Europe's largest private port operator has officially announced that it intends to bid for the chance to run the private ports planned for Haifa and Ashdod.

Eurogate, which is based in Bremen, Germany, announced over the weekend that it would submit the necessary documents at the end of the month to compete in the prequalification round of the bidding process to run the new ports.

The government plans to build the privately run ports to compete with the state-run facilities in the two Mediterranean coastal cities, in the hope that the competition will make shipping operations here cheaper and more efficient.

The plan has engendered vigorous resistance from the port workers' committees in Ashdod and Haifa.

In a related development, the Histadrut labor federation (with which the Haifa and Ashdod workers' committees are affiliated) submitted a request to the National Labor Court Thursday for permission to launch a strike over the government's reform plan, which the Histadrut called "one-sided."

The federation also claimed that talks with the state over the reforms were at a stalemate, due to what it called a refusal by the state to engage in genuine negotiations over the effects of the reform plan on the state-run ports. The state responded that the federation had failed to present concrete examples of the effects of the reform plan in the talks.

Eurogate runs ports in Germany, Italy, Portugal and Morocco, and employs a total staff of some 7,660 people. The company is jointly owned by Eurokai, a privately held firm owned by Germany's Eckelmann family, and the BLG logistics firm, owned by the Bremen city-state. The two merged their companies in 1999 to form Eurogate, which has estimated assets of 1.17 billion euros. The firm concluded 2012 with revenues of 654 million euros and net profits of 54.6 million euros. The combined volume of cargo the company handled last year was many times larger than the aggregate volume at the Haifa and Ashdod ports.

Gunther Bonz, a member of Eurogate’s management, told Israeli reporters that Israeli ports have three advantages - their geographic location; a stable and growing market; and a relatively professional approach when compared to their neighbors.

There are political risks involved in running a port here, Bonz added, but that also exists in other places in which Eurogate does business. He cited Russia as an example, noting that democracy there was less developed than in Western Europe. He said his firm was not currently concerned that entering the Israeli market would cause the company problems due to a possible Arab boycott of the firm.

Bonz, who also serves as chairman of the Federation of European Private Port Operators, said he was aware of the tension between port union representatives and the government here, but was not concerned by it.

Eurogate has experience in going head-to-head with port union representatives. About a year ago, in an effort to get the same job conditions as Spanish port workers, the workforce at a Eurogate-run private port in Tangier launched labor sanctions. Eurogate refused to accede to the Moroccans' demands and a three-month strike followed. Although the dispute was settled, the workers at Eurogate's Tangier port still ended up getting salaries that were a third less, on average, than their Spanish counterparts.

Bonz noted, however, that Spanish port workers' wages are excessive, due to the strength of the unions there. As a result, he claimed, Spain's ports are not competitive.

Bloomberg