This interesting article points out how the nature and availability of insurance can be weaponized in wars such as Trump’s Iran action. If you have not been interested in maritime insurance before, you need to learn how it can work in such a dire situation as the Strait of Hormuz activities now.
It’s a war zone, to be sure. But many ships, shippers, and in fact countries, are dependent on passage. And they need insurance to do it.
Manipulating the insurance ecosystem is a potential way to shape the movement of ships in the Gulf of Hormuz or the Red Sea. It’s been used before, but we are now seeing novel approaches from the US government and from insurers.
Maritime shippers and operators will need to pay attention to this changing landscape.
Coos Bay, OR, USA is pushing for a new West Coast US container port. It will have rail to the port, so that transloading can take place directly to it.
The port planners see a need for another West Coast port of entry for Asian containers that will reach inland via intermodal rail as far as Chicago. The Oregon International Port of Coos Bay has obtained a $25 million grant for pre-planning and pre-construction. The grant will be matched by $25 million from NorthPoint Development, and will be used for environmental review and preliminary engineering activities.
The map below shows why environmental concerns might be considerable. Coos Bay is a small town that’s long been a Mecca for beachgoers and people who love the coastside style of living. A friend moved there from Santa Rosa, in the Bay Area, for that reason.
Google Map of Coos Bay, OR. Red square shows the approximate location of the new container port.
You can see on the map that ingress is through a small strait, with a narrow bay running northward to the Coos River. The port will be on the barrier island, just below another industrial site, a sawmill, according to the planning material. Its projected capacity will be 2 million TEU, or one million forty-foot containers per year.
It’s not a bad idea, geopolitically, to have another West Coast port for containers. It’s a relief valve for the big California ports, which are subject to periodic longshore union strikes and other potential disruptions. Those ports are also major sources of pollution.
The all-rail connection should also make air pollution less of a problem. Perhaps the port can prevent local drayage from causing mammoth traffic and air problems in this pristine area.
Notice Charleston Marine Life Center at the entrance to the strait, a branch of the University of Oregon. Below is a photo of a Dungeness Crab, a local resident; delicious and protected from overfishing. Dredging, which the plan says is necessary, may threaten marine species nearby.
Boxes will move via a short line, Coos Bay Rail Line, owned by the port. It runs north from the peninsula about 137 mi, terminating near Eugene OR at the Union Pacific line. That provides access by rail to all of the central US. And if the UP/NS merger comes to pass, it will provide a single transfer access even to the Northeast US and even Europe. That provides access by rail to all of the central US. And if the UP/NS merger comes to pass, it will provide a single transfer access even to the Northeast US and even Europe.
It’s not clear that more capacity is needed on the West Coast of the US, particularly if interntional maritime trade is resetting and the Asia-US container movements are declining.
Evidently East Coast container traffic is also in decline.
We see a report today of Charleston, on the US East coast, shutting down a 700,000 TEU capacity terminal, Leatherman, because of low demand. It only processed 75,455 containers so far this year. The final capacity of Leathrman Terminal when built out is planned to be 2.4 million TEU. A second berth construction project is being continued. The planned rail yard adjacent to Leatherman, a $690 million project, is being suspended.
The shadow fleet consists of ships that are sanctioned by governments, or who are associated with sanctioned entities, such as shippers or brokers or owners. They’ve needed to be able to show a registration to get insurance or to enter ports.
But they need a flag state that isn’t going to ask very many questions. And that is not going to enforce the nation’s rules on your ship. And that isn’t going to care about how you maintain the ship or take care of the crew, or handle potential pollution problems. Most of the shadow fleet consists of older ships that can be expected to need more frequent maintenance.
Recently some flag states, such as Panama, have tightened their regulations substantially, and are committed to greater oversight. However, others still operate simply as rubber stamps for a fee.
The maritime intelligence firm Windward has reported that Nicaragua and Equatorial Guinea have started taking on shadow vessels in their flag registries.
There are also many cases of false-flag registries, which purport to be associated with a nation, but in fact are simply paper-shuffling offices set up to mislead those who rely on flag identification for activities such as port entry.
Some registries are often seen as “rubber stamps.” While they technically require “proof of insurance” and “non-sanctioned port” letters, the recent case of the tanker Apple (flying the Equatorial Guinea flag) shows that these vessels often ignore reporting requirements and operate under opaque ownership despite these formal rules.
The International Maritime Organization (IMO) recently approved new guidelines aimed at improving transparency in ship registration and cracking down on the growing misuse of flags.
We need to see how much the IMO actions actually affect the picture. But past history is not promising. The effect the IMO can bring to bear is at the nation level.
It’s unrealistic to expect nations to police external private firms that produce false-flagging documents. However, nations can have an effect by announcing their rejection of false-flag firms, by name and location.
Nations can have a substantial effect if they choose, like Panama, to announce and follow up on their enforcement of the rules. That would mean tracking possible use of their flag papers and striking off ships that are not using them legally, or are violating national and IMO rules, such as insurance and crew treatment.
I’m a skeptic that nations will stand up and do this. But recent actions by some flag states are good signs, and some stiffness on the part of the IMO may be rewarded.
Supply Chain and Logistics 