* Foreign firms wary of falling foul of sanctions
* Iran reliant on shipping markets for trade
By Jonathan Saul
LONDON, July 1 Two top Chinese shipping lines
severed ties with Iran as tough new U.S. sanctions over the
country's disputed nuclear programme came into effect on Monday,
leaving the country increasingly dependent on front companies
and overland routes.
Many of Iran's imports, including food and consumer goods,
arrive by ship, either directly or via feeder services from
places like the United Arab Emirates, and the latest set of
sanctions are likely to worsen an already deep economic crisis.
"The vast majority of major container carriers have now
ceased calling at Iran," said Daniel Richards, shipping analyst
with Business Monitor International.
"As even feeder services begin to shy away from calling
there, the country will struggle to continue importing."
Tehran is set to become more reliant on trade by land, which
will push up prices already driven by currency volatility.
An Iranian food producer said business was getting more
difficult. "The prices of food are so high, I don't know how
people can afford it," the Tehran-based producer said. "They're
about three times higher than before."
The U.S. National Defense Authorization Act (NDAA), which
came into effect on July 1, blacklists Iran's shipping,
shipbuilding, energy and port management sectors.
The latest measures build on previous sanctions which
targeted Iran's banking sector and key oil exports to try to
force Tehran to negotiate on a nuclear programme it says is
peaceful but which Western states fear has military aims.
While the NDAA has an explicit exemption for food, medicine
and other humanitarian goods, foreign shipping firms have pulled
out to avoid falling foul of its provisions.
China is among Tehran's main allies, but its shipping firms
are also bailing out. China Shipping Container Lines Co (CSCL)
, among the world's top 10 lines, has become the latest
group to exit Iran, a CSCL official confirmed.
In a June 27 letter seen by Reuters to U.S. pressure group
United Against Nuclear Iran (UANI), whose board includes former
CIA and British intelligence chiefs, Shanghai-headquartered CSCL
said it took "trade sanctions compliance with the utmost
seriousness", ceasing all Iran business from July 1.
China's COSCO Container Lines, the world's number 5 player,
was another firm to end ties.
"All of COSCO's business to and from Iran has been
suspended," said a Shanghai-based company official, citing a
company statement saying lines to Iran stopped in early June and
those leaving Iran would end in early July.
An industry source summed up the impact of the latest U.S.
move. "China's shipping firms operate in a globalised trade, so
they are more risk averse to Iran now," he said.
Taiwanese lines Evergreen and Yang Ming Marine said they had
pulled out, while Singapore's Pacific International Lines has
also cut ties along with two top South Korean shipping firms.
"The departure of international shipping companies including
those from China and Taiwan indicates that the virtual economic
blockade of Iran is increasing," said Mark Wallace of UANI,
which has targeted companies trading in Iran to end links.
"It is a sign that Iran has fewer and fewer friends in the
international community that are willing to do business with its
regime," said Wallace, a former U.S. ambassador to the UN.
AP Moller-Maersk's Maersk Line, the world's
biggest container company, pulled out of Iran last year, joining
others including the world's number two and three MSC and CMA
CGM and smaller groups like Germany's Hapag-Lloyd.
Ali Reza Cheshm Jahan, deputy of logistics for Tidewater
Middle East Co, which operates six ports in Iran and was
blacklisted in 2011, said the remaining four lines had cut ties
with the top southern cargo port of Shahid Rajaee.
"The carrying of goods and cargo at this port will be
carried out by the Islamic Republic of Iran Shipping Lines
(IRISL) and (a subsidiary)," he told Iran's student news agency
IRISL, Iran's biggest cargo carrier, has tried to dodge
sanctions by changing its flags and setting up front companies,
the U.S. Treasury and the European Union have said.
In March, Archer Daniels Midland Co, one of the
world's top grain traders, said it unwittingly used a vessel
beneficially owned by IRISL last year to transport grain in what
it said was a "concerted effort" by Tehran to hide the ship's
Shipping sources say IRISL will find it harder to call at
many ports globally, adding that Iran may become more dependent
on land based trade via its borders with Iraq and Pakistan,
slowing the transport of goods further.
"It seems logical that shippers will try and find the most
convenient way to get their cargoes as close to Iran as possible
in a first step," another ship industry source said. "It is
improvising from there on."
(Additional reporting by Keith Wallis in Singapore, Aizhu Chen
in Beijing and Marcus George in Dubai; editing by Philippa