Commercial Activity at a Time of Conflict: Global Trade Report

Global trade and security are inextricably linked. The ongoing Red Sea Crisis shows how security events affect trade on a global scale in short-term and long-lasting ways. As conflicts escalate and tensions flare up, commercial activities are inevitably impacted – trade routes shift, altering shipping companies’ behaviors, port congestion, and freight prices. Deceptive shipping practices often evolve and adapt as well, particularly, once sanctions are launched. 

An ecosystem already on edge from months of Houthi rebel attacks in the Red Sea, the Panama Canal drought, and continued Russia-related sanctions is now coping with the aftermath of Iran’s big attack and recent vessel hijacking. Having Russian backing since the outbreak of the Ukraine war seems to have emboldened the Iranians, creating a potentially dangerous new maritime ecosystem with potential effects on commercial, trade, and ocean freight activities in the area.

This Global Trade Report can help. 

It starts with some behind-the-scenes analysis of a critical vessel, looks at the effect of Iran’s aggression on major shipping companies – the 450% increase in destination updates in the Arabian Gulf between April 7-12 is pretty staggering – and highlights OFAC’s recent efforts.

The report also explains how Windward’s NEW war risk polygon layer, compliance risk, and location (GNSS) manipulation identification can help you better navigate this new landscape. 

Iran launched more than 300 missiles, drones, and rockets at Israel on April 14, saying it was retaliation for what Iran claimed was an Israeli strike on a site in Damascus on April 1.

Optical satellite imagery shows that on April 20, 2024, at 07:01 UTC, a vessel similar in appearance and size (approximately 170 meters in length, 30 meters in width, and with a white/gray deck) was sailing near the Bandar Abbas Port Waiting Area, at 27°4’6″N, 56°16’31″E, while not transmitting its AIS signal. It is likely (as suggested in published reports) that the Behshad returned to Iranian waters due to the possible risk of attack following Iran’s latest moves, and will remain in the area.

The increased tension in the region is impacting the maritime domain. Aside from the Behshad deviating from its routine behavior for the past three years to return to Iranian waters, Iran also seized a Portuguese-flagged cargo ship, the MSC Aries, on April 13, saying it has ties to Israel. In addition, the Iranian Navy has begun escorting Iranian commercial ships in the Red Sea. 

Despite the difficulties, maritime activities continue. 12,367 vessels made 51,930 area visits in war risk areas worldwide in April 2024. Most area visits were by cargo vessels (945%), tankers (25%), service (21%), or fishing vessels (6%). Less than 1% of the visits were by military or law enforcement vessels. 

Being in a state of active conflict does not necessarily mean a halt in the movement of goods or ongoing commerce activities in these areas. Despite the heightened risk, commercial vessels inevitably continue to sail through. 

Figure 4: Dark activities in the Gulf of Oman and Strait of Hormuz by cargo vessels, April 2-13, 2024.

There was a 50% increase in vessels anchoring for over six hours in Suez (North and South port waiting areas) between April 4-11, likely to await further directions for entry to the Red Sea (due to the situation).

The heightened tension and looming attack had a clear impact on trade in Iran’s territorial waters. In the two weeks leading up to the Iranian attack, port calls in Iran by cargo vessels and tankers steadily declined and only began increasing again after the Iranian missile attack on April 14, 2024.

Figure 5: Port calls in Iran by cargo vessels and tankers, March 30- April 30, 2024.

Windward’s data also shows a 600% increase in dark activities conducted by vessels of the six major carriers in the Red Sea during the week of April 7-13 (ahead of the looming attack). This marks the highest number of dark activities by these vessels since December 2023, at the height of the Houthi attacks against merchant vessels.

Figure 6: Dark activities by six major carriers in the Red Sea and Gulf of Aden regions by week, October 22, 2023-April 20, 2024.

Due to the recent seizure of the MSC Aries and the increase in geopolitical tensions in the Middle East and Arabian Gulf regions, carriers are again adopting evasive measures to avoid risky areas and hiding their location in potentially dangerous regions as safety measures.

Following the attack, during the week of April 14-20, Windward insights indicate that major carriers once again reverted to The Cape of Good Hope – with a 28% increase in area visits by the six major carriers (MSC, Maersk, COSCO, CMA CGM, ONE, Hapag-Lloyd) in The Cape of Good Hope compared to the week prior (April 7-13). The increase comes after three consecutive weeks of decreased area visits to The Cape of Good Hope.

Figure 7: Area visits by six major carriers in The Cape of Good Hope by week, October 22, 2023-April 20, 2024.

As seen in recent cases, vessels affiliated with Iran usually use deceptive shipping practices for illicit commodity trading, namely crude oil and oil products. Windward’s compliance risk, and location (GNSS) manipulation identification, enable a better understanding of the potential risk for sanctions evasions.