The purchase of new cranes and upgrading of old ones at a cost of hundreds of millions of shekels, a 10-year safety net in case the movement of containers is less than expected, upgrading of Quay 21 and the conversion of two quays to general cargo, the transfer of 95 workers to the Israel Ports Development and Assets Company, and a NIS 1.5 million increase in the cultural basket are the main points of the reform at Ashdod Port agreed by the Ministries of Finance and Transport, the Ashdod Port workers committee, and the Histadrut (General Federation of Labor in Israel). The parties will announce the reform, designed to help the port compete with the new private port being constructed in Ashdod, next Sunday.
Leading the reform were Ministry of Finance wages department director Kobi Amsalem, Ministry of Finance deputy budget director Udi Adiri, Ministry of Transport director general Uzi Itzhaki, Histadrut chairman Avi Nissenkorn, and Ashdod Port workers committee chairman Avinoam Shoshan.
Two new ports are under construction in Israel: Haifa Bay Port in Haifa and the South Port in Ashdod. Israel Ports Development and Assets is promoting these huge projects at a multi-billion shekel investment in order to generate competition with the two major existing ports. The new ports are scheduled to begin operating in 2021.
The announcement of the construction of the new ports was greeted with consternation at the existing ports. The port companies fear that the new ports, with deep and wide anchorages facilitating the entry of modern advanced vessels, will deal them a critical blow. The companies are also afraid that when the new ports open, their biggest customer - giant shipping company MSC - will abandon them, because Dutch company TIL, which won the tender to operate the new private port in Ashdod, is an MSC subsidiary. When the new port goes into operation, MSC is expected to move most of its activity to the new port.
Workers at the ports have begun wildcat sanctions several times over the past 18 months that disrupted the ports' activity. The Israel Association of Manufacturers estimated that every day the ports are on strike costs the economy NIS 75 million. In preparation for competition in the ports, the ports demanded billions of shekels in investments for the purpose of building suitable infrastructure.
The parties have been in intensive negotiations in recent months, which were concluded this week. Under the agreement to be presented on Sunday, Quay 21, which has been used for general cargo up until now, will be upgraded to handle large cargo ships of up to 18,000 TEU. Most ships currently using the port have a volume of 9,000 TEU, so two other quays will be converted to general cargo.
It was also agreed that Ashdod Port would buy new equipment suitable for the quays. As reported exclusively in "Globes" last September, the port has already begun to prepare for changes in the global shipping market and competition with the new ports. The port published a tender for the purchase of two new cranes and the upgrading of six existing cranes at a cost of NIS 220 million. These cranes will enable the port to provide service to huge ships. The port also hired over 120 new stevedores in 2015.
The parties also agreed that if the state's forecast for container traffic is not borne out (3.5 million containers in 2021, compared with 2.5 million at present), the workers will receive 70% of their premium pay for a period of up to 10 years. They will also receive a NIS 1.5 million addition to their cultural basket, and the port's sea division' s 95 workers will be moved to Israel Ports Development and Assets.
Next stage: Reform at Haifa Port
After agreeing on reform at Ashdod Port, the parties will begin negotiations on reform at Haifa Port. In this case, however, the negotiations are expected to take much more time than at Ashdod Port. At a Government Companies Authority conference this week, the Authority's director, Ori Yogev, praised Israel Ports Development and Assets for its economizing measures in 2015, with the company's net profit jumping 35%, compared with 2014.
Yogev contended that while Ashdod Port had managed to significantly rein in the employment of relatives and the disruptions in the port's work, the situation at Haifa Port was the opposite. He attributed the differences in the companies' results, among other things, to the Authority's success in appointing three directors at Ashdod Port, while no director had been appointed at Haifa Port.
Published by Globes [online], Israel business news - www.globes-online.com - on January 28, 2016
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