- SCF did not immediately respond to a request for comment.
- No contract can function on the basis of an asset freeze.
- Classification societies provide services such as checking a ship’s seaworthiness, with certification essential for securing insurance and entry into ports.
Sovcomflot (SCF), Russia’s largest shipping business, which is already having trouble finding berths to discharge goods, is facing new pressure. After the UK joined the list of nations that have imposed sanctions on it, with ramifications for insurance and certification as reported by Reuters.
Pulling back from Russian business
SCF, which is owned by the Russian government and operates a modern fleet of ships, is a major carrier of Russian oil and liquefied natural gas, as well as cargo from other countries such as the United States.
SCF has seen significant difficulty in closing charters since Moscow’s invasion of Ukraine on February 24, according to shipping insiders, like ports, end customers, marine insurance, and other freight companies drawback from Russian business.
The SCF-operated tanker NS Champion was forced to change course away from Britain on Feb. 28 due to docking restrictions on Russian vessels, even before London placed sanctions on the business on Thursday, along with other Russian banks, crucial industries, and a host of the country’s elite.
Maria Angelicoussis, chief executive of the Angelicoussis Group, one of the world’s leading shipping companies, told the FT Commodities Global Summit this week that Sovcomflot’s fleet was “facing issues”, while also pointing to the wider trend of “big hesitancy” among ship owners to carry Russian cargoes.
Prohibition of transaction
SCF did not respond to a request for comment right away.
According to ship-tracking data, the NS Champion’s second voyage carried it toward the Danish coast, but it has subsequently reversed direction for the Baltic Sea area.
After a wind-down period ends on May 15, the European Union added SCF to a list of Russian state-owned companies with which it is “prohibited to directly or indirectly engage in any transaction.” Canada added it to a list of designated entities in February, and the United States has barred it from raising capital in its financial markets.
“The approach of governments towards Sovcomflot has been somewhat confused and different between jurisdictions and has left people trying to work out what they are doing,” said an insurance industry source with knowledge of the situation.
“No contract can function on the basis of an asset freeze.”
Securing insurance
The Russian maritime sector is already dealing with the winding down of services such as ship certification by key overseas suppliers such as the LR Group in the United Kingdom and the DNV Group in Norway.
Classification societies perform services such as inspecting a ship’s seaworthiness, and certification is required for insurance and port admission.
When the cover is removed, it’s uncertain what will happen to SCF’s fleet.
A DNV spokesperson said on Thursday that it was “still in the process of winding down all business with Russian entities and that Sovcomflot is part of this process”.
Shipping data shows Norway’s Skuld provides some insurance cover for SCF ships.
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Source: Reuters
