In September 2019, the U.S. sanctioned tanker company Cosco Dalian, a division of Chinese shipping giant Cosco, for carrying Iranian crude. The sanctions only covered the 20 tankers owned by Cosco Dalian, but that didn’t matter. As a precaution, charterers shunned the entire 150-tanker fleet of the Cosco parent, causing tanker spot rates to spike.
Shipping execs don’t just refuse vessels or cargoes based on what’s definitely sanctionable. They do so based on what they believe might possibly be sanctioned now or later. Sanctions are written in precise language, but they’re messy in practice.
That precept is now on full display. Sanctions have yet to specifically target Russian energy exports or (non-dual-use, i.e., non-military) containerized goods, but that doesn’t matter. Many tanker owners and container liner operators are preemptively pulling out of Russia.
On Tuesday, MSC, Maersk and CMA CGM — the top three liner companies in the world — temporarily suspended Russian bookings. Yang Ming, the ninth largest, suspended Russian bookings on Wednesday; ONE, the sixth largest, on Sunday; and Hapag-Lloyd, fifth largest, on Thursday. These six carriers control 62% of global capacity, according to Alphaliner data.
The world’s largest container lines are dropping Russia “to manage sanctions risk but also perhaps manage reputational risk,” said Michelle Linderman, partner of law firm Crowell & Moring, during a panel presented by shipping association BIMCO on Tuesday. “Do they want to be seen as supporting Russia? Or are they going to say at this moment, while this is going on, we don’t want to go anywhere near there.”
The tanker sector is seeing the same pattern of behavior among shipowners and operators. Many are refusing to load Russian oil cargoes even though sanctions don’t bar them from doing so.
“Few owners are now willing to transport Russian oil, resulting in an undersupply of ships [at Russian export terminals],” said Clarksons Platou Securities.