Shadow Fleet Growth Risks Splitting Shipping Into Two Tiers

Two-Tier Shipping Concerns Raised by CSG

More than 80% of global trade moves by sea, underscoring how critical shipping lanes are to the world economy. According to a report by Marine Insight, a group of maritime nations known as the CSG has warned that the industry has faced repeated shocks in recent years, including the COVID-19 pandemic, the war in Ukraine, the Panama Canal drought and the US-Iran conflict, all of which have driven up prices for oil, commodities and fertiliser.

One of the CSG’s central concerns is the expanding number of vessels used to circumvent international sanctions. Many of these ships operate without the insurance, safety inspections and transparency normally required in international shipping, effectively creating a split between compliant operators and those working outside accepted standards.

The Caroline Bezengi Case

The report cites the case of the Caroline Bezengi, an oil tanker that exploded after striking a limpet mine near the Omani port of Salalah this summer. The vessel, described as part of the shadow fleet, lacked traditional protection and indemnity (P&I) insurance, leaving the Omani government to cover cleanup costs.

Similar insurance gaps have emerged since Western P&I clubs began withdrawing from vessels tied to the Russian oil trade last year. Alternative insurers, some financially weaker, have stepped in to fill the gap. As a result, when a shadow fleet vessel is involved in an accident, the P&I club in the country where the incident occurs may end up bearing the costs.

Strait of Hormuz Risk

The CSG also flagged concerns over the Strait of Hormuz, particularly Iran’s proposal to impose a toll on passing vessels, which shippers fear could set a precedent for other strategic corridors. War-risk insurance costs for tankers using the strait rose sharply after a conflict began in February 2026, and elevated pricing continues to affect renewals.

Call for Common Standards

The CSG said shipping becomes more costly and complicated when countries adopt inconsistent rules, adding that uncertainty over port and route access complicates operational and investment planning. The group urged governments to promote common standards and procedures and to support the international legal framework established by the International Maritime Organisation.

The CSG’s member countries include Belgium, Canada, Denmark, Finland, France, Germany, Greece, Italy, Japan, South Korea, the Netherlands, Norway, Poland, Portugal, Singapore, Spain, Sweden and the United Kingdom.