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. 

A Spy Ship’s Interesting Change of Course

Why did the Beshad suddenly return to Iran? 

According to published reports, Behshad is a cargo vessel used by Iran’s Iranian Revolutionary Guards Corps (IRGC) for espionage and operation command in the Red Sea and Yemen. More recently, the vessel has been linked to the attacks conducted by Yemen’s Houthi rebels against commercial vessels.

Behshad arrived in the Red Sea region in 2021 and replaced the Saviz, a former vessel that served the same purpose before being disabled in an attack. The vessel has anchored at the exclusive economic zone (EEZ) border area of Yemen, Eritrea, and Saudi Arabia since 2021 – it didn’t leave the area for port calls. 

The vessel departed its position at the beginning of 2024 for the first time and sailed south in the Bab el-Mandeb Strait, sailing for three months in the Gulf of Aden – within Somalia and Djibouti’s EEZs.

Behshad’s AIS transmission was lost on April 4. On April 18, the ship appeared in the Gulf of Oman, updating its destination to the port of Bandar Abbas. The vessel then crossed the Hormuz Strait and started engaging in dark activity in the Bandar Abbas Port waiting area.

Behshads's sailing path
Figure 1: Behshad’s sailing path between April 4-18, 2024.

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.

Satellite image
Figure 2: Candidate vessel for the Behshad, at Bandar Abbas Port Waiting Area, April 20, 2024.

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. 

War risk zones
Figure 3: Vessels in war risk zones in April 2024

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. 

A NEW War Risk Zone Layer

The Red Sea disruptions and the Russia-Ukraine war and its accompanying sanctions have highlighted the need to have full visibility for war-risk areas – whether on land, in the air, or in the sea. To help, Windward recently released a new war risk areas layer, to ensure our users have better visibility into these evolving areas, and the relevant activities and deceptive shipping practices (DSPs) taking place. Windward’s war risk areas are updated according to recent publications from the Joint War Committee.

High Alert for Shipping Companies Amid Increased Tensions

The Behshad was not the only vessel to change its behavioral pattern in anticipation of a violent escalation. There was speculation regarding an Iranian attack on Israel for two weeks. Knowing that an Iranian attack was imminent/extremely likely, shipping companies and traders prepared and took action. 

Windard’s Maritime AI™ platform showed a 450% increase in destination updates in the Arabian Gulf between April 7-12. There were similar patterns of evasive acts – transmitting the presence of armed guards on board, and Chinese/Syrian/Russian crew members, claiming no connection to Israel, etc. Some vessels made U-turns in the area, others drifted in a “wait-and-see” pattern, but all adopted some evasive measures.

Immediately following the seizure of the MSC Aries, on April 13, there was a 200% increase in dark activities conducted by cargo vessels in the Gulf of Oman and Strait of Hormuz, likely by vessels trying to hide their location.

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.

OFAC Targets Network Facilitating Shipments for Iranian Military

The U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) reported on April 4 that it was taking additional action against Iranian military revenue generation and targeting Oceanlink Maritime DMCC for facilitating the shipment of Iranian commodities on behalf of Iran’s Armed Forces General Staff and Ministry of Defense.

Windward’s Maritime AI™ platform shows that Oceanlink Maritime DMCC owns ten vessels, all currently sanctioned. Seven of the ten vessels are crude oil tankers and all sail under flags of convenience, or blacklisted flags.

During the past year, the Oceanlink Maritime DMCC fleet was mostly active in the Arabian Gulf and China. But Windward data shows that the fleet had mainly conducted dark activities and location (GNSS) manipulation in the Black Sea and the Arabian Gulf.

Cluster of dark activities
Figure 8: Clustering of dark activities conducted by Oceanlink Maritime DMCC fleet, January 2023-March 2024.
Location (GNSS) manipulation
Figure 9: Clustering location (GNSS) manipulation conducted by Oceanlink Maritime DMCC fleet, January 2023- March 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.

Increasingly Complex Sanction Regimes Require Similarly Sophisticated Solutions

In response to the Iranian attack, the U.S. House passed a bill on April 22 introducing new sanctions on Iran, specifically targeting the Iranian oil sector. The legislation broadens sanctions against Iran to include foreign ports, vessels, and refineries that knowingly process or ship Iranian crude oil in violation of existing U.S. sanctions – China being the main target, given that it is the biggest buyer of Iranian crude oil.

This follows news from Europe on upcoming sanctions on Russia and DPRK. This flurry of sanctions is shaping up into a clear dichotomy between two clusters – the West and Iran/China/Russia/DPRK/Venezuela. But this seemingly neat structure of opposing blocs is complicated by ever-increasing and complex regulatory structures and enforcement mechanisms. 

Organizations that manage risk by relying on legacy systems will struggle to keep up. Floods of false positives will be costly, both in terms of business relationships and revenues. 

As organizations, departments, and teams grapple with distinct facets of risk management, tailored risk insights and thresholds have become indispensable. Proactive, agile solutions that allow entities to autonomously define and align their risk profiles, while still keeping their business thriving, are critical. 

This is underscored by volatile market dynamics, evidenced by the record number of vessel transactions, and the emergence of new typologies and behavioral trends that complicate compliance and strategic planning. 

Together, these factors are reshaping the maritime sector, necessitating sophisticated and configurable risk management strategies to ensure operational continuity and security, safeguarding the resilience and success of maritime endeavors in an increasingly complex global trade landscape.

Stay tuned for our upcoming eBook to learn more.

Don’t Let Conflict Disrupt Your Business