Inside the booming ‘shadow fleet’ industry keeping rogue states afloat

It's the middle of the night, April 2023. We're in the East China Sea. A North Korean linked oil tanker sailing under another country's flag suddenly goes dark. It stops transmitting its location. It simply vanishes from the map. 10 days later, the ship reappears on the tracking screen. It signal places it off the coast of China. Except it's not. It's actually in a bay. many hundreds of kilometers away and it's not supposed to be there. [music] I'm Justin Bergman, international [music] affairs editor at the Conversation in Australia, and this is the Conversation Weekly. How did we end up with a shadow fleet of ships just like this one blinking on and off radars as they circle the globe? >> [music] >> Justin Hastings, welcome. You're a professor of international relations at the University of Sydney, and you've been tracking shadow fleets for quite a long time. Tell me about the new conchk. >> The new conchk is a relatively small oil tanker. It is incredibly unremarkable, and that's the point, right? It is an old ship. It has been sort of modified several times, but ultimately at the end of the day, the point of the new conchk is it doesn't look like anything in particular. I think it was built in the early 90s, so it's well over 30 years old at this point. And it's supposed to be a ship that evades detection. It's evades sort of notice and can be used by any number of people for what they want without it drawing too much attention. >> But that all changed. What happened? >> So it started drawing attention initially once it sort of entered the North Korean shadow fleet sometime around 2018 2019. seems to have passed into ownership of people associated with North Korean sanctions evasion specifically and that's when it got onto the radar of other people besides North Korea. >> Was there something specific that it did that aroused suspicions? Was there something that triggered alarm bells from the monitors who've been watching North Korea and its ships? >> So, usually if you're wondering how these kinds of ships start attracting attention, there's two things they might happen, right? The first is they start just changing ownership to really sketchy companies, really unusual ownership structures to [music] sort of flags that may not even exist anymore. That sort of indicates that someone is acquiring the ship and doing something with [music] it that is potentially illegal. The other way is just to look at its behavior. Is it meeting with other ships that are known to be involved in sort of sanctions evasion? So, let's explain this a little bit more detail. It helps to understand what an AIS machine is and how the new con and other ships use it to disguise their identity. >> AIS machine stands for automated identification system and it's a machine that will broadcast its identity, what its name is, what its international maritime organization number is, what its MMSI is, which is kind of like its phone number, and other sort of characteristics that will allow other people to track where the ship is. So that information that the AS machine is broadcasting to the rest of the world is actually really important for enforcing the law and for making sure that all ships in in the sea are safe. >> North Korean ships have been using this information to hide their identity or spoof their location for a long time. Right. >> Right. So I mean the flip side of a sort of universal system that broadcasts location and identity is that obviously you can manipulate that. If you want to show that a ship is somewhere else, at least to the casual observer, then you can put in a false location into the IAS machine. If you want to make other ships think that it's a different ship, you just put in a false identity, right? And that will in some sense, at least from the people who are looking at a computer screen and tracking the ships around the world, make the ship appear a different ship. And in that sense, that allows you to make the ship look like it's completely in a different location and destination than it actually is. Uh you could also just manipulate it by turning it off in which case the ship disappears. There are many reasons why you might want to do that and in some cases this is actually allowed under national law but not [clears throat] for any of the reasons that North Korea uses. >> So inspectors were watching this North Korean shadow fleet for a long time and came across the new conchk specifically. What happened in April 2023? What New Kong was doing at the time at the beginning of April 2023 was hanging out in sort of a bay in China as many North Korean sanctions vessels do. And in the course of being stationed in that bay in China, the AIS data that showed where Newark was supposed to be started moving around East Asia, right? So to make it look like it had left the area, but satellite images according to the UN showed that in fact it was still there. It was still in the bay. And then after a period of time, it started using different identities and started moving towards North Korea. >> Right. When it turned off its machine, what was it up to? >> Probably, although we don't have the direct evidence, it may have taken on oil at some point from another ship at sea. So, a ship to ship transfer. And then it traveled to North Korea and then by July was photographed transferring oil to another ship. And that ship then transferred the oil to to a North Korean port. Officially, the ship actually reappeared July 7th or 8th, and it was shown to be pretty far from North Korea when it reappeared. So, there was no transmission that it did during this period that showed it to be in port in North Korea. >> And so, this isn't the only way that North Korean shadow ships disguise their identity. There's other things they do, right? >> Yeah. The downsides of only using AIS to hide where you are. When you're on the water, other ships can obviously see you if they're within visual range, right? And if you ever enter a port, obviously the port is going to want to know this information. So there's often incentive for ships that really really want to disappear to basically disguise themselves physically. Right? This isn't unique to North Korean shadow fleet ships. This is a common tactic that was also used by pirates that would hijack ships and then basically disguise them so it was difficult to find them after they'd hijacked them. And so what you do is you take the two characteristics of a ship that are easiest to spot and easiest to differentiate the ship, which are its color and the name of the ship. Under international regulations, every ship is required to have its name in a visible location on either the side or the back of the ship. And so if you repaint the ship and you change the name, then on first glance, you know, they'll say, "Oh, okay. The name is a different name. That's not the ship we're looking for." If you repaint it, obviously that takes a lot more time. If you remove certain features of the ship, like you add a smoke stack, you take away a smoke stack, that will in some sense make the ship a little bit different and and sort of make it less recognizable to people who are looking for a particular ship with particular physical characteristics. And so the ship that was originally called New Con at some point went into a shipyard and at least changed color of its deck and changed its physical name that's on the ship as well. Sometimes North Korea will be really lazy about this. they either won't bother to change the name or they'll just sort of like sloppily paint over it. But in this case, it was in port for several months. >> And the name change is pretty remarkable. This ship went through several different names during its lifetime. Is that right? >> Yeah. So, what's interesting about New Conch, it's that it used a number of identities that North Korea had essentially stored up. Right. So, North Korea's network had acquired a number of different ships and basically they had built up a history of those ships and that sort of then created an identity. These ships had their own international maritime organization number. [music] They had unique MMSIs, the phone numbers for the ships. They had a history of being registered. [music] And what new could then do was try on these identities. So you [music] say like in one case it was broadcasting as Eflon line. In another case it was broadcasting as Leon, another case was broadcasting as Leon which is kind of similar to Leon if you don't look too closely. Right. It was going through these identities that North Korea had built up to look like a a regular ship that already had a history to the casual observer. >> It's so fascinating the the lengths that they go to disguise their identities. Are they successful? I mean, did New Con ever get quote unquote caught by anybody? >> The answer is, I mean, no, right? If you're traveling directly from China to North Korea, there's minimal areas where another ship could actually interdict a ship like New Kong. And sort of North Korea knows this. So in some sense, a lot of the reasons we even know about these data is because they're being followed from afar. It's not like we've actually interdicted them. And in some sense, the limits of North Korea's ability to run these shadow fleets is bored [music] down to the sort of the bad shape the ships are in, the repairs they have to make on them, and just the cost and the effort associated with hiding them [music] like this all take its toll on North Korea. But the worry that they'll actually be interdicted is not one of those. After the break, as Shadow fleets go global, can anything be done to stop them? [music] >> Every week, Michelle Graten offers you a ringside seat to the latest in Australian politics with interviews and insights from political insiders. On the conversations Politics with Michelle Graten podcast, we cut through the spin and get to the substance with independent analysis of the issues that really matter. Stay informed. Search and follow Politics with Michelle Graten wherever you get your podcasts. >> Welcome back, Justin. This is a story that's bigger than just one ship. We've been telling listeners about the new conchk, but this is a much bigger problem around the world, isn't it? >> British armed forces have intercepted a shadow fleet oil tanker attempting to pass through the English Channel. >> North Korea, I would say, probably pioneered shadow fleet ships, but it's not the only country that does this. It's the country that has to do it for all its ships because all North Korean ships are sanctioned by the United Nations. But there are a number of other countries that obviously have unilateral sanctions against them. Russian ships, Iranian ships, at least in the past, Venezuelan ships. And these ships don't have to deal with UN sanctions, but they do have to deal with sanctions by countries like the United States and Australia and sort of groupings like the European Union. And in order to evade those sanctions, the other countries will often create shadow fleets as well. And those shadow fleets are not necessarily disguised to the same extent as North Korean ships are. They don't need to be, but they do have similar sort of behaviors. So Russian ships, for example, or ships that are transiting Russian oil and natural gas will also turn off their AIS and use spoofing um sort of try to make it look like they're somewhere else in a bid to at least make their journey look more legitimate to potential enforcers. Iranian ships did similar things when they tried to run the blockade the US is running right now. >> Off the southeast coast of Malaysia, one of the world's busiest shipping corridors hides a surprisingly open secret. Tankers tied to Iran sanctioned oil trade move through these waters largely unchecked. So in that sense, there are a number of ways to do this. The other sort of fundamental problem that shadow fleets have not only for North Korea but others is that part of the point of sanctions either UN sanctions or even sanctions from the US and the EU is that what you really need fundamentally to run a ship on sort of international waters is insurance and you get insurance by buying it and if it's impossible to buy insurance then you either run without insurance and start using fraudulent papers or you selfinsure which creates its own problems if you don't have hard currency or you basically to start creating fraudulent identities that make it look like you're insured and make it look like you're properly registered. So, it is the case, for example, that even though Russian shadow fleet ships aren't sanctioned by the UN, they will still use false flags, false registrations, they'll still use questionable insurance documents or run without insurance. And this creates problems for safety. It creates problems for the environment if there's an oil spill and no one can pick up the cost. And it also means that in some sense the ships because they're not properly registered are then susceptible to being interdicted at sea because not having an actual valid identity is one of the few reasons why a state can interdict another state's vessel on the high seas. >> We talked about oil as being one of the commodities that are traded on these ships. What else do they carry? >> For North Korea, what they primarily care about is importing oil and exporting coal, right? So they make money from selling coal which is sanctioned and they need oil to sort of run their industry. Russia obviously they want to sell oil and natural gas to make money. For Iran they also want to sell oil but they also want to export weapons and weapons components to their proxy groups around the world. >> It's amazing to me that this is a world with so much surveillance and so many countries we know about are doing this. So why is it so hard to crack down on these countries that are operating these shadow fleets? I think there's three related reasons. The first reason is that the oceans are a lot bigger than you think. It's a lot harder to find ships that don't want to be found in the ocean. For example, the main kind of ship that has its AIS turned off so you can't find it. It's actually not shadow fleet ships. It's fishing vessels because they want to be able to fish illegally. In some cases, 90% of fishing vessels in a certain region have their AIS off. >> [music] >> The only real way to find them aside from physically being there is by satellite surveillance, which is not easy to be honest. The second reason is that there is this presumption under international law that if a ship is on the high seas, you won't really interfere with it unless you have very specific [music] legal reasons. And so what we're finding is that unless you find a ship that is very easily and obviously out of compliance with say the requirement to have a valid flag, there's really not that much legal reason or legal ability for countries to interdict these ships. It's why, for example, the US and the UK and other countries have only recently started interdicting Russian shadow [music] fleet ships because the costs of doing so are very high, especially in the high seas. it's not particularly safe and if they had a valid flag registration and they weren't doing anything obviously illegal at the time, it's difficult to stop them. The third reason is this ecosystem of support. There are countries that will not necessarily be interested in actively helping other countries evade unilateral sanctions, but they're not interested in enforcing them either. You want to start a company in that region, and as long as you're not doing anything illegal in that country, then they're not going to stop you. And so in some sense the ecosystem [music] that's designed to support shipping is very valuable to the world. We need a lot of these companies. [music] But those companies can also do things like facilitate shipping that violates sanctions from at least one or two countries in the world. With a team of researchers in Singapore, you're building a massive database that's tracking all of these ships. Can you tell us about what you're looking at and how this works? The work we're doing with Singapore is because they had access to this massive database. It was all the AS data for the world for 3 years. And what we're interested in doing was using machine learning, using AI to come up with behaviors in AI manipulation that might indicate that they were shadow fleet or doing something that was funny. If for example the AS just sort of disappears intermittently over a certain period of time that indicates that the ship is doing something that may be illegal or at least may be responding to some kind of problem. If the ship is going in a straight line for hundreds of kilometers at a time that's probably not real because ships don't really do that on the high seas. So the idea was to basically create a series of rules that would allow us to identify which ships were engaged in AAS gaming around the world >> and that data could then be used in real time. Is that the idea? >> Yeah. The idea would be eventually you could use those rules sort of understand in real time if a ship is engaging in some kind of shenanigans. There's kind of a strain of thought that the high seas are the last vestage of the wild west in the world. There's only so much you can do to control what happens. For countries that are engaging in sort of large-scale campaigns to evade sanctions like Russia and that also have lots of money and lots of ships, boarding the ships, interdicting them is one way to at least slow them down. But obviously there's a lot of ships and every interdiction is really expensive and potentially dangerous. I think denying services to a lot of these ships is effective in punishing them, in making it so they can't operate. But this has costs, right? It has environmental costs and safety costs. If you have ships with no insurance and ships that can't get services to be repaired, then you end up with a situation where they might be an oil spill in a collision in a crowded port or crowded sort of waterway that no one has insured. And this is like a problem that might be bigger than the shadow fleet itself. I think ultimately one way to deal with this is to make it so that the owners of the ships themselves and the companies that provide services to them don't see the profit in providing services to these kinds of ships. Right? North Korea may not care because ultimately they're using very small, very old ships that they just let die essentially if they run out of life. Russia may care more as their ships are a little bit younger and they need to be able to sell oil and natural gas on an ongoing basis. So, I mean, you can't necessarily get at the ships themselves all the time, but you can get at the ecosystem. You can track the tactics they're using, and you can find ways to at least raise the cost of them doing that to the point where the cost may be higher than whatever benefit they're getting from engaging in sanctions evasion. >> Just a couple months ago, the US Navy actually used a missile to strike one of these shadow tankers off the coast of Iran. Three crew members were killed in that attack. This sort of thing must weigh on you as a researcher in this field. >> Yeah. So, I mean, I think sort of one of the the challenges and one of the fundamental issues with dealing with shadow fleet ships is that like everything else, it's a set of trade-offs, right? If you took muscular sort of kinetic action to stop every single shadow tanker ship, that's a lot of dead people. What the US is trying to do, and you can agree or disagree with it, was essentially disable the engine, right? So, one way to sort of make it easier to stop a ship is just make it so the ship can't move. That has its own issues. Obviously, you can't necessarily always get just the engine. There are people in the engine room. The tanker might start listing and might start sinking as the Houthis have now done with ships off the coast of Yemen. And you know, it creates its own problems. That's a lot of um you know, sort of potentially sunken ships with with environmental uh consequences. It really makes the the fundamental principle of freedom of navigation, the openness of the high seas very very problematic. Well, you've described this as the wild west, the open seas, the oceans bigger than we can imagine. The countries that are operating these shadow fleets seem to be evolving their tactics and trying to be one step ahead. Do you feel that they're winning right now? >> In some cases, yes. Right. So, if you think about North Korea, what does North Korea actually want? They want enough oil to survive. They want enough money from selling coal and [snorts] other natural resources to survive economically. That level of need is not particularly high. North Korea's legal trade even at its height was something like $90 million in terms of imports and exports. So this is not high. They don't need that much to survive as a country. It's not a good way to survive, but it's a living, right? So in that sense, does North Korea feel constrained by this? Not really. I think they get what they want. They obviously have enough resources, enough oil to run the factories that are producing the ballistic missiles that are being used in Ukraine [music] and they're producing the munitions that are being used to shell Ukraine from Russia. When you come to a country like Iran and Russia that have much larger economies that need an ongoing sale of oil on a consistent basis to make money and to conduct a war, in some sense they feel this much more acutely, right? They can adapt. They can run blockades. They can build much larger shadow fleets. But if you have a combination of pressure on the buyers of the oil and a combination of making it difficult to run the ships in the first place, they can always go to cities for their ecosystem that don't care about this. But at the end of the day, the level of consistent product that they need to move to actually have an impact on their budget and to allow them to survive is a lot higher than for North Korea in some sense makes the challenge for them significantly more difficult. >> Well, it's been fascinating chatting with you about this. Thanks so much, Justin. We really appreciate the time. >> Thank you. [music] >> That's it for this week's episode of The Conversation Weekly. You can see pictures of the new conchk and track its journey in a visual feature Justin Hastings and [music] his team have written for us. It's on our website now, the conversation.com. We've also linked to it in our show notes. Isabella Podwinsky [music] was the writer and executive producer of this episode. Sound mixing is by Lloyd Barrett and our theme music is by Nita [music] Sarl. Gemma Wear is head of audio. Ashley McGee is head of [music] editorial innovation and Misha Ketell and Steven Khan are our editors and chief. [music] The conversation is a nonprofit news outlet dedicated to sharing the work of academic [music] experts with a wider audience. If you like what we do, please support us at donate.the conversation.com. [music] Thanks for listening. >> [music]