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

Legal

Harper Government Invests in Naufrage Harbor

The Honorable Gail Shea, Minister of Fisheries and Oceans, announced today an investment to improve safety and working conditions for fishermen at Naufrage Harbor, Prince Edward Island.

Ondimar Firms Order Suezmax Quartet at Navantia

Navantia and Maritime Transport Ondimar LDA (shipping company Ibaizabal Group) today ratified the contracts signed in late June and the financial structure for

Contship Italia Signs Iran MoU

Contship Italia Spa, also on behalf of Eurogate GmbH & Co. KGaA, KG, recently signed a strategic Memorandum of Understanding (M.O.U.) with Sina Port & Marine Company (SPMCO),

Ports

Pentalver Opens London Container Facility

U.K. inland container service operator Pentalver opened a new five-acre site at the U.K.’s newest deep sea container port, DP World London Gateway, the London Port Authority announced.

USCG’s New Cutter Pulls into Boston

The U.S. Coast Guard’s (USCG) latest 418-foot National Security Cutter James (WSML 754) entered Boston Harbor August 3 ahead of her commissioning scheduled for August 8.

CMA CGM to Resume Service to Iran

The world's third-largest container shipping group, France's CMA CGM, said on Monday it would resume operations to Iran following the deal between Tehran and world

Casualties

TSB Investigating Ferry, Pleasure Craft Collision

The Transportation Safety Board of Canada (TSB) is deploying a team of investigators to Laval, Quebec, following a collision between the ferry Paule II and a pleasure craft which occurred on August 1.

Injured Woman Rescued on Lake Washington

Coast Guard, Seattle Police Department, Seattle Fire Department, King County Sheriff’s Office and Washington Department of Fish and Wildlife personnel rescued

Boxships Collide in Port Klang, Malaysia

The container ships MOL Empire and Northern Democrat collided at around 1430 LT Aug 1 in Westport harbor at Port Klang, Malaysia, reportedly while mooring.   Container or containers fell overboard,

News

Pentalver Opens London Container Facility

U.K. inland container service operator Pentalver opened a new five-acre site at the U.K.’s newest deep sea container port, DP World London Gateway, the London Port Authority announced.

USCG’s New Cutter Pulls into Boston

The U.S. Coast Guard’s (USCG) latest 418-foot National Security Cutter James (WSML 754) entered Boston Harbor August 3 ahead of her commissioning scheduled for August 8.

Egypt Says Finishes Work on New Suez Canal

Egypt has finished building its New Suez Canal, its overseer said on Wednesday, a project President Abdel Fattah al-Sisi sees as a symbol of national pride and

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Naval Architecture Salvage Ship Repair Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | 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: 0.1456 sec (7 req/sec)