Israel-Hamas War - Trade Secrets Before and After the War Started

The Israel-Hamas War has been at center stage in terms of geopolitical conflicts today. Starting on October 7, 2023, it has had many repercussions in terms of socio-economic, financial, and supply chain factors, such as the attacks on Israel-linked ships in the Red Sea by Houthis. We take a look at how the Middle Eastern nation prepared for this outcome beforehand and the repercussions faced because of the war, specifically its impact on Israel's global trade.

Israel’s Economic Landscape

Israel's economy was set to grow by 3.4% in 2023, but the war set new expectations for the Israeli government, which changed their annual projections to 2%. Compared to 2022, when Israel's economy grew by 6.5%, its growth rate has taken a significant hit. Their 2.2% projection for 2024 further outlines the impact of war on the national economy.

Global trade is a major contributor to any country's economy and growth, and looking at Israel’s trading patterns, Trademo has identified notable changes. Being its largest trade partner, United States imports and exports account for over a quarter of Israel's trade according to the World Bank. Insights sourced from Trademo Intel into the US containerized shipping data revealed shifts in Israel's trade such as a decline in shipment numbers after the war started, but also an odd rise in maritime activity a few months prior.

Israel Export Trends

Looking at data from June of last year, it becomes clear that shipments from Israel to the US have declined since the start of the war with Hamas. The majority of shipments from Israel to the States comprised primarily of pharmaceutical and medical products, articles and finished products of plastics, organic and inorganic chemicals, food and edible preparations such as cereals & starch, construction materials, heavy machinery & parts, and items of clothing and apparel.

While there is an increase in the export of pharmaceutical goods contributing to November’s trends, it was noted that there was a decline in the export of heavy machinery and related goods to the US in August of 2023. While the total number of shipments is rising to normal, the weight of shipments is reducing still, meaning only lighter products are being produced and shipped out. December saw another low as the war is still fought in the Gaza Strip.

Israel Import Trends

Containerized shipment data till October shows that import trends seem normal considering global trade’s ups and downs, but looking at things granularly, July shows the highest volume traded by USD value, accounting for well over a billion dollars in the month. This number is the second largest in the history of Israel’s imports in a month, with the highest being in May of 2022, which mostly comprised machines and machinery, electrical equipment, chemicals, plastics, vehicles, and aircraft parts.

Most of Israel’s containerized imports from June consisted of vehicles and vehicle parts, iron and steel nuts, bolts, screws, and washers, electrical and heavy machinery and parts, articles and products of plastics and polymers, metals and alloys, chemicals, essential oils, soaps, and other organic goods. While the total shipment value has declined since July, the total weight of shipments saw a steep rise after the war started, mostly contributed by vehicles, alloys, and polymers.

Interesting Insights from Months Before the War

Something very interesting strikes the eye when zoomed out to look at certain import trends from the start of 2023. To start things off, Israel is the most advanced nation in the Middle East, and it is anticipated that its intelligence agencies are the most sophisticated and well-aware of the geopolitical scenarios unfolding. While many experts from around the world, including Israel’s government officials expected the nation to see an imminent attack incoming, at the very least from its highly secure and monitored boundaries with the Gaza Strip, Israel always claimed the ambush was unanticipated, even though Hamas stated it would do so on a Jewish holiday, and the Simchat Torah on October 7 was one.

One might question otherwise once the shipment details from the States are inspected. An atypical rise in the shipments of hard plastics, precious and heavy metals, machinery & mechanical parts, chemicals, personnel transport vehicle parts, articles of steel like nuts & bolts, parts of tanks, and parts of manned & unmanned aircraft was noticed from the first half of 2023. Aluminum & its alloys, and rare-earth metals like titanium, crucial ingredients for Israel’s Iron Dome missiles, saw a rise from February to April.

With certain articles of plastic and unspecified chemical products, specifically with the 6-digit HS codes 392690 & 382499, an unexpected spike in mid-2023 was noted, with negligible shipments historically. This deviation further highlighted the rather surprising upswing in the import of spent lead acid batteries (854911) and electric motors and parts (850153) in July with no prior shipments in the past, leading to speculation that their EV industry is being focused on heavily. It is no secret that Israel is a military manufacturing powerhouse, and the rise of electric vehicles and their advantages and applications in warfare are constantly highlighted by militaries across the globe, especially the US Army. These imports combined are reflected in the graph below, although shown in USD values, speak volumes.

Another point to note is the unusual decline in the imports of arms, ammunition, and parts from the US. Since March of 2023, they have been almost nil, an unusual deviation from past trends, when there was a stable supply chain maintained for arms. Hamas has been known to manufacture and assemble its weapons locally in the Strip, and this import decline could be a bold measure to curb any slippage into the hands of the group, or a show of proof that Israel isn’t anticipating an escalation anytime soon.

Closing the Discussion

Such granular details from global trade data can reveal trade secrets, but cannot capture true sentiments. These insights might lead many to make assumptions that Israel was aware of what was coming, but one cannot simply discount the fact that a nation can be hoping for the best and yet preparing for the worst. Get more such global supply chain insights from Trademo Intel to identify global trends and find new opportunities for growing your business.