CONTENTS
Geopolitical tensions are escalating as we move out of the post-Cold War era of globalisation, and into a more challenging landscape.
This has led to the creation of the dark fleet, which by now has become a major and well known phenomenon in the world of shipping. It is a clandestine network of vessels trying to hide its links to Iran, Russia and other nations subject to Western sanctions.
In a series of talks over the last 12 months, I have argued that this development point towards parts of the world fleet splintering off into a “parallel fleet”. In many ways, the emerging “parallel fleet” is different from the dark fleet we have come to know.
Through Nordisk’s 135 years, our Members’ businesses and hence Nordisk’s caseload, has been influenced by a multitude of geopolitical shifts. Nordisk has been through two World Wars, the end of the era of empire and colonialisation, the Cold War, the Tanker War in the 1980s, and the ebbs and flows of globalisation. We find ourselves yet again at a crossroads, heading into uncharted territory. Here are our thoughts on the current developments.
The Dark Fleet
The dark fleet comprises of ships that engage in evasive tactics to avoid detection and monitoring. These vessels often disable their AIS, change their flag to those still willing to accept them, or increasingly, sail with false registration and no flag. They engage in STS transfers to obscure the origin and destination of their cargo. They often change from one bland ship name to another, to obscure their identities.
Some even paint false names on the hull to obscure their identity to passers-by. A VLCC caught in an illegal STS operation in Indonesian waters in July 2023 had the name “S. Tinos” on the hull, but in reality the vessel was a Cameroon flagged vessel named “Lilu”. The fake name had been borrowed from another dark fleet VLCC, that had been recycled in Bangladesh in 2018. The re-use of an old name was presumably done to ensure a similar ship would show up on Google if passers-by googled the ship’s name. Similar fake identity schemes were also used in the past when sanctions forced ships into the dark, perhaps most notably for tankers secretly carrying crude to South Africa during the apartheid era.
The dark fleet vessels are also often un-insured or underinsured, causing increased risk to their crews, to other ships, and to the environment. This clandestine approach has increasingly been used to transport oil and other commodities that are subject to sanctions, thereby undermining the effectiveness of these economic measures.
The Parallel Fleet
The developing parallel fleet differs from the dark fleet, in that it operates in the open, aiming to stay outside of the reach of Western sanctions altogether. This fleet increasingly operates with Iranian and Russian sounding ship names, and increasingly with Iranian or Russian flag and Russian class.
For example, it was reported in May 2024 that Sovcomflot was flagging several tankers from the Gabon flag to the Russian flag, and was switching to the Russian Maritime Register of Shipping class. One of these tankers was renamed “Belgorod”, after the Russian regional capital and region bordering Ukraine, frequently in the news recently. Unfortunately, these vessels suffer from some of the key challenges of the dark fleet, including, presumably by being under-insured or not insured at all.
As we see it, the development of these dark and parallel fleets underscores the complexities and the unintended and perhaps unavoidable consequences of international economic restrictions.
Both the dark fleet and the parallel fleet are primarily developing in response to the stringent sanctions imposed by Western nations on countries like Russia and Iran. Again a sign of increasing geopolitical tensions, in a fast changing world. A recent slew of books describe the development, of which I can recommend “Chip War” (Chris Miller), “Goodbye Globalisation” (Elisabeth Braw) and “The New Cold Wars” (David E. Sanger).
In my talks, I have also pointed to the way the Soviet Bloc merchant fleet operated during the Cold War, as a parallel that might be relevant. History does not repeat itself, but it often rhymes, as Mark Twain is reputed to have said. This sizeable fleet of ships was generally built in Soviet Bloc countries, had Soviet or other friendly flags, as well as class and insurance. They mainly traded between the Soviet Bloc and nations friendly or neutral to it.
As this article is being written, Western politicians are increasingly realizing that Russian oil will not be sold below the G7 Price Cap and transported on Western ships insured in the West. It will instead be transported on dark and parallel fleet vessels owned, flagged and insured elsewhere. In recent written evidence to the UK Treasury Select Committee, the International Group (“IG”) disclosed that about 800 tankers had left the 12 IG Clubs and moved into the dark fleet and the parallel fleet that seems to be developing.
Where are we headed?
To some observers’ surprise, it has been possible for Russia, Iran and others to turn to alternative service providers to the international and largely Western ones. By now, most of the Iranian and Russian oil continues to flow without reliance on the normal international fleet. The alternative service providers used by their owners and operators are often financially weak, lacking in experience, and unlikely to be able to operate the vessels at the increasingly high safely standard the industry has come to represent.
A gruelling example was the explosion on the Gabon flagged aframax tanker “Pablo” in May 2023, which killed three crew members and ripped the whole deck of the vessel open. The P&I insurer that had issued its Blue Card was called “Anglo & Eastern Ship Owners P&I Club”. Allegedly, no real insurance was hiding behind their bland web page. No-one showed up to take care of the wreck, and it is said that no insurer has cared for the surviving crew members or the relatives.
In our view, there is no way in the current geopolitical landscape to reverse the unwelcome creation of the dark and parallel fleets. The geopolitical landscape would have to improve significantly for that to happen. Our best hope at present might be that the dark fleet increasingly becomes a parallel fleet, like the one operated by the Soviet Bloc during the Cold War. It would then hopefully be operating in the open and with local service providers and flags, which could at least ensure safe operations in accordance with international regulations, and at a safety level equal to the one the industry has fought so hard to build over the last decades.
Conclusions
History has shown that Members turn to Nordisk for support more frequently when there are seismic shifts in the world of shipping and the world at large. This is such a period, and we at Nordisk are working hard to ensure we have the right team with the right skills to be of maximum use to the Members.
Over the last two years we have increasingly been involved in cases related to the growth of the dark fleet, including, in particular, by helping Members uncovering shady buyers trying to disguise their true ownership and intentions, as well as screening vessels, charterers and other counterparties for risk.
Looking back at Nordisk’s 135 years in shipping, a lesson is that with good risk management and an eye to windward, our Members will find new opportunities to thrive during tumultuous times. Nordisk will be there to support the Members as they steer the course safely, just as in previous times of change.