Container Shipper Suspends Some Iran Operations over Sanctions

By | June 30, 2011

The world’s largest container firm suspended operations at several Iranian ports on Thursday, potentially disrupting critical food shipments as it complies with tightening U.S. sanctions.

Maersk line, a unit of A.P. Moller-Maersk , manages several refrigerated ships and container vessels that transport food to the country, including wheat, rice and bananas from Asia.

Shipments could be delayed for weeks as Maersk adjusts its operations in the Middle East, analysts said.

“We are not sure how they are going to sort this out as it could disrupt food supply to Iran, especially ahead of the Ramadan festival,” said Ker Chung Yang, an agricultural commodities analyst at Phillip Futures in Singapore.

The United States last week blacklisted Tidewater Middle East Co. and prohibited U.S. entities from any transactions with the major Iranian port operator, which manages over 90 percent of the country’s container operations.

“Maersk Line is committed to complying with all relevant foreign trade controls and sanctions programs,” said Morten Engelstoft, chief operating officer for Maersk Line in a statement on Thursday.

“In this connection, Maersk Line has decided to cease acceptance of, business to and from the Iranian ports of Bandar Abbas, Bandar Khomeini and Asaluyeh.”

Engelstoft declined to specify how much cargo would be affected by the closure of its operations, but did say it would not impact the company’s quarterly earnings in “any material way.”

SHIPPING ALTERNATIVES
Maersk operates in other Iranian ports and could also divert shipments to Dubai, partnering with other companies that are not bound by U.S. sanctions aimed at curtailing Iran’s alleged nuclear weapons program.

“This does leave a challenge for foodstuffs when we can’t transport to those ports. That challenge will need to be resolved,” Engelstoft said.

“We might be able to do that through the port in Bushehr, which is not covered by sanctions, but the overall challenge of foodstuffs to Iran will probably need to be solved politically.”

The sanctions are expected to force other shippers with business in the United States to avoid Bandar Abbas and other port facilities managed by Tidewater Middle East, which Washington suspects is run by the Revolutionary Guards.

Tidewater-managed ports have been used to export arms or handle related material in violation of U.N. Security Council resolutions, the U.S. Treasury said last week. International sanctions are aimed at curtailing Iran’s alleged nuclear weapons program.

Maersk’s Engelstoft said a number of other shipping lines have also suspended their operations at Tidewater’s ports, but declined to name them.

Hong Kong-based Orient Overseas Container Line last week suspended its direct voyages to Bandar Abbas, saying it was due to commercial reasons and not because of U.S. sanctions.

South Korea’s Hanjin Shipping and privately owned Switzerland-based Mediterranean Shipping Company (MSC), the world’s second largest container firm, said their Iranian operations were not immediately affected by the sanctions.

Bandar Abbas, the world’s 49th largest container port in 2009, handled around 2.6 million twenty-foot equivalent container units last year, according to Tidewater’s website.

The port, along with Bandar Imam and Bandar Amirabad, handled a total of 2.56 million tons of general cargo and 10.32 million tons of bulk goods.

(Additional reporting by Naveen Thukral in Singapore and Ju-min Park in Seoul; Editing by Michael Urquhart)

Topics USA

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