Port of the month

Port of the Month: Israel Ports Company (IPC)

31 March 2017

This month, we are taking you beyond the European continent, to the Middle East, where ESPO has Israel as an observer member. We asked the Israel Ports Company (IPC), which serves as the landlord port authority for Israel’s three commercial ports (Haifa, Ashdod and Eilat) to give you a deeper insight in the countries’ port sector.

ESPO: Can you briefly give an overview of Israel’s port sector? What are the main characteristics and challenges? 

Israel Ports Company (IPC): Israel has three commercial seaports:  Haifa and Ashdod on the Mediterranean and Eilat on the Red Sea. Israel’s port sector underwent a major reform in 2005 when the existing operating port authority was broken up into four separate government corporations: the Israel Ports Company (IPC) which serves as the nation’s landlord port authority and three operating companies, one at each of the commercial ports. The three operating companies were planned to be privatised in the beginning of 2010, but this has been delayed in Ashdod and Haifa due to labour relations issues. One of the goals of the reform programme was to create a more efficient port sector via competition between the port operating companies.  However, there has only been limited competition to date and as a result, some of the efficiencies envisioned were not achieved.

Nevertheless, Israel’s economy has continued to experience growth, which couldn’t be handled at the existing facilities. As a result, the Israeli government authorised the Israel Ports Company to develop new container terminals in Ashdod and Haifa, which will create competition and facilitate the efficiency improvements vital to Israel’s future economic growth. Under the direction of the Transport Minister and Finance Minister, tenders were also issued for the construction and operations of the new terminals. The terminals are currently under construction and operating contracts have been signed with two international operators (TIL and Shanghai International Ports Group), who are expected to bring their experience and expertise to the sector and encourage the efficiencies mentioned above.

ESPO: This year the European Union adopted the Port Regulation, which can be considered as the first EU law on ports. Is there a similar law applicable to Israel’s ports? Can you briefly explain the legal framework applicable to Israel’s ports?

IPC: Israel’s port reform law mandates that the Israel Ports Company acts to promote competition in the sector. It has done this both in the terminal cargo handling sector, as well as in the port hinterland where the IPC has encouraged the private sector to develop port-related logistics services.

With regards to public funding, the IPC does not and has never received any public funding for port infrastructures or services. All costs are covered by internal sources. The State’s only involvement covers road and rail development in the port area.

ESPO: Israel’s ports are crucial for the export and import of goods. How is the container business evolving? What are the main challenges?

IPC: Container traffic grew with 7.5% during 2016 and with 7.1% during the first two months of 2017.  IPC's container traffic forecast is more modest, estimating an annual growth of 4.3% over the next decade, but IPC forecasts are frequently more on the conservative side. The two new terminals, which will be capable of handling EEE size vessels, will become operational in 2021. Until then, the IPC will need to find ways to encourage the existing terminals to be more efficient and limit the waiting time for berthing and improve service levels once at berth. As experienced globally, average vessel size is increasing annually. Recent dredging will permit the existing facilities to handle vessels as large as 14,000 TEU.  Plans are also under way to further develop the existing facilities to accommodate even larger vessels.

ESPO: In 2013, China revealed the “One Belt, One Road” initiative, containing two dimensions. The first is the Eurasian Land Bridge, which connects China with Central Asia, West Asia and Europe via land. The second one is the Maritime Silk Road, which links China with Southeast Asia, the Middle East and Europe via sea. Is this initiative relevant for Israel’s ports? Are Israel’s ports looking into this initiative?

IPC: Ashdod’s Southport is being built by the Pan-Mediterranean Engineering Company (PMEC), a subsidiary of China’s port infrastructure giant China Harbour Engineering Company (CHEC).  Furthermore, the Shanghai International Ports Group has won the tender to operate the new Haifa Bayport Terminal.  We believe that our trade relationships and regional connections create certain opportunities within the Maritime Silk Road initiative framework.

ESPO: European ports are part of the EU trans-European transport network (TEN-T), which is an EU transport infrastructure policy aiming to close the gaps between its Member States’ transport networks, removing bottlenecks and overcome technical barriers. Are Israel’s ports trying to connect with TEN-T? Is there a similar infrastructure plan for Israel’s ports? Can you briefly describe the main future port investment projects?

IPC: As mentioned above, we are currently developing two new container terminals which are scheduled to become operational in 2021. The two new terminals will be able to handle the largest container vessels in the Far East – Northern European trade. Together with our own domestic needs, we believe that we can provide certain solutions for EU member state ports in our region. Recently completed railway developments to the East will facilitate traffic to the Jordanian border and beyond.

Rendition of New Southport Terminal in Ashdod (c) HUE-3D Studio

ESPO: Administrative simplification is currently a priority in the EU’s maritime transport policy. How are Israeli ports trying to cut red tape and achieve administrative simplification?

IPC: The IPC, under the supervision of the Shipping and Ports Administration and Customs and in collaboration with the greater maritime community has developed and manages a national Maritime Community Information System (TASC-Yam). The system is based on an electronic platform, replacing virtually all trade-related paper transactions covering vessel, crew and cargo activity. The community brings together the port authority, port terminal operators, shipping lines, shipping agents, customs, customs agents, freight forwarders, trucking and rail and importers and exporters under one umbrella, based on a single window concept.  Containers are delivered to and received from the port based on electronic messages, without the exchange of any paperwork. The system has resulted in significant savings to users on clerical activities, reduced data input errors, reduced energy costs related to unnecessary trips to handle paperwork which in turn reduced pollution, accidents and congestion on roads. 

ESPO: Israel is an attractive tourist destination, with Cruise ships often calling at Israel’s ports. Can you briefly describe us the importance of the cruise business for Israel’s port sector? What are the main issues?

IPC: In light of Israel’s “island economy” resulting from regional geopolitical relationships, our focus is on handling the national trade demand and assuring Israel’s ability to continue to foster economic growth.  99% of Israel’s trade is handled via its ports, with the remaining 1% moving via air or Israel’s eastern border. 

At the same time, we recognise that the cruise business is a potential growth sector considering Israel’s historical, religious and cultural attractions. The oldest section of Haifa Port is currently undergoing a transformation with cargo functions expected to be phased out over the coming decade. The area will be converted in stages into waterfront recreational uses, opened up to the public with the existing quays being dedicated to cruise traffic.

ESPO: The 2017 ESPO Conference in Barcelona will focus on “Climate”. In this context, can you briefly tell us more about the climate agenda of Israel’s ports? What are the other main environmental policies?

IPC: The IPC has had a clear environmental policy for almost a decade. Climate change has impacted the design of the new terminals, as well as breakwater protection. Climate change has also had an impact on sand flows. The IPC has created a joint mechanism with the Environmental Ministry to deal with some of this impact.

ESPO: ESPO is a partner of PORTOPIA, an FP7 project that aims to measure port performance. How are Israel’s ports measuring the port’s performance?

IPC: Over the last decade, our focus has been on measuring operational performance.  This includes KPI’s on average waiting and dwell time of vessels, average gang throughput per operational hour, average vessel throughput per operational hour and average vessel throughput per dwell hour.  We also monitor average truck turnaround time in the port and the capacity of the operating companies to meet demand for gangs and equipment.  The industry regulator, the Transport Ministry’s Shipping and Ports Administration, is also considering additional operational performance indicators. 

The IPC is also considering additional performance indicators that would reflect sustainability factors from an environmental, economic and social viewpoint.  

Haifa's Carmel Container Terminal (c)Verhaftig-Venezian

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