Red Sea Shipping Disruption and the Impact on Israeli Supply Chains
The Houthi attacks on commercial shipping in the southern Red Sea, beginning late 2023, collapsed Eilat Port and forced Haifa and Ashdod traffic around the Cape of Good Hope. How Israeli supply chains absorbed the shock.
By The Olam Editorial Team
The Houthi attack campaign against commercial shipping in Bab el-Mandeb and the southern Red Sea, beginning in late 2023, produced the largest disruption to global container logistics since 2021. For Israel, it was an extinction-level event for Eilat — the country's only Red Sea port, which collapsed commercially and sought state assistance in summer 2024 — and a costly rerouting exercise for Haifa and Ashdod.
What Happened
Beginning in late 2023, Houthi forces launched a sustained campaign of attacks on commercial shipping transiting Bab el-Mandeb. Container lines, tanker operators, and bulk carriers responded by suspending Red Sea transits and rerouting around the Cape of Good Hope. By early 2024, Suez Canal traffic had fallen roughly 50–60% at the worst of the disruption.
Eilat: The Local Casualty
Eilat is Israel's only Red Sea port. When the southern Red Sea became unsafe, Eilat's lane disappeared. By summer 2024, revenues had collapsed, container and vehicle handling had stopped almost entirely, and the operator sought emergency state assistance. Eilat became the most visible domestic casualty — a port suspended not by its own operational failure but by the collapse of the lane that fed it.
Haifa and Ashdod: Rerouting Costs
Container lines rerouted around the Cape of Good Hope, adding roughly 10–14 days of transit time and an estimated $1 million+ per voyage cost increase on the largest vessels. War-risk insurance premiums on Israel-bound cargo spiked by orders of magnitude. ZIM repositioned its network first; Maersk, MSC, CMA CGM, and Hapag-Lloyd followed.
Inventory and Procurement Response
Israeli importers extended inventory buffers, diversified supplier networks, and pre-positioned critical stock. Companies that had operated on just-in-time inventory norms moved to just-in-case stocking. Air freight on the Asia–Israel lane absorbed displaced sea cargo. The Red Sea disruption reset Israeli supply chain planning permanently — the just-in-time assumptions of the 2010s are gone.
Related — Israeli Ports & Logistics
- Israel's Ports and Logistics: The Complete Map
- Eilat Port and the Red Sea Crisis
- Israel's Global Trade Corridors: The Complete Map
- Israel's Logistics Bottlenecks
- ZIM Integrated Shipping
- ZIM and Israel's Global Shipping Footprint
- Israel Port System: Who Operates What?
- Adani at Haifa: The Three-Year View
- The Eilat-Ashkelon Pipeline Company's Strategic Second Life
