Air and ocean freight services to and from Iran have been thrown into doubt after US President Donald Trump announced he would re-impose sanctions against Tehran after he pulled the US out of Iran’s nuclear deal with Western countries.
A raft of container lines including Maersk, CMA CGM, Evergreen Marine and Pacific International Lines had re-entered the Iran market after the Joint Comprehensive Plan of Action (JCPOA) was implemented in January 2016. The Iran market is thought to be worth around 1.6 million TEU a year to box lines, which mainly offered feeder services between Bandar Abbas and Dubai.
Foreign dry bulk and tanker operators had also established a presence on the Iran trade while airlines including British Airways, KLM and Air France also resumed flights to Tehran.
All those services are now threatened by the US withdrawal even though the JPCOA signatories – UK, France, Germany, the European Union, Russia and China – have vowed to remain in the agreement with Iran.
Maersk and Mediterranean Shipping Co (MSC) said they had stopped accepting cargoes highlighted by the US Treasury Department in the sanctions announcement. They include graphite and raw or semi-finished metals such as aluminium and steel.
British insurer, the North of England P&I Association said, “The decision by President Trump announced on 8 May to cease US participation in the JCPOA and to begin re-imposing US nuclear-related sanctions is likely to have significant ramifications for maritime trade with Iran and the insurance of such trade.”
MSC said it is “reviewing its services, operations and business relationships to understand if any are impacted and will comply with the timetable set out by the US government”.
Maersk Line added, “We will monitor the developments to assess any impact on our activities.”
The US government said sanctions would be reapplied in two stages, 90 and 180 days after the executive order.
Phase one will see sanctions re-imposed on Iran’s trade in gold or precious metals, together with the purchase or supply of graphite and metals on August 8.
Under phase two, sanctions will be reapplied on Iran’s port operators and shipping and shipbuilding sectors, including the Islamic Republic of Iran Shipping Lines (IRISL) and South Shipping Line, from November 8, North of England P&I said. Insurance and reinsurance services will also be targeted.
Worryingly for shipping companies, the US has warned it could impose secondary sanctions against foreign firms who continue to trade with Iran. This would allow the seizure of any assets firms have in the US.
US National Security Advisor John Bolton hinted at such measures on May 13 saying whether the US did or not “depends on the conduct of other governments”.
When the US, European Union and United Nations previously imposed sanctions against Iran, they each had different penalties for non-compliance. The US went as far as to warn of secondary sanctions against firms or individuals with substantial business interests.
As EU and UN sanctions were lifted ahead of those levied by the US, it allowed some shipping companies with limited exposure in the US to take a calculated risk and re-enter the Iran market.
They included Singapore’s PIL and Taiwan’s Wan Hai Lines which were the first container lines to resume calls at Iran’s main port of Bandar Abbas in 2014 after they added the port to their jointly operated China-Middle East-India CMS service.
While both lines could have had assets seized in the US, their volume of US business was so small it was considered a risk worth taking.
While France and Germany have asked the US government for waivers against secondary sanctions, French foreign minister Bruno Le Maire said European states would try to impose sanction-blocking measures through the European Commission.
“Do we accept extraterritorial sanctions? The answer is no,” Le Maire said.
Insurers including North of England and Norway’s Gard said, “A full assessment of the likely impact of the decision will only be possible following receipt of clarification of the position of the remaining JCPOA partners”.