LONDON - Two top Chinese shipping lines severed ties with Iran as tough
new US sanctions over the country's disputed nuclear program came into
effect on Monday, leaving the country increasingly dependent on front
companies and overland routes.
Many of Iran's imports, including
food and consumer goods, arrive by ship, either directly or via feeder
services from places like the United Arab Emirates, and the latest set
of sanctions are likely to worsen an already deep economic crisis.
vast majority of major container carriers have now ceased calling at
Iran," said Daniel Richards, shipping analyst with Business Monitor
"As even feeder services begin to shy away from calling there, the country will struggle to continue importing."
Tehran is set to become more reliant on trade by land, which will push up prices already driven by currency volatility.
Iranian food producer said business was getting more difficult. "The
prices of food are so high, I don't know how people can afford it," the
Tehran-based producer said. "They're about three times higher than
The US National Defense Authorization Act (NDAA), which
came into effect on July 1, blacklists Iran's shipping, shipbuilding,
energy and port management sectors.
The latest measures build on
previous sanctions which targeted Iran's banking sector and key oil
exports to try to force Tehran to negotiate on a nuclear program it says
is peaceful but which Western states fear has military aims.
the NDAA has an explicit exemption for food, medicine and other
humanitarian goods, foreign shipping firms have pulled out to avoid
falling foul of its provisions.
China is among Tehran's main
allies, but its shipping firms are also bailing out. China Shipping
Container Lines Co (CSCL) , among the world's top 10 lines, has become
the latest group to exit Iran, a CSCL official confirmed.
June 27 letter seen by Reuters to US pressure group United Against
Nuclear Iran (UANI), whose board includes former CIA and British
intelligence chiefs, Shanghai-headquartered CSCL said it took "trade
sanctions compliance with the utmost seriousness", ceasing all Iran
business from July 1.
China's COSCO Container Lines, the world's number 5 player, was another firm to end ties.
of COSCO's business to and from Iran has been suspended," said a
Shanghai-based company official, citing a company statement saying lines
to Iran stopped in early June and those leaving Iran would end in early
An industry source summed up the impact of the latest US
move. "China's shipping firms operate in a globalized trade, so they are
more risk averse to Iran now," he said.TOUGHER TRADE
lines Evergreen and Yang Ming Marine said they had pulled out, while
Singapore's Pacific International Lines has also cut ties along with two
top South Korean shipping firms.
"The departure of international
shipping companies including those from China and Taiwan indicates that
the virtual economic blockade of Iran is increasing," said Mark Wallace
of UANI, which has targeted companies trading in Iran to end links.
is a sign that Iran has fewer and fewer friends in the international
community that are willing to do business with its regime," said
Wallace, a former U.S. ambassador to the UN.
Maersk Line, the world's biggest container company, pulled out of Iran
last year, joining others including the world's number two and three MSC
and CMA CGM and smaller groups like Germany's Hapag-Lloyd.
Reza Cheshm Jahan, deputy of logistics for Tidewater Middle East Co,
which operates six ports in Iran and was blacklisted in 2011, said the
remaining four lines had cut ties with the top southern cargo port of
"The carrying of goods and cargo at this port will
be carried out by the Islamic Republic of Iran Shipping Lines (IRISL)
and (a subsidiary)," he told Iran's student news agency last week.
Iran's biggest cargo carrier, has tried to dodge sanctions by changing
its flags and setting up front companies, the US Treasury and the
European Union have said.
In March, Archer Daniels Midland Co,
one of the world's top grain traders, said it unwittingly used a vessel
beneficially owned by IRISL last year to transport grain in what it said
was a "concerted effort" by Tehran to hide the ship's ownership.
sources say IRISL will find it harder to call at many ports globally,
adding that Iran may become more dependent on land based trade via its
borders with Iraq and Pakistan, slowing the transport of goods further.
seems logical that shippers will try and find the most convenient way
to get their cargoes as close to Iran as possible in a first step,"
another ship industry source said. "It is improvising from there on."