Container ship 370.
(photo credit: Thinkstock/Imagebank)
LONDON - Iran's vital seaborne trade is buckling under the weight of Western sanctions, deepening hardship for a population deprived of basic imports and heaping intense pressure on Tehran over its nuclear program.
Many of Iran's imports, including food and consumer goods, arrive on container, bulker and other ships, but the number of vessels calling at its ports has dived by more than half this year as the United States and European Union tighten the screws.
Analysts doubt the Iranian economy is near collapse, even though its rial currency has plunged in the last few weeks, but they say some shortages and rising prices of imported goods could provoke public unrest directed at Tehran's leadership.
A growing number of Western companies, especially those in shipping and related businesses, are pulling out of trade with Iran due to the complexities of deals and tougher banking restrictions as the sanctions take hold - and out of fear of losing business elsewhere.
"Iran's commercial shipping sector has suffered a significant hit," said Anthony Skinner of risk analysts Maplecroft.
"Although US and EU sanctions do not target food shipments, importers struggle to acquire letters of credit and transfer funds. I expect current sanctions and the further tightening EU sanctions to sour the appetite of the international commercial shipping sector further."
The United States and the EU have led the sanctions push, hoping to force Iran to halt its nuclear program which they suspect is aimed at making weapons. Tehran says the work is peaceful, but the trade measures are hurting shipping badly.
Data from maritime intelligence publisher IHS Fairplay showed the overall number of vessels calling at Iranian ports in the year to early October was 980. That figure for more than three quarters of this year compares with 2,740 ships for the whole of 2011 and 3,407 for 2010.
Of that total, the number of visits by container ships - which carry consumer goods ranging from foodstuffs and household items to clothing and toys - was 86 so far this year, compared with 273 for the whole of 2011 and 378 in 2010.
The world's top container firm Maersk Line said this week it had stopped port calls to Iran, citing the risk of damaging trade opportunities especially in the United States.
"Lower shipping volumes may also mean that importing vital commodities will be increasingly hard, leading to possible riots over inflation," said Alan Fraser, Middle East analyst with security firm AKE.
Only eight refrigerated cargo vessels carrying fresh produce including bananas called at Iranian ports so far this year, down from 16 in 2011 and 36 in 2010, the IHS Fairplay data showed. Even fishing trawlers unloading their catch have slumped to five from 14 last year and 20 in 2010.
Starved of dollars as the sanctions curb oil exports, Iran bought large amounts of grain earlier this year using other currencies. Nevertheless dry bulk ships, which can carry cereals and commodities such as coal and iron ore, have also made fewer port calls with 100 arrivals so far compared with 352 in 2011 and 406 in 2010.
"You start to see Iran reaching a balance of payment crisis particularly on the imports side when a plummeting currency, which makes imports exceedingly expensive, is compounded by external sanctions," said Mark Dubowitz with the Washington-based Foundation for the Defense of Democracies.
"The combination of these factors is making it difficult for Iran to buy what it needs from abroad and pay for these goods and services," said Dubowitz, who has advised US President Barack Obama's administration and US lawmakers on sanctions.