Red Sea Situation Force Israeli Smart Transportation Firm To Forge Overland Trade Agreements

One of the most prominent shipping lines in the globe and an Israeli software firm are among the businesses that are creating commercial trade routes across the Middle East for the first time, bypassing the Red Sea, which is under threat from the Houthis.

The company’s CEO, Hanan Fridman, is shipping products, such as food, plastics, electricals, and chemicals, from ports in Bahrain and the UAE via Saudi Arabia, Jordan, Israel, and ultimately Europe. The fifth-largest container carrier in the world, Hapag-Lloyd AG, wants to link Jebel Ali in Dubai and two ports based in eastern Saudi Arabia with Jeddah on the western coast. Jordan and Jebel Ali are connected by one more of their choices.

Companies have been compelled to look for alternatives. Trucknet’s route has not been attempted commercially due to strained relations between Arab nations and Israel. While three years back, the UAE-Bahrain-Israel Abraham Accords eased the ties, efforts to normalize the relations between Tel Aviv and Saudi Arabia have stalled with the war in Gaza.

Trucknet
Image Credits: Trucknet

Cargo from South Korea, India, Thailand, and China has been sent by trucks in recent weeks, Fridman added. Goods destined for Asia are moving in the opposite direction, helping lower overall costs. The long-term viability of the route, however, will depend on the region’s stability. The volumes trucks can carry are significantly smaller than those transported by vessels. Still, the land route offers alternatives for some goods, Fridman mentioned.

Hapag-Lloyd spokesperson Nils Haupt has acknowledged that its links are a short-term solution for the shippers moving a restricted amount of cargo – not some thousands of containers. He said the land bridge is not fast or easy, but it may help boost the trade flow via ports in regions like Jeddah that are cut off from usual links to the worldwide economy.

The drive to Israel’s trade gateway based in Haifa from Jebel Ali port reportedly takes some three to four days compared to a voyage spanning ten days or more via the Cape of Good Hope, which is likely to increase the appeal, per research from S&P Global Market Intelligence. While carrying a not-insignificant amount of traffic, the land bridge will continue to be a niche option for shipments, especially to Israel, explained Chris Rogers, the head of supply-chain research at S&P Global.

The company’s website shows Trucknet operates with businesses such as WWCS in Egypt, PureTrans FZCO in Dubai, and Cox Logistics in Bahrain. Trucknet was ready to move forward with its plan when Houthis started posing threats to ships in the Red Sea after the Israeli war with Hamas. Test runs to Israel from the Gulf began earlier this year.

A trial run for the much larger India-Middle East-Europe Economic Corridor might also be conducted using the new routes. Following the Israel-Hamas disputes, the US-supported project’s progress has slowed down. It was made public during a Group of 20 conference in India a year ago.

But there are also many barriers. To reduce disputes, the US administration and others have worked to expand trade and economic connections throughout the Middle East. Resolving the diplomatic obstacles to such trade collaboration is getting more difficult due to the ongoing war and its aftermath.

Reference: Times Of Israel, Economic Times

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