Shipping Powers Say Wars, Shadow Fleets Threaten Free Seas

Dow Jones
Sep 08

A group of the 18 biggest shipping countries warned Tuesday that global conflicts, trade restrictions and chokepoints were raising costs and spreading uncertainty across global supply chains.

The Consultative Shipping Group, an informal alliance made up of shipping powers like Germany, Denmark, Germany, Japan South Korea and the U.K., said attacks on ships in the Strait of Hormuz and the Black Sea were not one-off shocks, but a "signal of a structural shift in the operating environment of global trade."

The changes are eroding freedom of navigation, a cornerstone of global shipping, the group said.

Some 80% of global trade moves by sea. The trade is regulated by the International Maritime Organization, a United Nations body made up of 176 countries that have adopted its rules on safety, no-trade barriers and environmental protection.

The Consultative Shipping Group doesn't normally issue statements. It said two parallel trade systems are emerging, with one playing by the rules and another operating by evading sanctions, attacking vessels and forcing ships to reroute from key waterways like the Strait of Hormuz, the Suez and the Red Sea.

It said hundreds of vessels are now part of shadow fleets that evade sanctions and sail without insurance, fragmenting supply chains.

Ocean trade has experienced repeated disruptions in recent years, including the Covid-19 pandemic, the Russia-Ukraine war, a drought that has lowered water levels in the Panama Canal and the U.S.-Iran conflict.

The Iran war, in particular, has caused bottlenecks across the Middle East this year disrupting the trade of energy products and commodities like fertilizers, causing prices to rise.

"Without maritime trade, supply chains would fragment and the global economy as we know it would come to a sudden halt," the group said.

 

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