Cyprus seeking EU support for shipping industry sanctions impact

Posted on February 21, 2023 by | 1 comment

Sanctions have made many ocean carriers change the registry of their ships to countries that are not involved in enforcing them.

Cyprus is one such flag state. As a member of the EU, Cyprus follows their policies on sanctions, which are among the strongest. So ships registered in Cyprus may not carry Russian cargoes.

Shipowners who want to trade Russian or Iranian goods, such as oil, can’t do it with Cyprus-registered ships. So they flag them elsewhere.

The Cypriot registry has lost about one-fifth of its tanker registry since sanctions were imposed on Russia. According to 2021 registry figures, Cyprus was 11th in dead weight tons (DWT) registered among the registries of the world, with over 1000 ships registered (not all tankers). This is a significant loss of revenue.

Cyprus is going to apply to the EU for compensation for the loss of registrants.

I’m not sure this is how to deal with the problem. There’s plenty of evidence that flag states are not dealing very well with environmental, social, and governance (ESG) problems in their own countries. By World Bank measures, there has been little improvement on many of their 68 ESG measures in Cyprus and other countries. They are thus less likely to be good enforcers of cooperative goals such as sanctions or emissions. Paying them for losses doesn’t seem like a good strategy.

There are already requirements for Cyprus to follow EU sanctions rules. As a flag state Cyprus needs to get approval from the EU for such rules as a tonnage tax discount. I think this is just following the rules they agreed to when Cyprus joined the EU.

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David Glass | Feb 20, 2023

Cyprus seeking EU support for shipping industry sanctions impact

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Not enough SAF for air cargo to hit net zero – carriers must find other routes

Posted on February 20, 2023 by | Leave a comment

It’s becoming obvious that there’s no way that enough sustainable aviation fuel (SAF) can be produced to meet the needs of air traffic.

Carriers are already suggesting they will need to play a little use in their path to ‘Net-Zero’ emissions. They plan to take advantage of strategies which allow them to keep emitting but using offsets with technologies that have been declared legitimate to shelter fuel use.

Such technologies concern purchasing carbon credits and developing carbon capture sources. But those do not actually reduce the emissions from air traffic.

I’m interested by what Glen Hughes, the director general of The International Air Cargo Forum (TIACA) said for the article below.

“What’s important is the capacity to monitor a company’s total ESG impact and activities in a manner that fulfils audit requirements and has a direct impact on investment decisions by equity firms and banks.”

Source: Loadstar Article

Clearly this sidesteps serious ESG improvement for the industry and promotes a form of gaming the rules.

Promoting watered-down audit requirements and shaping how investment decisions are made by large investors clearly takes precedence over actually improving emissions. The premise that investment firms and auditors are to determine the world’s response to environmental improvement is patently ridiculous. TIACA is promoting a specious response. A harsh judge could call it a form of greenwashing.

To be fair, I will quote Mr Hughes again, from the same article, citing six questions to answer for supply chain officials:

 “Am I being as environmentally responsible as I can? Am I using recyclable materials? Am I optimising transport? Am I using sustainable energy or compensating for emissions? Am I supporting global prosperity and economic growth? And how can I, my partners and supply chain stakeholders continually improve?”

Source: Loadstar Article

Compensating for emissions is a big loophole. And if you use the loophole, are you being as environmentally responsible as you can be?

Leaving it to investors and politicians to decide does not seem like a wise course.

By Alex Whiteman 20/02/2023

Not enough SAF for air cargo to hit net zero – carriers must find other routes – The Loadstar

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Navigating the new world of sanctions

Posted on February 14, 2023 by | 2 comments

Sanctions are increasingly complex today, due to the Ukraine war. P&I Clubs are increasingly on point sorting these out for carriers and shippers.

P&I Clubs form risk pools to insure carriers on specific voyages, covering such risks as damage, war risks, and environmental damage.

The annual joint conference of the Hellenic American Chamber of Commerce included several P&I club members and attorneys who represent them and others.

I especially noted the comment by Nikolai Ivanov, of Skuld.

 “being in between the sanctions authorities, and the practical part of the shipping industry…we act as a buffer between the two and have to effectively police up and down the sanctions chain”

Nikolai Ivanov, Skuld, in Navigating the new world of sanctions

He points out that Skuld had to deny coverage to some old customers as a result of the sanctions. His remark clarifies that the P&I clubs are on the front lines of sanctions enforcement. No one else is allocating substantial resources to it.

What can happen if this enforcement mechanism fails? The result could be a kind of free-for-all in which sanctions for the Ukraine war, for instance, are no longer of much use. There have been attempts to circumvent the major clubs, for instance, by Russia attempting to provide similar insurance. I don’t think anyone believes that Russian entities could do this on a very large scale.

It appears most of the issues are in the energy transport and bulk carrier transport areas. Extreme shortages in these areas could be the trigger for massive violations of the sanctions, possibly without insurance, with only shadow coverage, or with insurers looking the other way. This wouldn’t be a good situation.

So far the insurers have been able to cope with the sanctions increases.

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Barry Parker | Feb 14, 2023

Navigating the new world of sanctions

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