US targets Chinese maritime sector with blacklisting move

The shipping world was thrown into confusion yesterday by the news that a number of Chinese maritime companies – including the world’s largest shipowner Cosco Shipping and yard giant China State Shipbuilding Corp (CSSC) – have been added to the US Department of Defense’s ‘blacklist’.

The list, which also reportedly includes oil company CNOOC and container manufacturer CIMC, is designed to discourage US firms from doing business with the named parties. It is not an absolute sanction, however.

Ostensibly the blacklisting was for links to the People’s Liberation Army but suspicion of involvement in the import of Iranian oil may also have been behind the move.

Last week, on December 31, powerful US-based lobby group UANI (United Against Iranian Oil) updated a document entitled ‘Uncovering the Chinese Purchasers of Iranian Oil’ on its website. This provided further details of how so-called ‘teapot refineries’ were importing Iranian oil – concealed by rebranding its origin as a blend of different oils from elsewhere – “rather than major state actors” in contravention of US sanctions. A full list of ships serving these refineries was also published.

It remains to be seen what the reaction of Chinese companies and authorities to the blacklisting will be, but an immediate effect is likely to be a rise in rates with tonnage supply effectively ‘squeezed’, observers believe.

Leading maritime economist and commentator Dr Martin Stopford tells SMI: “This is not the first time that Cosco has been sanctioned but it is clearly a significant move because a) it the world’s biggest shipping company b) the company is Chinese, which carries the world’s largest trade, and c) COSCO trades all over the world., with about 1400 ships.

“It all depends on what the embargo actually involves and how the world market reacts. Last time the USA rattled Iran’s cage, the brokers were reluctant to go anywhere near a ship that had been there. But an awful lot of trade went on in the background. We’ve seen this with the Russian black tanker fleet.

“But putting the evil eye on the whole of the world’s biggest shipping company with its enormous cargo base of products vitally needed by customers in Europe and the United States must be regarded as a significant move in global trade with widespread potential consquences, which might include driving Chinese trade towards South America, Africa and Asia, a big step in realigning the Atlantic and the Pacific trading areas.”