Shipping Industry's 'Moral Sanctions' vs Russia An Extraordinary Feat

Historically, the shipping industry has done the minimum when it comes to following sanctions. But since Russia's invasion of Ukraine, companies are choosing to self-sanction for moral reasons. The shipping and commodities sector has never seen "moral sanctions" like this, two experts told Hannah Towey of Business Insider.

Photo Insert: The mass withdrawal also includes the world's largest freight forwarders and container shipping lines.

When Shell bought Russian crude oil one week after the invasion of Ukraine, the internet freaked out. The energy giant apologized for the purchase and vowed to "choose alternatives to Russian oil wherever possible." Shell said it would donate the profits from the exchange to humanitarian efforts in Ukraine.

The mass withdrawal also includes the world's largest freight forwarders and container shipping lines. Even insurers that once covered trade in disputed areas have stopped doing business in the Black Sea and Sea of Azov.

Last March, British dockworkers refused to unload Russian crude oil from Seacod, a German-flagged tanker. "Historically, companies have done the minimum amount of sanctions," Ami Daniel, CEO of the maritime risk consultancy Windward, told Insider.

"However, what we've seen in the last month is a lot of companies do the maximum." He said the shipping industry hasn't seen moral sanctions like this "ever in the history of mankind."

Shell's purchase was entirely legal and complied with sanctions at the time. But at that moment, the public decided that simply following the rules would no longer cut it.

While the Russia-Ukraine conflict isn't the first crisis to be broadcast on social media, it is the "most viral" war, as The Economist reported. For many global companies, keeping a clean name is more valuable than keeping Russian clients.

The energy giant's response is just one example of what experts are calling "moral sanctions," or voluntary business limitations created in response to Russia's invasion of Ukraine. In the notoriously ruthless shipping and commodities industry, the trend has led companies like Shell to avoid all trade associated with Russia — even when it's legal.

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