Syria's shipping trade struggles as war risks bite

Reuters

* Syria seen as risk area for many shipping companies

* Syrian ports operating normally, volumes hit by conflict

By Jonathan Saul

LONDON, Oct 9 (Reuters) - War and sanctions are taking anincreasing toll on Syria's vital sea-borne trade, with fewervessels calling at its cargo ports as ship-owners shy away fromthe risks associated with a conflict now in its third year.

The slowdown in deliveries of food and other essentials ispiling pressure on the government of President Bashar al-Assad,which is struggling to keep commercial supply lines open.

Syria has failed for some time to procure strategiccommodities such as wheat, sugar and rice through internationaltenders due to the civil war and an associated financing crunch.Shipping volumes have been hit despite the country's ports beingopen and operational, sources familiar with matter say.

"Assad has support from his allies such as Russia and theregime continues to cling on. At the same time, the conflict ishaving an effect on supply lines which includes everything fromcommodities and goods," said Alan Fraser of security firm AKE.

"They are struggling on the shipping side, which is why theyhave tried to keep land corridors open."

Ship-tracking data from maritime analytics firm Windwardshows that the number of ships - dry bulk, container and generalcargo vessels - calling at the ports of Tartous and Latakia hasfallen since the start of the year.

Port calls made by dry bulk vessels have fallen from a peakof 108 in March to just 20 in September. Similarly, 120 generalcargo vessels made port visits in March, falling to 52 inSeptember, the data shows.

"Although sanctions have had an impact on Syrian trade, thedangers to inland transport may also curtail trade into Syrianports," a shipping industry source said.

"Ship tracking shows the major ports are receiving only fouror five ships a day, nearly all of which are small local generalcargo vessels."

Many of the vessels visiting Syrian ports are among theoldest in the global fleet, averaging 28 years old, the datashows, which sources say reflects the caution bigger lines haveabout sending more modern ships in.

The threat of Western attacks has faded as Assad has agreedto destroy his chemical arsenal, but "Syria is still not worththe hassle for many owners. You need to factor in potentiallyhigh-risk trade," a European ship owner said.

Earlier this year, Philippines-based International ContainerTerminal Services pulled out of operating the Tartouscontainer port because of the war.

"As the conflict has intensified, so it has become lessviable for freight transport operations," said Daniel Richardsof business intelligence firm Business Monitor International.

"Not only have (Syria's) ports seen shipping companies shyaway from them, but road haulage firms have looked foralternative routes for goods that otherwise would have beentransited through the troubled state."

An official in Latakia said the port was ready to receiveships as normal although business was down.

"In terms of operational problems we don't have any. Thereare also no problems with our infrastructure and no damage so weare ready to operate one hundred percent as normal," theofficial said. "However, of course because of the situation thevolumes of cargo are much less."

Port officials in Tartous did not respond to requests forcomment and official data was not immediately available.

HIGH RISK ZONE

In late 2011, London's marine insurance market added Syriato a list of areas deemed high risk for merchant vessels, whichhas also led to higher shipping costs, trade sources say.

"The situation in Syria is such that underwriters reallyneed to be notified if a vessel wishes to go there so they canmake their own decision as to whether that risk is bearable atthe current terms, or change the terms or conditions for therisks," said Neil Roberts of the Lloyd's Market Association,which represents insurance underwriting businesses in theLloyd's market.

France's CMA CGM, the world's third-biggestcontainer group and part of a consortium that manages theLatakia terminal, said it still called at both Latakia andTartous.

Others though have scaled back activities, including theworld's number one ship container firm Maersk Line, which offersa weekly feeder service via a sister company after cuttingdirect calls due to a lack of profitability.

Feeders transport containers which are loaded from biggerships at other locations or at transshipment hubs such as Egyptor Lebanon.

"We are abiding strictly by the comprehensive sanctionsimposed by the international community and this more thananything has reduced the flows into Syria," said Simon Brown,head of Maersk Line Egypt.

"We continue to accept bookings for any commodities not onthe restricted list, for example humanitarian aid, food andmedicine. It is our hope that the security situation continuesto allow safe passage of vessels and cargo through to Syria."

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