In the wake of recent naval attacks of an international character and with international significance in the Red Sea, including the hijacking of a ship in an act of maritime robbery – ostensibly because of a slight connection to Israel – concerns have arisen for the safety of ships with any Israeli affiliation sailing on this route. Nonetheless, most of the shipping lines have continued their routine routes to Israel, with no interruption in the frequency or quality of the service. A stable trend is also seen in the shipping fees in the maritime trade between Asia and Israel.
Among the shipping companies that serve Israel, the brave decision of the ZIM company to change the routes of its ships and avoid crossing the Red Sea stands out. This ZIM line is operated by 12 ships, all under a foreign flag. Their crews are multinational and their owners are foreign companies, so their connection to Israel is their operation by ZIM.
The significance of this decision regarding the line between Asia and the ports of Turkey and Israel, a product of the concern for the safety of the ships on this line and their crews, is the lengthening of the sailing route and the delivery of the containers to the company's customers two to three weeks late in each direction, compared to the average time along the route through the Suez Canal. As a result, there will be an evident decline in the service to the company's customers and in its financial results, as a result of any increase in its fixed expenses without adequate compensation in the freight charges that exist in this trade.
Indeed, changing the route of this line involves a significant economic burden – the additional costs of approximately 30 days of sailing and the additional fuel consumption for the voyage around Africa and back, instead of the passage through the Suez Canal, are extremely significant. These are far higher expenses than the savings of not passing through the Suez Canal (which may reach half a million dollars or more per ship in one voyage) and the non-payment of war insurance due to not passing through the Red Sea. However, it does not seem at the moment that there will be a change in the line's revenues, which depend on the prices of the entire market – hence the loss inherent in the route change.
The freight charges in this trade, as in shipping lines in general, are dictated by the market and supply and demand models, which do not allow any individual shipping company to raise its rates beyond the going rates in the market. So in this aspect as well, ZIM and any other company that follows suit are exposed to freight charges, which are stable at the moment, but at the same time these charges prone to a downward trend due to the ongoing delivery of new and large ships entering service and creating an oversupply in shipping.
In the wake of recent naval attacks of an international character and with international significance in the Red Sea, including the hijacking of a ship in an act of maritime robbery – ostensibly because of a slight connection to Israel – concerns have arisen for the safety of ships with any Israeli affiliation sailing on this route. Nonetheless, most of the shipping lines have continued their routine routes to Israel, with no interruption in the frequency or quality of the service. A stable trend is also seen in the shipping fees in the maritime trade between Asia and Israel.
Among the shipping companies that serve Israel, the brave decision of the ZIM company to change the routes of its ships and avoid crossing the Red Sea stands out. This ZIM line is operated by 12 ships, all under a foreign flag. Their crews are multinational and their owners are foreign companies, so their connection to Israel is their operation by ZIM.
The significance of this decision regarding the line between Asia and the ports of Turkey and Israel, a product of the concern for the safety of the ships on this line and their crews, is the lengthening of the sailing route and the delivery of the containers to the company's customers two to three weeks late in each direction, compared to the average time along the route through the Suez Canal. As a result, there will be an evident decline in the service to the company's customers and in its financial results, as a result of any increase in its fixed expenses without adequate compensation in the freight charges that exist in this trade.
Indeed, changing the route of this line involves a significant economic burden – the additional costs of approximately 30 days of sailing and the additional fuel consumption for the voyage around Africa and back, instead of the passage through the Suez Canal, are extremely significant. These are far higher expenses than the savings of not passing through the Suez Canal (which may reach half a million dollars or more per ship in one voyage) and the non-payment of war insurance due to not passing through the Red Sea. However, it does not seem at the moment that there will be a change in the line's revenues, which depend on the prices of the entire market – hence the loss inherent in the route change.
The freight charges in this trade, as in shipping lines in general, are dictated by the market and supply and demand models, which do not allow any individual shipping company to raise its rates beyond the going rates in the market. So in this aspect as well, ZIM and any other company that follows suit are exposed to freight charges, which are stable at the moment, but at the same time these charges prone to a downward trend due to the ongoing delivery of new and large ships entering service and creating an oversupply in shipping.