Israeli Exporters, Manufacturers Accuse the Government of Apathy as Port Backup Continues

Israeli Manufacturers Association says cost to economy is approaching 1 billion shekels as shortages develop for raw materials, food goes to waste in port

Israel Fisher
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The Ashdod port, last year.
The Ashdod port, last year.Credit: Tomer Appelbaum
Israel Fisher

The backup at Israeli ports has cost the economy some 960 million shekels ($292 million) over the last six weeks by forcing factories to close for want of raw materials, but importers, exporters and manufacturers all say officials have yet to solve the problem.

The Manufacturers Association of Israel, which made the 960 million shekel estimate, said that each additional day of port delays costs the economy an additional 75 million shekels. The immediate damage is not only to imports of raw materials but to the import and export of fresh produce and other time-sensitive foods whose sell-by date has expired while waiting aboard ships, the association said.

Ron Tomer, the president of the manufacturers’ trade group, again called on the Transportation Ministry to intervene in the crisis. Every delay in the delivery of raw materials to factories means that plants remain idle. Companies can’t export and reputations that were built over the years are destroyed, he said.

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The crisis has led a trade group representing truckers and others in the transportation industry to appeal to Defense Minister Benny Gantz to solve the problem, after failing to elicit interest from Transportation Minister Miri Regev.

“We face a national problem that threatens to affect Israel’s economy and its trade relations with the world. ... The indifference of the transportation and finance ministries to such a serious crisis cries out to the heavens. As a last resort, we are appealing to the Defense Ministry in the hope it can help with the situation,” the group said in a letter.

Among other things, the group suggested that soldiers be assigned to work at the ports and that areas used by the defense establishment be turned over to the ports temporarily to store a growing number of empty cargo containers – another facet of the other crisis.

Itzhak Istrik, the CEO of Vanda Steel, a company that imports and sells iron, said the local market was facing a severe shortage. “The biggest players in the industry, which usually maintain large inventories, have been left with nothing. Everything is on the ships,” he said. End users, such as builders, have set up an informal market to trade steel products among themselves to solve spot shortages,

Istrik attributed the problem to labor shortages at the ports, especially Ashdod, which means that even after vessels enter the port the time to unload is lengthy. The problem is compounded by the fact that steel is shipped as general cargo, as against container cargo. Labor practices at the ports more than double unloading times to five days.

He dismissed claims that the backup was caused by the ship that last month blocked the Suez Canal for several days. Istrik said most ships arriving in Israel were coming from Europe and didn’t use the canal.

Ronen Yoeli, CEO of the kibbutz company Omen Casting Group, a maker of aluminum products mainly for the transportation industry, said none of the raw materials he sources from Turkey have arrived. “The ships arrive at the ports, but they aren’t unloaded for a long time. That causes production lies to stop. We’ve had to close the factory down for several days and out the staff on holiday.”

In some cases to meet export orders, Omen shipped products by air or put them on a ferry to Greece and then transport it by truck to customers in Europe – a far more expensive way than by cargo vessel.

The ports crisis isn’t yet threatening to create food shortages, said Etai Ron, chairman of the Grain Importers Association and CEO of Zenziper Grains & Feedstuffs Importers, because local supplies of inputs remain large.

However, he added, that the backup in Ashdod has reached the point that it can take 28 days to unload a ship. “That’s in unimaginable number,” he said. As a result, food makers based in southern Israel have asked suppliers to ship goods through Haifa, so that backups in Haifa are growing.

Ron compared the situation to supermarket lines on a busy day and the manager having to decide whether to spend money opening more checkouts versus the risk that impatient shoppers will go elsewhere. “The problem is that our supermarket is a monopoly,” he said referring to the government-owned ports.

He estimated the losses to grain importers to date have reach 200 million shekels.

Haifa Port sources said there has been an easing of backups compared to last week, even though ships that were destined for Ashdod are unloading at the northern port instead. In any case, the sources said, ports all over the world are experiencing similar logjams.

“Major ports all over the world have recently been experiencing unusual backlogs as part of the global supply chain crisis due to the coronavirus,” a spokesman for Ashdod Port said in a statement. He blamed the disruption of lockdowns and a sharp rise in consumer spending in many parts of the world.

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