Can we stop saying “shadow fleet”, please?
The term “shadow fleet” has become ubiquitous in recent months. It’s mostly linked to Russia but other countries also have a claim, notably Iran.
There is, however, a slight problem with it. The “shadow fleet” isn’t really a fleet which is controlled by one actor or at least one unified entity. It’s not a shadow either, quite the contrary. It’s made up of real ships which can be tracked, albeit with some difficulties. They happen to operate pretty intransparent which causes various problems. At the same time, that’s not vastly different from other parts of the shipping industry.
So what does that mean in practice? Let’s talk definitions.
What’s the shadow fleet actually?
Different organisations define the “shadow fleet” or the “dark fleet” in different ways (you can see the first part of the problem already). By and large, the “shadow fleet” refers to ships which are relatively old, have anonymous ownership, frequently disable or even manipulate their AIS position and are using various flags of convenience.
(The term “flag of convenience” is another issue. The ITF, a seafarers’ union, has declared more than 40 countries as flags of convenience, and it’s the only organisation that actually defines what a flag of convenience is. This definition makes sense for a union. Using the same term in a different context makes a lot less sense.
The ITF list includes Panama, the Marshall Islands and Liberia, i.e. the three largest flag states in the world. It also includes the international registries of Germany and France.)
Who gets to decide?
So why would a shipping company engage in the practices mentioned above? Ultimately, it’s about money. In a nutshell, shipping is all about transporting cargoes from one place to another for a fee. Some governments, however, don’t want specific cargoes from specific countries to be transported. That’s what’s called sanctions.
Sanctions are an entirely political tool. For the US and most European countries, the political decision to impose sanctions on Russian crude oil exports might make sense. For many other countries, that’s not the case. That’s why it’s entirely legitimate for a Dubai-based company to transport crude oil from Russia to India.
The problem with such a voyage is the structure of the shipping industry. Many insurers, for example, are based in the UK so they are not allowed to provide insurance cover for the respective ship or the cargo.
Most international trading is priced in US dollars. As a result, the US government has long used the global reach of the US financial system. That means the Dubai-based company might land on a US sanctions list so that it cannot engage in other (non-sanctioned) types of trades anymore.
Sanctions have side effects
Unsurprisingly, that leads to a lack of transparency and to companies being registered and unregistered to avoid such exposure. So it’s at least this kind of behaviour that could lead to a good definition, right?
Not quite. The shipping industry is made up of many companies, specialising in different things. Some are publicly listed and have a broad range of internal guidelines and policies. At the other end of the spectrum, many companies don’t care much about these aspects.
Imagine a tanker which is more than 15 years old and officially owned by a Liberia-registered company. The actual owner is a Dubai-based entity which only operates this tanker. The ship has called at Russian ports several times in 2024. Sounds pretty shadow fleet-ish.
But do you know where the ship has also been last year? In Ukraine. More than once, actually.
In fact, a lot of ships which are calling at Ukraine are not operated by big shipping companies with solid reputations. They belong to one-ship companies in various tax havens. They are operated by ship managers which are registered in Liberia or in Honduras, and these companies are managing vessels which are registered in Belize, Togo or the great maritime nation of San Marino.
None of that means that they are necessarily involved in illegal practices. However, the general patterns of ships trading with Ukraine are not particularly different from those that are transporting Russian or Iranian crude oil. Moreover, they are not different from ships which help to facilitate illegal fishing off South America or fuel smuggling in West Africa either. These types of illicit operations, however, don’t get the same political exposure. They don’t get your company on a sanctions list.
Conclusion
Whether sanctions are a useful political tool is an interesting discussion. In practice, however, sanctions in the maritime sector have pushed a significant – and highly irresponsible – part of the shipping industry which has long existed over the edge. These companies were never particularly keen on protecting their seafarers or the environment. Now they happen to also engage in behaviour that is not compliant with (exclusively Western) sanctions.
As a result, a significant percentage of the global merchant fleet (especially tankers, but that may expand in the future) is now engaged in trade patterns which are not in compliance with sanctions. That development was entirely foreseeable.
Describing such a large number of companies merely as the “shadow fleet”, however, is a simplification that doesn’t help much in practice. In addition, many other irresponsible, irregular and often illegal practices simply continue to be ignored.