The maritime market needs to be reassured that there is a “Plan B” on Western Sanctions against Russia according to Neil Roberts, Head of Marine and Aviation at Lloyd’s Market Association.
“If the aim of sanctions is to make a state alter course”, Roberts wrote in a LinkedIn post, “the test of success would be to ask whether the target country has changed its actions”.
“What is unclear to industry is why policymakers believe 20 years of Russian inculcation and perceived grievance will be materially altered through further constraints against shipping and insurance”.
Additional sanctions in Roberts’ view, based on the evidence of the last 15 months or so, “is unlikely to move the strategic dial” and instead “will sink further teeth into the hand that feeds, meaning the world’s legitimate floating supply system”.
Roberts also flagged a growing industry concern about the “shadow fleet” of ageing ships that “operates beyond the dollar and dilutes western efforts”. These ships operate with limited coverage, and transport sanctioned goods, including Russian crude oil.
This fleet is undermining the sanctions imposed on Russia since the start of the invasion, in particular barring of coverage on tankers carrying Russian oil above $60-per-barrel price cap.
S&P Global Market Intelligence, as reported in the Financial Times, has estimated more than 400 tankers operate within this shadow fleet. Yet, once the figure is stretched to include vessels at risk of breaching the sanctions, this number runs into the thousands.
Industry experts are concerned that old tankers long discarded by oil companies are being used to transport Russian crude oil, thereby increasing the risk of accidents and spillage.
Gard, the leading Norwegian insurer, has described this situation, as a “social and environmental disaster waiting to happen”.
Sanctions, Roberts highlighted, like any policy instrument, are double-edged in nature meaning that they may well solve one problem, but over a period, may create another problem.
For an industry “caught in the cat cradles of complexities”, it is “only so resilient”, meaning that time is ticking for policymakers to come up with a Plan B and fast.