Iran feels the bite of new US sanctions

Two top Chinese shipping lines have severed ties with Iran; Tehran set to become more reliant on trade by land.

July 2, 2013 02:06
4 minute read.
Malta-flagged Iranian crude oil supertanker

Malta-flagged Iranian crude oil supertanker 370 (R). (photo credit: Tim Chong / Reuters)


Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analyses from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later Don't show it again

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.

Be the first to know - Join our Facebook page.

"The vast majority of major container carriers have now ceased calling at Iran," said Daniel Richards, shipping analyst with Business Monitor International.

"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.

An 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 before."

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.

Click here for full Jpost coverage of the Iranian threat

While 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.

In a 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.

"All 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 July.

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.


Taiwanese 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.

"It 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.

AP Moller-Maersk's 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.

Ali 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 Shahid Rajaee.

"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.

IRISL, 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.

Shipping 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.

"It 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."

Related Content

Bushehr nuclear Iranian
August 5, 2014
Iran and the bomb: The future of negotiations