The largest ocean carriers in the world are cutting off Russia. MSC, Maersk, CMA CGM, ONE, and Hapag-Lloyd have all announced that they are temporarily suspending service to and from Russia in response to Russia’s invasion of Ukraine.
Doing so is not required by sanctions from any country. The ocean carriers made the decision on their own. MSC and Maersk made exceptions for shipments carrying food, medical equipment, and humanitarian aid. CMA CGM said it would be suspending all service due to safety concerns.
As Greg Miller points out for FreightWaves:
Shipping execs don’t just refuse vessels or cargoes based on what’s definitely sanctionable. They do so based on what they believe might possibly be sanctioned now or later. Sanctions are written in precise language, but they’re messy in practice.
There’s ample precedent for sanctions applying to ocean shipping, with oil tankers carrying Iranian oil as the prime example. The number of players involved in a typical ocean shipment makes accepting Russian goods not worth the risk. Miller quotes a trade lawyer who said, “Not only do you have to make sure [a shipment] is legally permissible, you’ve got to make sure every other party to the transaction thinks so: your banks, insurer, shipper, receiver, charterer, owner, etc. Otherwise, you won’t get paid, you won’t have a completed shipment or you’ll lose your insurance.”
It’s important to remember that the major container carriers are not the same as the liquid and bulk-goods carriers. Most of the Russian goods that the rest of the world relies upon (e.g., natural gas, oil, metals, fertilizer, and grain) are not containerized, so they won’t be much affected by MSC, Maersk, et al. suspending service. The U.S. and EU have made clear they don’t intend for sanctions to apply to energy exports, although oil traders are starting to get skittish nonetheless, and some oil carriers have stopped sailing to the Black Sea for fear of being fired upon.
Stopping containerized shipping hurts Russia more than it hurts the rest of the world. The same cannot be said of China, which is something to keep in mind going forward. Cutting off China from containerized trade would hurt the rest of the world more than it would hurt China. The rest of the world is also dependent on China for bulk goods as well, especially metals. China remains America’s most powerful adversary, and many of the tools currently being employed to hurt Russia’s economy would not be as effective against China. American policy-makers should not fool themselves into thinking they could cripple the Chinese economy in the event of a crisis in the same way that Russia’s economy has been crippled.