Iran has announced that all vessels associated with South Korean shipping company Sinokor will face "legal action" starting November 1, increasing uncertainty for shipping through the Strait of Hormuz.
What Happened?
On October 27, Iran's Persian Gulf Strait Authority (PGSA) accused vessels from Sinokor of committing the largest number of transit violations within the last three months. PGSA said that enforcement actions have already been made against at least seven vessels.
Sinokor is one of the key operators in the market of oil transportation. Bloomberg reported that the vessels of the company transported almost 40% of the total volume of crude oil exports via the Strait of Hormuz in September.
No details on how "legal actions" will be carried out and which ships exactly will be involved are provided by Iran. But the declaration may raise fears of potential restrictions on the vessel movement, detention, attacks, and insurance issues.
Impact on Shipping and Freight
- Increased security risks: Ships that are connected to Sinokor may encounter greater security challenges when passing through the Strait of Hormuz.
- Higher costs: War-risk premiums and extra charges for emergencies might stay high, making shipping even more expensive.
- Potential delays and rerouting: Companies may decide to divert ships from certain routes or ports, using land transport instead.
- Continued uncertainty: This announcement has increased the existing uncertainties of the shipping environment, making freight rates more difficult to predict.
What Freight Forwarders Should Watch
Forwarders handling Gulf shipments need to ensure that the vessels used by their clients do not have any affiliations with Sinokor through ownership, charter, or operations. Forwarders should also communicate with carriers, discuss their contract terms and take into account any potential surcharges in their quotes.
In addition, it is important to conduct sanctions checks, as potential exposure through services involving Iranian transit agencies and insurance may cause additional compliance risks.
Key Takeaway
Iran's announcement marks a shift from general threats against shipping to targeting an entire shipping company. With the new measures scheduled to begin November 1, freight forwarders should monitor carrier updates closely and prepare for possible delays, rerouting and higher costs on shipments moving through the Strait of Hormuz.