Chinese state-owned shipping giant COSCO Shipping has stopped mooring its ships at Israeli ports, Israeli financial website Globes reported in an article published on January 7, 2024.
The company, the world’s fourth largest container shipping company, which accounts for about 11% of global trade, made this decision despite the fact that it is not particularly at risk in the Red Sea due to the fact that it is owned by China and because its ties to Iran, which is collaborating with the Houthi rebels in Yemen.
Consequences
In addition to the impact on trade between the Far East and Israel, COSCO’s decision is also important because it is partnering with Israeli shipping company ZIM, which will now have to operate more ships on Far Eastern trade routes, which could lead to higher freight rates as XIM experiences shortage of ships.
The second direct impact will be on the port of Haifa, which is operated by another Chinese state-owned company, SIPG. The port largely depends on the berths of incoming COSCO vessels.
Iran and China
The Houthis threaten to attack ships of any company going to Israel, but China is the buyer of 90% of the oil exported from Iran. Therefore, the chances of the Houthis targeting ships of the state-owned Chinese company are very low, raising questions about the reasons for COSCO’s decision, of which international shipping companies have not yet been notified.
One of the harbingers of COSCO’s decision was the recent announcement by its Hong Kong subsidiary OOCL that it would cease shipping to Israel due to “operational issues.” The announcement, which was supposed to allow her to sail in the Red Sea without Houthi interference, sparked significant backlash. As a result, the company reversed its decision, as did the Singaporean shipping company ONE (Ocean Network Express).
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