Eight International Shipping Associations Urge UN to Reject Hormuz Strait Levy

JAKARTA - The international shipping industry has rejected plans for a levy on ships passing through the Strait of Hormuz. They warn that mandatory costs could raise shipping costs, energy prices, inflation, and add to global economic uncertainty.

Anadolu Agency, quoted on Thursday, August 6, reported that the rejection was conveyed by eight major maritime associations through an open letter to UN Secretary-General Antonio Guterres and Secretary-General of the International Maritime Organization or IMO Arsenio Dominguez.

The letter was sent on Monday and was made public on Wednesday by the International Chamber of Shipping.

In the letter, the eight associations asked the United Nations to reject mandatory levies or service fees for ships passing through the Strait of Hormuz. They assessed that such policies could interfere with freedom of navigation and damage the global economy.

"The imposition of mandatory fees for transit, or service fees that are essentially a levy even if they are not so called, in the Strait of Hormuz would be a major deviation from existing international practice," the letter said.

The shipping association also warned that such levies could set a precedent for other international waterways. If left unchecked, the international legal framework on transit rights could weaken.

The right of transit is the right of a ship to pass through international straits that are important shipping routes.

According to them, additional costs at sea will not stop at the ship. These costs can spread to the international supply chain, then drive shipping costs, energy prices, inflation, and economic uncertainty.

The eight associations that signed the letter are the Asian Shipowners' Association, BIMCO or Baltic and International Maritime Council, Cruise Lines International Association, European Shipowners, International Chamber of Shipping, INTERCARGO or International Association of Dry Cargo Shipowners, INTERTANKO or International Association of Independent Tanker Owners, and World Shipping Council.

The group also stressed that the safety of the crew and freedom of navigation should not be sacrificed in regional security negotiations and conflict resolution.

The letter came after Iran and Oman on Wednesday reached an initial understanding on almost all issues related to the future arrangement of the Strait of Hormuz.

Deputy Foreign Minister Kazem Gharibabadi said the final understanding "is almost completed."

According to Gharibabadi, this understanding includes the location of entry and exit routes for maritime traffic. The statement was delivered to the Iranian state news agency, IRNA.

However, he stressed that the understanding did not mean that the Strait of Hormuz was fully opened.

"This understanding does not mean the full opening of the Strait of Hormuz," Gharibabadi said.

He called the arrangement a "new and different model from the last 60 years of practice."

The IMO Council in July stated that shipping through the Strait of Hormuz must remain free of levies and fees under international law.

IMO also stressed that any arrangements between coastal states of the region must ensure that all ships can pass without discrimination and without obstacles through internationally recognized traffic separation schemes.

The traffic separation scheme is a vessel lane arrangement to make the incoming and outgoing traffic more orderly and reduce the risk of collision.

The Strait of Hormuz is an important sea route connecting the Gulf region with the Gulf of Oman and global markets. Disruption to commercial traffic on this route can be a major risk to energy supplies and international trade.