Flag-Switching On Russian Ships Hits Record Amid Sanctions  

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by Tyler Durden
Tuesday, Apr 05, 2022 - 06:45 AM

The latest sign that Western sanctions on Russia over the invasion of Ukraine are beginning to take a massive economic toll is a surge in the number of Russia-flagged vessels switching their country of registration (or ship's flag) to evade trade restrictions. 

Bloomberg, citing maritime consultancy Windward Ltd, reports that 18 vessels, including 11 cargo ships, changed their flags to non-Russian ones last month. That's a 300% jump compared to monthly averages of Russian ships. 

Source: Bloomberg

Five of the 18 vessels were directly connected to Russian owners. Eleven vessels were owned by a UAE company and changed their flags to the Marshall Islands.

"Foreign companies have different motivations for moving from the Russian flag, they want their vessels to be able to operate everywhere without restrictions and, in some cases for moral reasons," said Windward product manager Gur Sender.

Sender said ship registration changes aren't unusual and happen all the time, though the sudden increase in flag changes for Russia's 3,300-strong commercial fleet has never exceeded nine in any month. 

"What makes flag changes interesting is when they are taking place in correlation with trade restrictions against a specific country, especially when one of the management or ownership companies is in fact registered in that same restricted country," Sender said. 

Source: Bloomberg 

Flag switching comes as some Russian vessels have switched off their automatic identification system, or AIS, to evade sanctions and conduct ship-to-ship cargo transfers in or around Russia's exclusive economic zone. 

"It's all a clear attempt by Russian ship owners and operators to try to obscure the identities of the vessels," he said. "They want to avoid detection."

What to expect moving forward is more Russian vessels switching their ship registration to other countries to evade Western sanctions—plus ghosting AIS to conduct ship-to-ship transfers. 

This news also follows reports of Russian oligarchs switching off AIS on their superyachts, hiding private jets, and other trophy assets from Western sanctions. 

Switching registrations reminds us of the scene in the action war/drama "Lord of War," where gun smuggler Nicolas Cage had to falsify a ship's name and origin to evade authorities.