Israel must look for alternative markets to prevent commodity crisis - opinion

The world has not yet had time to learn about the effects on the market in the wake of COVID-19, and now it is being upended again by war in Europe.

 THERE IS a constant shortage of ships and shortage of space in ships, a shortage of containers and other problems that arise every day.  (photo credit: FLASH90)
THERE IS a constant shortage of ships and shortage of space in ships, a shortage of containers and other problems that arise every day.
(photo credit: FLASH90)

The commercial market as we knew it has changed completely. The increase in the price of goods is already here, including basic commodities such as wheat, cocoa and sugar. The world has not yet had time to learn about the effects on the market in the wake of COVID-19, and now it is being upended again by war in Europe.

The COVID-19 crisis and the war in Europe are “black swan” events that could not have been anticipated or prepared for. It is also too early to estimate the extent of the damage they have created, but it can already be understood that it is on an inconceivable scale.

Additional crises are already unfolding before us, including climate change, political conflicts and natural resources that are becoming rare. Accordingly, the traditional trade routes on which Israel has relied for years are no longer sufficient to give the country the security we need.

Israel is almost completely dependent on external resources, and the vast majority of raw materials and food products are imported from outside. The functioning of the economy and the survival of the public depend almost entirely on imports. Wheat is just one burning example that was impacted severely by the war in Ukraine.

Israeli exports in the field of agriculture also have been affected. For example, potatoes, carrots and radishes, which are usually shipped at this time of year to Russia and Ukraine, should be shifted to other alternative markets and countries, which is challenging and requires many changes and sometimes different regulations and taxes.

 Business & Innovation  (credit: JERUSALEM POST) Business & Innovation (credit: JERUSALEM POST)

Following the crisis in cement and iron, which will further increase housing prices, a crisis in the supply of basic commodities that are consumed on a daily basis, such as wheat, means we may face periodic shortages of certain commodities and products in view of the longer transportation times and costs.

To avoid this situation, Israel must stop relying on traditional trade routes and quickly create routes for other perishable agricultural products in alternative markets.

Countries in South America, such as Brazil and Argentina, have not been a source of trade for Israel to date. The distance and shipping from these places increases the cost of goods significantly, compared with Eastern Europe. But we are in a position where we have no choice. We must also turn to the more distant markets and understand that South America can serve as Israel’s new “granary.”

The war is also affecting marine insurance rates in the Black Sea region, which have jumped by hundreds of percent. In addition, with rising fuel prices, which have been steadily increasing since the outbreak of the war, the cost of land, sea and air transportation will continue to rise in the foreseeable future.

If there is one thing that is certain today in the world of shipping and forwarding, it is that there is no certainty. There is a constant shortage of ships and shortage of space in ships, a shortage of containers and other problems that arise every day.

Israel must adapt itself to a world that is changing on a daily basis. Therefore, we must purchase from new markets as long as they are available. The supply is limited, and we cannot know whether the alternative market will still be an option tomorrow.

Israel must think outside the box and prepare for more shortages of raw materials and basic commodities. It must immediately check out the possible new routes for dispatch by air, sea and land and the existing alternatives, sooner rather than later.

The writer is CEO of Allalouf Shipping and Allalouf Logistics.