Payment Problems Disrupting Iran Food Deals

Posted by Joseph R. Fonseca
Sunday, May 11, 2014

 

Payment problems are disrupting commercial food cargoes to Iran, with hundreds of thousands of tonnes of grain and sugar stuck in transit, as Western banking sanctions complicate deals and trade financiers scale back exposure.

Iran is not barred from buying food or other "humanitarian" goods under sanctions imposed over Tehran's pursuit of nuclear technology, but measures by the European Union and the United States have made trade more difficult over the past two years.

Several international trade sources, with knowledge of deals that have been affected, told Reuters that ships carrying cargoes of grain, including wheat and soybeans, as well as raw sugar, have been stuck for several weeks outside Iranian cargo ports such as Bandar Imam Khomeini and Bandar Abbas.

With evidence of people starting to stockpile food and prices rising following cuts in government subsidies, Iranian officials acknowledged to Reuters that there are import problems, notably due to reluctance among international banks.

One European trade source said: "There are problems getting paid on deals and Iran looks to be struggling on the trade finance side. It comes down to the banking complexities, which have held up cargoes for a number of suppliers."

Several trade sources point to growing difficulties opening letters of credit, vital to ensuring smooth delivery of goods.

"Western banks are unwilling to get involved," a second European trade source said. "As soon as the banks see the word 'Iran' in the paperwork, you get it rejected."

BANKS "AFRAID"

Bankers and government officials said Western lenders are steering clear of attempts by Iran to get them involved in financing humanitarian transactions, fearing they could be penalised under U.S. sanctions.

"We still cannot open letters of credit," said one Iranian government official, who spoke on condition of anonymity.

"International banks are concerned about - or let's say afraid of - doing business with Iran," the official added. "And we don't know what the solution will be. Dozens of ships are waiting at the ports and we just can't do anything."

Reuters ship tracking data shows that five panamax-sized vessels, each capable of carrying 60,000 to 70,000 tonnes of grain, reached Iran in early April from ports inEurope, Australia and South America. The vessels were still located around Bandar Imam Khomeini and Bandar Abbas on May 9, several weeks after they should have been able to discharge a cargo.

Reuters was unable to reach owners of the five vessels, which all sailed from international wheat terminals, including Australia's Kwinana and Rostock andHamburg in Germany.

"Having a panamax at port for that long would suggest to me there has been a payment issue," said a Sydney commodities trader. "There have been some issues with Iran in the past."

The five cargoes would represent nearly 2 percent of Iran's estimated annual wheat consumption of around 17 million tonnes.

SHIPS WAITING

Ship tracking data indicated that other vessels may also have been disrupted in recent months. Four panamax-sized vessels left Australia for Iran at the end of January.

After arriving in Iranian waters in mid- to late February, the vessels were stuck mainly around Bandar Imam Khomeini until they departed in April. A spokesman at agribusiness group Cargill's Australia office said three panamaxes it had been involved with had been delayed due to port congestion in Iran.

A separate panamax vessel originating in Ukraine was also stuck in Iran for weeks until April. A further three smaller vessels, including one carrying raw sugar, were also held up for weeks, ship tracking data showed.

A European trade source said at least one or two cargoes had been re-routed to other buyers: "The shipments in question were stuck in Iran for a long time and clocked up a big loss," the source said. "They were subsequently traded to other buyers."

A second Iranian government official said ships were waiting with perishable goods: "A few have had to return to the country that we purchased goods from.

"Various factors are involved - like Iran not facilitating the delivery and also the banking problems."

A spokeswoman for U.S. agribusiness company Archer Daniels Midland, which has supplied Iran, said many international banks would not participate in transactions with Iran "for fear of being sanctioned or fined".

"Another hindrance is Iran's foreign currency controls," she added. "Ships arriving in Iran with grain must frequently wait weeks for the Central Bank of Iran to approve the release of funds to pay for the cargo."

Banking and trade finance sources said several Iranian banks were cut off from the global electronic cross-border payment system SWIFT, which was adding to further financing problems.

A banking source said: "We should not rule out further bureaucratic delays in Iran to manage their limited availability of hard currency until sanctions are properly eased." (Additional reporting by Michael Hogan in Hamburg, Colin Packham in Sydney and Nigel Hunt in London; Editing by Veronica Brown and Alastair Macdonald)

Maritime Reporter March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

Scandlines Ferry Back in Service by End June

The damaged Scandlines ferry M/V Prinsesse Benedikte is being repaired at the Polish shipyard Remontowa and is expected to be ready before the end of June 2015.

Greece Will Sell Piraeus Port Stake in Weeks

The Greek government will sell its majority stake in the port of Piraeus within weeks, the country's deputy prime minister told China's official Xinhua news agency,

US Navy to Roll out Underwater Spy Satellites

The robotic series that remade crusade in skies will shortly extend to a low sea, with underwater view “satellites,” drone-launching pods on a sea building and unmanned ships sport submarines,

Ports

Greece Will Sell Piraeus Port Stake in Weeks

The Greek government will sell its majority stake in the port of Piraeus within weeks, the country's deputy prime minister told China's official Xinhua news agency,

China Unveils Action Plan on Maritime Silk Road

China has unveiled the principles, framework, and cooperation priorities and mechanisms in its Maritime Silk Road initiative in a bid to enhance regional connectivity

China Maritime Silk Road to Touch India for Namesake

Chinese officials on Saturday fleshed out some details for the country's ambitious 21st Century Maritime Silk Road (MSR) project in its “one belt, one road,” action plan.

Energy

USA Urged Not to Delay Arctic Drilling

The U.S. should immediately begin a push to exploit its enormous trove of oil in the Arctic waters off of Alaska, or risk a renewed reliance on imported oil in the future, reports AP.

Feds Delay LNG’s Port Ambrose Application

The US Coast Guard and the US Maritime Administration (MARAD) have temporarily suspended their review of the proposed Port Ambrose deep-water LNG import terminal.

Austal Graduates 48 4-Yr Apprentices

Austal USA combined two classes to graduate a total of 48 members of Austal’s cutting-edge four-year apprenticeship program yesterday at a formal ceremony held at the Arthur R.

News

Gulf Bridge Express Service to End

The Gulf Bridge Express Service will shortly be terminated with the last roundtrip voyage being MV Saint Nikolaos voyage 00008S, ETA New Orleans on April 22, 2015.

Obangame Express 2015 Concludes in the Gulf of Guinea

Maritime forces from Gulf of Guinea nations, Europe, South America, and the United States and several regional and international organizations concluded the multinational maritime exercise,

Scandlines Ferry Back in Service by End June

The damaged Scandlines ferry M/V Prinsesse Benedikte is being repaired at the Polish shipyard Remontowa and is expected to be ready before the end of June 2015.

 
 
Maritime Careers / Shipboard Positions Maritime Standards Navigation Pipelines Port Authority Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.2171 sec (5 req/sec)