Global shipping rules are collapsing, say maritime nations
Wars and the growth of the shadow fleet are causing a ‘structural shift’ in global trade, according to 18 maritime authorities
The rules governing global shipping are breaking down, the world’s largest maritime nations have warned, disrupted by wars and a growing shadow fleet that operates beyond western oversight.
The shipping industry has for decades been protected by laws that ensure free navigation and the neutrality of commercial vessels, but the collapse of those principles is posing a severe risk to global trade, according to a group of 18 shipping superpowers.
“Without maritime trade, supply chains would fragment and the global economy as we know it would come to a sudden halt,” the group said in a statement published on Tuesday.
The battle to control the Strait of Hormuz, the Covid-19 pandemic and the shadow fleet created as a result of US, EU and UK sanctions are not “episodic shocks” but “signals of a structural shift in the operating environment of global trade”, said the Consultative Shipping Group, whose members represent more than a fifth of global trade by tonnage.
The statement is the first public intervention from the CSG since it was established more than 60 years ago. The group’s members include Greece, Singapore, Denmark, Japan, Canada, the UK, the Netherlands and South Korea.
“Shipping routes are increasingly instruments of leverage and risk,” the CSG warned, adding that recent events show how “fragile” the system of maritime trade can be.
Brian Wessel, director-general of the Danish Maritime Authority, which chairs the CSG, told the FT the seafaring nations made this rare statement because of deepening concerns about the fragmentation of the maritime sector and the undermining of standards set by the International Maritime Organization, the UN body that regulates the shipping industry.
“For decades, we have built global trade on the assumption that ships can move freely across borders. That assumption is now under pressure,” he said.
“The global level playing field [and] the global regulations that we’ve made for many, many years in the IMO have been taken for granted,” he added.
More than 80 per cent of world trade is transported by ships, which operate under rules set by the IMO. The body itself was formally created in 1948 but the concept of international governance of the oceans stretches back to the 17th century when the idea of mare liberum, or “free seas”, was first established.
Because of their role in global trade, vessels have become an increasingly prominent target and pawn in geopolitical machinations.
Russia, Ukraine, the US and Iran have all hit civilian shipping targets during conflicts this year, while the vulnerability of maritime chokepoints has been underscored by Iran’s efforts to try to establish a fee-paying regime in the strait.
Tehran on Monday said a deal with Oman to manage shipping through the waterway, through which about a fifth of the world’s oil and gas previously flowed, was close to being agreed. It is not clear whether a toll will be charged.
Shipowners and maritime organisations have said that charging a fee would set a dangerous precedent that could cause other countries bordering critical chokepoints to follow suit.
At the same time, US, EU and UK sanctions on Russia and Iran have caused the rapid growth of a shadow fleet of oil tankers that now amounts to more than 1,500 vessels, according to TankerTrackers.com, almost a fifth of the global tanker fleet. Nearly all these lack traditional insurance policies.
This summer, the Caroline Bezengi, a shadow fleet ship carrying roughly 800,000 barrels of Russian oil, hit a limpet mine off the coast of Oman without any traditional protection and indemnity insurance, potentially leaving the Omani government on the hook for millions of dollars of costs related to the clean-up.