LDN - Business

Shipping giant Maersk steers clear of Russia as Western net tightens

[March 01, 2022] By Stine Jacobsen and Sudip Kar-Gupta

(Reuters) -Shipping giant Maersk will temporarily halt all container shipping to and from Russia, deepening the country’s isolation as its invasion of Ukraine sparks an exodus of Western companies.

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

The curbs have closed airspace to Russian aircraft, shut out some Russian banks from the SWIFT global financial network, and restricted Moscow's ability to use its $630 billion in foreign reserves.

Energy firms BP and Shell have abandoned multi-billion-dollar positions, while leading banks, airlines, auto makers and more have cut shipments, ended partnerships and called Russia's actions unacceptable.

"I would expect to see a slew of similar announcements over the next few days," Sonia Kowal, president of Zevin Asset Management in Boston, said on Monday, adding that divestment by Norway's big sovereign wealth fund would support the move.

Maersk, which operates container shipping routes to St Petersburg and Kaliningrad in the Baltic Sea, Novorossiysk in the Black Sea, and Vladivostok and Vostochny on Russia's east coast, said on Tuesday all container shipping to Russia would be temporarily halted.

Oil and gas group TotalEnergies also said it will no longer provide capital for new projects in Russia, following moves by Shell, BP and Norway's Equinor to exit positions in the energy-rich country.

U.S. payment card firms Visa Inc and Mastercard Inc have blocked multiple Russian financial institutions from their network.

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 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 on Monday, in line with similar moves by major U.S. tech companies.

YouTube is blocking channels connected to Russian state-backed media outlets RT and Sputnik across Europe, the company operated by Alphabet Inc's Google said.

Late on Monday Warner Bros said it had pulled this week's release of 'The Batman' from Russian screens, following an announcement from Walt Disney Co that it would pause the release of theatrical films in Russia.

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The BP logo is seen at a BP gas station in Manhattan, New York City, U.S., November 24, 2021. REUTERS/Andrew Kelly

Major auto and truck makers, including Volvo and GM, have cut off exports to Russia. Ford Motor, which has a 50% stake in three Russian plants, has not commented substantively on its plans.

Automaker Mitsubishi Motors may suspend the sale of its cars in Russia, news agency Jiji reported on Tuesday. Japanese trading house Mitsubishi Corp owns 141 Mitsubishi dealerships in Russia.

'CLEAR AND UNEQUIVOCAL'

Some U.S. state-linked investors have been vocal in setting expectations for corporations.

"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, some of the largest in the United States.

Companies and asset managers eager to liquidate stakes face barriers because many exchanges have halted trade.

A top executive at equity index provider MSCI said on Monday that Russia's stock market is "uninvestable" after stringent new Western sanctions and central bank curbs on trading, making a removal of Russian listings from indexes a "natural next step".

Some Western companies with major exposure to Russia have already seen shares drop. Finnair, based in Russia's neighbor Finland, lost a fifth of its value after withdrawing its 2022 outlook amid airspace closures.

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

The White House has not made a decision on barring Russian flights, though Senator Dick Durbin, the second-highest ranking Democrat in the U.S. Senate, voiced his support for a ban.

(Reporting by Nikolaj Skydsgaard and Jacob Gronholt-Pedersen in Copenhagen, Sarah Morland in Paris; Additional reporting by Nerijus Adomaitis in Oslo, Foo Yun Chee in Brussels, Jamie Freed in Sydney, Maria Ponnezhath and Bhargav Acharya in Bengaluru, David Shepardson in Washington, Ben Klayman in Detroit, Dmitry Zhdannikov, Carolyn Cohn in London, Saeed Azhar in Dubai and Dawn Chmielewski in Los Angeles; Writing by Sayantani Ghosh; Editing by Jan Harvey)

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