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Shipping giants steer clear of Russia as Western net tightens

The world’s biggest shipping lines MSC and Maersk on Tuesday suspended container shipping to and from Russia, deepening the country’s isolation as its invasion of Ukraine sparks an exodus of international companies.

The West has imposed heavy restrictions on Russia to close off its economy and block it from the global financial system, pushing companies to halt sales, cut ties and dump tens of billions of dollars’ worth of investments.

The moves by MSC and Maersk mean that Russia — the world’s 11th largest economy and supplier of one-sixth of all commodities — is now effectively cut off from a large chunk of the globe’s shipping capacity.

To stem the stampede, Moscow said on Tuesday it would temporarily curb foreign investors from selling Russian assets but energy firms BP (LON:BP) and Shell (LON:RDSa) have already decided to abandon their Russian businesses, while leading banks, airlines, automakers and more have cut shipments and ended partnerships.

Austria’s Raiffeisen Bank International (RBI) is looking into leaving Russia, two people with knowledge of the matter told Reuters, a move that would make it the first European bank to do so since the invasion.

“The corporate world is building up a fortress to isolate Russia from the international community,” Hargreaves Lansdown (LON:HRGV) senior investment and markets analyst Susannah Streeter said.

French oil and gas group TotalEnergies said it would no longer provide capital for new projects in Russia, while Exxon Mobil (NYSE:XOM) has begun removing U.S. employees working there, a person familiar with the matter said.

Paramount Pictures became the latest Hollywood studio to halt theatrical film distribution in Russia, announcing Tuesday that it would pause the release of upcoming films “The Lost City” and “Sonic the Hedgehog 2.”

FINANCIAL PARIAH

In a matter of weeks, Russia has turned from a lucrative bet on surging oil prices to a financial pariah with a central bank hamstrung by sanctions, major banks shut out of the international payments system and capital controls choking off money flows.

U.S. payment card firms Visa Inc (NYSE:V) and Mastercard (NYSE:MA) Inc have blocked multiple Russian financial institutions from their network.

Major auto and truck makers, including Volvo Cars, AB Volvo, General Motors (NYSE:GM), Harley-Davidson and Jaguar Land Rover, have also cut off exports to Russia.

Finnish telecoms equipment firm Nokia (HE:NOKIA) joined rival Ericsson (BS:ERICAs) in saying it will stop deliveries to Russia to comply with sanctions.

Big tech companies are juggling calls to shut services in Russia with what they see as a mission to give voice to dissent and protest.

Facebook (NASDAQ:FB) parent company Meta Platforms Inc will restrict access to Russian state media outlets RT and Sputnik on its platforms across the European Union, it said, in line with similar moves by major U.S. tech companies.

YouTube is also blocking channels connected to RT and Sputnik across Europe, the company operated by Alphabet (NASDAQ:GOOGL) Inc’s Google said.

‘CLEAR AND UNEQUIVOCAL’

Some U.S. state-linked investors have been vocal in setting expectations for corporations, with Connecticut Treasurer Shawn Wooden saying he would direct state pension funds to sell Russian assets.

“We need to send a very clear and unequivocal response that California will not stand for Russia’s aggression,” California Treasurer Fiona Ma said on Monday in statement declaring support for divesting Russian assets from the state’s pension funds.

Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.

Airlines are bracing for lengthy blockages of east-west flight corridors after the EU and Moscow issued airspace bans, which are estimated to affect 20% of global air cargo.

European Union officials are speaking with their U.S. counterparts about extending the current airspace bans imposed on Russia, a senior EU official said on Tuesday.
Source: Reuters

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