Yemen's Houthi Gains Threaten Eilat Port With Complete Shutdown

The Houthi movement in Yemen is nearing full control of a critical global maritime chokepoint, a development that could severely impact Eilat's port, which has been struggling to recover from a crisis for nearly three years. Recent Houthi advances include capturing the city of Mokha and securing territory along the Red Sea coast, alongside consolidating their hold on Perim Island in the Bab al-Mandab strait. International reports suggest these gains grant the group unprecedented influence in the strategic area, significantly increasing their capacity to disrupt global shipping. The Bab al-Mandab strait connects the Gulf of Aden to the Red Sea, serving as a vital route for goods and energy from Asia to Europe, with alternatives being considerably more expensive and time-consuming. Shipping companies avoiding the region are forced to reroute vessels around Africa, incurring substantial additional costs for fuel, insurance, and operations, which are ultimately passed on to consumers.

While the global shipping turmoil has not yet significantly affected Israel, Eilat's port fears another blow. The southern port was hit hard in late 2023 when Houthi attacks intensified, leading shipping companies to avoid the Red Sea and resulting in the hijacking of a vessel. Consequently, vehicle imports, a major source of activity for Eilat, largely shifted to Haifa and Ashdod ports. This crisis, described as the worst in the port's history, saw annual revenues plummet from approximately 240 million shekels to near zero. Government subsidy plans for shipping companies failed to materialize, and the Ministry of Transport and Treasury announced they would not extend the port operators' concession at this time.

Eilat port officials are deeply concerned about the latest developments in Yemen, viewing the possibility of restoring regular operations as increasingly remote. They emphasize that the current crisis extends beyond Eilat, stating, "We are in a campaign against Iran and the shipping lane. A shipping lane to the State of Israel has never been closed, and when they tried to close the shipping lane to Eilat in the past, the State of Israel went to war. This is not just Eilat's problem." To mitigate the near-total paralysis, the port previously initiated an alternative route via the neighboring port of Aqaba, managing to import only 15-20% of its usual vehicle volume. To incentivize ships to call despite security risks, the port has offered drastic discounts of up to 90% on certain fees.

Internal port data paints a grim picture, with activity dramatically reduced since March. Eilat averages only one vessel per month, carrying around 4,700 vehicles, except for one exceptional month with two arrivals. This minimal activity generates no profit and barely covers basic payroll costs for its approximately 100 direct employees and 20 security and cleaning staff. Anticipating a prolonged shutdown, potentially lasting at least three years, the port requires long-term government support. Eilat port is demanding a ten-year extension of their management concession to offset accumulated damages and urges the government to actively engage in confronting the Houthis to reopen the shipping lane, advocating for Israel's participation in the global coalition fighting the threat.

The primary concern is that the new situation in Yemen will lead to a complete cessation of the little remaining fragile activity. Port officials admit, "It may be that in the new situation, even the narrow activity that exists today will not be possible. I am not sleeping well at night. We are worried." Amidst this threat, Israeli maritime infrastructure leaders see an opportunity for structural changes. HazI Halalouya, Chairman of Israel Ports Company, stresses the need for developing alternative land transport corridors, stating, "The blockade in Bab al-Mandab highlights the national need for strategic redundancy and the development of alternative trade corridors and land bridges." He emphasizes that disruptions in maritime trade directly impact the cost of living and the economy, as over 98% of Israel's trade relies on the sea. True maritime resilience, he adds, is measured by the ability to ensure the continuity of national trade even under global threats, and Eilat must remain integral to this equation.

Insurance companies are refusing to take risks, and while the Houthi entrenchment in the Bab al-Mandab may not result in a complete blockade, it has escalated uncertainty to new heights. Professor Yehoshua Krasna, an expert on Gulf states and geoeconomics, explains the complex challenge of deterring such an enemy, noting the lack of effective deterrence against this type of adversary. For Israel, this means its southern gateway, intended as a strategic alternative to Mediterranean ports, will continue to struggle economically in a highly threatened region, while other ports face increased shipping costs due to longer routes. Krasna points out that Houthi attacks on ships in July, including hitting two Saudi vessels, forced Saudi Arabia to reroute its oil exports, significantly increasing maritime trade costs in the region. Insurance councils in London have declared the Red Sea a war zone, ceasing to insure vessels passing through it. Egypt is expected to suffer significant losses in Suez Canal revenue, while the United States may potentially benefit.