Economy, Business And Markets

Shipping Industry Awaits Sanctions Removal

Shipping Industry Awaits Sanctions Removal  Shipping Industry Awaits Sanctions Removal

With the possibility of economic recovery, the shipping sector will be a major beneficiary of an easing of sanctions imposed on the country over its nuclear energy program, as the international shipping companies are set to begin operations at Iranian ports such as Bandar Abbas once again, based on a report by the Business Monitor International.

Ali Jahandideh, deputy director of the Iranian Ports and Maritime Organization (PMO), earlier said that following the lifting of western sanctions against the Iranian ports, foreign shipping companies have expressed interest in resuming the sending of their vessels to Iran’s southern ports such as the container-handling port of Bandar Abbas (also referred to as Shahid Rajaee since a name change in 2008). According to the PMO, international shipping lines have commenced loading and unloading operations at Iranian ports.

In its five-year forecast on Iran’s shipping industry, the BMI also predicts that with the long-delayed Chabahar port development project in Iran moving forward, the port will also offer India greater access to Central Asian markets and the trade volume between India and Afghanistan will increase as a consequence.

Another positive point predicted by the BMI is a joint plan by Iran and Oman to launch a new shipping service in order to boost trade between the two countries. Ali Akbar Sibuyeh, Iran’s ambassador to Muscat, said in September that talks for setting up the shipping line have been going on since March and a deal was expected to be signed soon.

The lifting of sanctions on shipping insurance has already resulted in an increase in oil exports, and the removal of sanctions against port operator Tidewater in the third quarter of this year will see container volumes at Bandar Abbas resume growth. On the other hand, the report forecasts a downtrend for maritime transportation if nuclear negotiations between Iran and the five permanent members of the United Nations Security Council plus Germany are stalled.  

Following the partial lifting of sanctions in January 2014, insurance firms in Europe were allowed to restart insuring Iranian vessels carrying crude oil. However, European shipping lines are still having problems, for instance in opening Letters of Credit, due to banking sanctions imposed on Iran.

The BMI report suggests that another upside for Iran’s shipping sector will come when a large transit terminal for transporting cotton from Central Asian countries comes on stream in Bandar Abbas (the project has been undertaken by the private sector. The officials say the facility is set to cost some $22.44 million and will have loading and offloading capacity of 800,000 metric tons of cotton annually. Other goods, including minerals, mazut, chemical fertilizers, oil derivatives and aluminum, will also be transported to South East Asia and the Arab states of the Persian Gulf through the transit terminal.

On June 9, 2010, the UN approved new sanctions against Iran over its nuclear program.

The resolution prohibited all states from providing bunkering services, such as providing fuel or supplies or other servicing of vessels, to Iranian-owned or Iranian-contracted vessels, including chartered vessels. But following the signing of an interim nuclear deal between Iran and the world powers in Geneva in December 2013, certain sanctions were eased or removed on the Islamic Republic of Iran Shipping Lines (IRISL). Another victory for the IRISL came when Europe’s second-highest court argued that the EU had failed to provide sufficient evidence linking the companies, including the IRISL, to Iran’s nuclear work to justify sanctions and ordered them to be lifted.