Need to Explore Maritime Transport Alternatives

EghtesadOnline: Less than a fortnight before the first wave of US sanctions hit Iran on August 6, Hapag-Lloyd, the multinational German-based transportation company said it will increase its cargo and container transport rates to $300 per TEU for its Persian Gulf services.

News ID: ۷۸۳۴۳۱

28 July 2018

Other international shipping lines are highly likely to follow in the footsteps of Hapag-Lloyd in making their services costlier here. Shipping insurance companies are probably behind this push because the ports of Persian Gulf have been perceived as high-risk following the imminent reimposition of US sanctions.

As a result, securing the services of international shipping lines won’t be a good value for money for Iran, except in times of emergency.

The maritime fleet of the Islamic Republic of Iran Shipping Lines accounts for 40-50% of cargo transportation in the country. Almost 90% of Iran’s foreign trade takes place through its territorial waters, Financial Tribune reported.

With sanctions back in place, the operations of IRISL and other shipping lines will face major challenges, the Persian daily Shargh reported.

Direct Talks With Smaller Firms

A look at the previous round of sanctions against Iran shows that to move around its cargo, the country had to resort to a few domestic and foreign companies, the so-called “businessmen of sanctions”, whose prime objectives were to line up their own pockets amid the tough situation facing the country.

Experts now believe that the government and major economic agencies need to enter into direct negotiations with small- and medium-sized enterprises this time rather than lobbying with the middlemen.

Hadi Haqshenas, the deputy head of Ports and Maritime Organization of Iran, said it is only natural that when the number of shipping lines calling at a country’s ports declines, the costs of transportation and, accordingly, the end-price of goods go up.

“The owners of cargos need to try other alternatives, instead of unloading their goods in Dubai’s Jebel Ali Port and then importing them into the country by feeder ships. They can dock at ports located beyond the Persian Gulf, like in the Sea of Oman, and move their cargos to Chabahar [in the southeastern Iranian province of Sistan-Baluchestan] to reduce costs. Currently, we are holding talks with small companies with no economic ties with the US,” he said.

Masoud Daneshmand, chairman of Transportation Federation, said, “As we speak, heavyweights, namely MSC, Maersk and the likes have discontinued their services to Iranian ports. Second- and third-raters are now moving containers to the Persian Gulf and as they have a monopolistic position, they are bound to raise their transportation fees. Therefore, it is best to find new, alternative shipping lines and replace them.”

Private Shipping Firms Not Banned From Iran

Noting that new sanctions target IRISL, Daneshmand said, shipping lines of the private sector are not banned from docking at Iranian ports.

“The management of maritime transportation is of particular importance under the circumstances. By adopting sensible policies, the government should decide whether or not to increase maritime transportation and if it wants to rent the contain ships of other countries,” he concluded.

On May 8, US President Donald Trump announced that he had decided to pull the United States out of the 2015 Joint Comprehensive Plan of Action—the formal name of the Iran nuclear deal—and to reimpose sanctions on Iran, which had been lifted with the deal’s implementation in 2016.

Seventeen major global shipping lines resumed their services to Iran following the implementation of JCPOA.

According to a factsheet released by the US Department of the Treasury, the United States entered a wind-down period before snapping back the sanctions on Iran. After 90 days—on August 6—US sanctions on Iran’s acquisition and purchase of US dollar notes , on its trade in gold and precious metals, on the sale and transfer of various metals and materials, on the Iranian rial, on Iranian sovereign debt, and on Iran’s automotive sector will come back into place. The United States is also going to revoke JCPOA-specific import authorizations for Iranian goods.

Later in the year, on Nov. 4, a second 180-day wind-down period will end and the United States will implement further sanctions against Iran. According to the US Treasury Department, these will include sanctions on Iran’s shipping and oil industries, secondary sanctions against third-country financial institutions doing business with Iran and sanctions on Iran’s energy sector. Other JCPOA-specific exceptions for Iran will also end.