Exclusive: Importers in Jordan, Israel and Palestine tell me the Red Sea blockade is changing their business
According to multiple market involved merchants, they are experiencing rapid shifts in their market dynamic. Due to the increase of shipping costs from China, there is a growing move to produce locally. It is cheaper now to import raw materials and produce locally than to import finished products from China. Factories are being built in Egypt and Jordan and Israeli merchants are increasing their imports from the two markets.
Due to the lack of imports, Chinese shippers has just slashed prices on container shipments from $11,000 to $3,000-$4,000 and are calling importers in these markets to catch a break.
Many takeaways here:
1- The region is accommodating and adopting to the Res Sea blockade by localisation. This is benefiting local manufacturers and enabling them to rediscover their economic worth.
2- Israel is learning that without regional integration it cannot survive and its supply lines will be unsustainable. The IMEC is thus critical for Israel’s future survival.
3- Houthis Red Sea blockade shock has been absorbed by the Israeli market and alternatives were found.
4- China is losing money due to the blockade. They have tolerated it thus far, but they are at a crossroads. Either they adopt and build a new resilient business model locally, or China's patience will run out. The Houthis are testing the Chinese tolerance level on the long term.
5- Hamas can capitalise on this new dynamic by marketing this as an achievement for their war which is gifted to these countries. Israel shared many economic rewards with Jordan and Egypt to silence them, but Hamas never did. This would be a good way to shed some light on the economic feasibility of besieging Israel.