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Land routes through the Kingdom and the UAE are emerging as a potential lifeline for trade amid the crisis in the Red Sea, Bloomberg reported over the weekend. The commercial trade routes in the “heart of the Middle East” are designed to avert the Bab El Mandeb strait in the southern Red Sea, a choke point the Houthis have been exploiting.
What we know: Israeli software startup Trucknet Enterprise is among those testing the routes, sending goods from ports in the UAE and Bahrain through the Kingdom and Jordan towards Israel and Europe, its CEO Hanan Fridman told business information service. The route, which hasn’t been tapped before on a commercial level due to strained ties between Israel and Arab countries, saw Trucknet sending cargo from India, Thailand, South Korea and China in recent weeks. Asian-bound goods were also moving in the opposite direction, helping bring costs down.
WATCH THIS SPACE- German shipping giant Hapag-Lloyd is considering linking Jebel Ali port in Dubai and two eastern ports here with Jeddah on the west coast. Another option by the German group seeks linking Jebel Ali with Jordan, which borders Israel.
REMEMBER- The Houthis have held Red Sea trade hostage for months, causing “the biggest diversion of international trade in decades,” according to Bloomberg. The Houthis are looking to put pressure on Israel, but their actions have started to have an impact on some Gulf markets.
The catch: An overland truck route will work for some types of cargo, but Hapag-Lloyd spokesman Nils Haupt admitted that it’s a short term-solution for shippers looking to ship small cargo — “not thousands of containers.” While it may “carry a not-insignificant quantity of traffic, [the land bridge] will remain a niche solution for shipments specifically to Israel,” Chris Rogers, head of the supply-chain research group at S&P Global, said.
The risks: “Gulf Cooperation Council states may be hesitant to promote the route as the Houthis have not yet threatened UAE or Saudi maritime assets,” according to S&P Global analysts. “A road route via Saudi Arabia and Jordan also would increase risks of cross-border attacks on cargo by Iran-aligned Iraq-based or Syria-based militants,” they added.
These routes could serve as a trial run for the planned US-backed India-Middle East-Europe Economic Corridor in which the Kingdom is taking part. The crisis in Gaza has stalled talks on the corridor, which was announced during the G20 summit in India last year.
