Red Sea attacks prompt firms to try new land routes through UAE and Saudi

An Israeli software startup and a major shipping line are forging new commercial trade routes through the Middle East to bypass the Houthi-threatened Red Sea. Trucknet Enterprise Ltd. is transporting various goods from the UAE and Bahrain through Saudi Arabia and Jordan to Israel and further to Europe.
Hapag-Lloyd AG, the world’s 5th-largest container carrier, is exploring links between Dubai’s Jebel Ali, two eastern Saudi ports, and Jeddah on the west coast, with another option connecting Jebel Ali with Jordan.

These routes provide an immediate solution for shipments avoiding the Houthi-affected Bab el-Mandeb strait in the southern Red Sea, where missile and drone attacks have forced vessels to take a longer route around Africa. The disruption has impacted crucial trade flows, raised freight costs, and is starting to affect the global economy.

Trucknet’s route, not attempted on a commercial scale previously due to strained relations between Israel and Arab nations, has seen cargo from India, Thailand, South Korea, and China transported by trucks in recent weeks. The long-term viability of this route depends on regional stability, though the smaller volumes trucks can carry compared to ships make it an alternative for specific goods.

Hapag-Lloyd acknowledges its planned links are a short-term solution for limited cargo, not suitable for transporting thousands of containers. While the land bridge is not fast or easy, it may help boost trade flow through ports like Jeddah, currently cut off from their usual global links.

The drive from Jebel Ali to Israel’s Haifa takes about three to four days compared to a voyage of 10 days or more around Africa’s Cape of Good Hope, increasing its appeal. However, the land bridge remains a niche solution for shipments specifically to Israel, according to Chris Rogers, head of the supply-chain research group at S&P Global.

Trucknet collaborates with companies like Dubai’s PureTrans FZCO, Bahrain’s Cox Logistics, and WWCS in Egypt. Test runs from the Gulf region to Israel started earlier this year, and amid Houthi threats following Israel’s war with Hamas, Trucknet proceeded with its plan.

Gulf Cooperation Council states face a critical decision as a burgeoning trade initiative takes shape. “We conducted preliminary runs in November, with the initial shipments taking place in December,” stated Fridman, refraining from disclosing specific details regarding the number of trucks or the volume of cargo transported. The company employs a digital platform that matches freight with available truck space, offering real-time visibility throughout the entire route.

In a potential trial for a broader economic corridor, these newly established routes could be a testing ground for the larger India-Middle East-Europe Economic Corridor, an initiative backed by the US and announced at a Group of 20 summit the previous year. Progress on this project has stagnated since the Israel-Hamas war.

However, challenges abound. The United States and other entities have long aimed to foster trade and economic ties across the Middle East to alleviate rivalries. The ongoing war and its aftermath have heightened diplomatic challenges for such trade cooperation.

S&P Global analysts caution that Gulf Cooperation Council states might be hesitant to endorse the route, as the Houthis have not yet posed threats to UAE or Saudi maritime assets. They highlight that a road route through Saudi Arabia and Jordan could elevate the risk of cross-border attacks on cargo by Iran-aligned militants based in Iraq or Syria. The unfolding situation presents a delicate balance for Gulf nations contemplating the endorsement of these strategic trade routes.