Dominic McKnight Hardy, managing director at MIS Marine, writes for Splash today on the complex sanctions situation following Russia’s invasion of Ukraine.
The past month has seen no shortage of challenges for the maritime industry, and the sanctions maze that we currently find ourselves in is a continuously evolving situation.
In recent weeks, we’ve seen P&I clubs removing cover from Russian shipping giant Sovcomflot’s vessels, at the request of Ukraine president Volodymyr Zelenskiy. Alongside P&I clubs’ complex and somewhat less transparent relationships, several Class Societies are also facing potential sanctions due to links with Russia. In a bid to avoid the sanctions, Russian ships are reported as switching flags at a record rate.
The Ukraine and Russian conflict cannot be over-simplified into red, amber, green statuses
Moving from purely sanctioning companies related to key individuals, we are also now seeing port call bans and a stricter purchase process of any Russian hydrocarbon cargoes, regardless of the ownership of the vessel. Add to that the need to duplicate or match the sanctions of other regimes to ensure that they are effective over multiple jurisdictions, and you can see the level of complexity involved.
Not only does daily life now require a comprehensive understanding of sanctions as they happen, but it also demands a daily level of analysis to establish levels of risk exposure to the Russian market.
With over 500 sanctions introduced and the government’s recent announcement that even more sanctions will shortly be imposed, global energy companies and ship charterers need to decide quickly which will be their deal breakers and act as the fundamental basis for operational decisions.
Responding to the increasing sanctions is automated to an extent, however due to the complexity of the current landscape, a traditional ‘traffic light system’ is simply not viable – the Ukraine and Russian conflict cannot be over-simplified into red, amber, green statuses. We recognise that there is a surge in demand for human intelligence, paired with AI that can provide experienced analysis and convert data into presentable facts that are formatted and ready to take to the bridge or the boardroom, to inform those critical decisions.
It is therefore vital that shipowners, operators, charterers and energy companies are provided with multiple high-level data sources and intelligent, detailed analysis to support their decision-making on specific sanctions. Combining human intelligence with artificial intelligence is the best way to navigate through this sanctions puzzle, as automated systems can only go so far in helping companies to manage them.
As the need for data to drill down deeper to look for any Russian links are met, and the volume of data continues to increase as sanctions grow, a new divide could start to emerge. The time and effort required to manage, process and analyse sanctions data could become too unmanageable for smaller companies. Previously perceived as a tool for the energy majors, it’s now vital that marine assurance systems are increasingly scalable to support smaller teams – an issue that we are passionate about being able to provide so that big and small businesses alike can access and benefit from marine assurance.
The war in Ukraine brings major economic, industrial and legislative complications. Through the sharing of data, companies are finding intricate ways to further mitigate risk. But we must not forget that at the root of this is a humanitarian crisis with a complexity that reaches beyond data. We must not forget the importance of crew welfare and safety that requires sensitivity and data in equal measure – not only are we facing a geopolitical matter, but a safeguarding one too. Given the current pace and scale of change, it is this combination of artificial and human intelligence that converts data into presentable facts, enabling companies to make confident and timely decisions, with the complete insight and sensitivity this delicate situation requires.