Notes on PiracyBy james tweed • Jul 9th, 2009 • Category: General, Piracy
Notes on Piracy based on comments from breakout session at Marine Money New York.
To describe the scale of the problem of piracy facing the shipping industry at the moment we need look no further than the moderator of the recent Marine Money conference in New York who said that “putting a man on the moon is easier than ending piracy in the Gulf of Aden”
Media coverage of piracy has inevitably thrust the industry to the front page of many newspapers and clearly there are reasons for the industry to be extremely alarmed. James Christodoulou, CEO of Industrial Shipping Enterprises Management Co – owners of the MV Biscaglia (hijacked Nov 28, 2008 carrying Palm Oil) gave a special breakout session at the New York Marine Money conference with a host of advice based on his first hand experience.
The panel (Jeremy Hurewitz, Control Risks / Thomas Rozjcki, Cubitt Jacobs & Prosek Communications / Larry Rutkowski, Seward & Kissel / Bruce Paulsen, Seward & Kissel / Jonathan Gregory, Hiscox Insurance / Jonathan Spencer, The Spencer Company) was an incredible line up of people with first hand experience of managing a piracy situation.
For a shipowner there is a financial calculation to make when considering routing via the Gulf of Aden or going round the Cape. One of the calculations to make is the cost of additional fuel to go round the cape vs Suez Canal fees and insurance. In a period of high rates, the lure of a direct voyage may be too much to resist and whilst the maths may be simple, the decision is anything but.
In terms of chartering negotiations for a transit of the Gulf of Aden there may be, for a tanker, a 5 to 10 worldscale point premium, plus $16-20k insurance premium. If an owner decides to say no, the owner removes many discharge options for the charterer, and losing that optionality for a trader could make the risk/reward premium not worthwhile in the present market. These are tough decisions to make.
As of mid May 2009 there had been as many pirate attacks as there were in 2008. List of ships attacked.
There is a degree of seasonality to attacks and whilst it would be reasonable to expect a slow down during the Monsoon summer months, the industry should be prepared for a big increase come autumn.
Pirates have been re-investing the money they have made and are now attacking off Oman and off Kenya near Seychelles. They are operating in an ever increasing area. They are coming further and further out and owners are therefore looking for premiums to go East of Madagascar: if the market was at the levels of last year (08) then the premium charged by owners would have a significant impact and consumers would see prices passed on. As it is, market rates are low at the moment, and therefore consumers are not feeling the impact of piracy.
These are tough calls and as with any decision making process, preparation and planning are key elements to making sound choices.
In order to plan the voyage, and to make the all important routing decision, there are 3 phases of planning that need considering:
3. Post hijack
Pre-voyage planning – some things to consider:
Can the company pay ransom if the vessel is hijacked and is the company prepared to do so?
What are the alternative routes?
Do you have a ‘go’ / ‘no-go’ decision process in place?
Are you receiving constant updates regarding the scale of the threat in the area
Piracy has a dramatic impact on people, the crew are therefore a critical component in the decision and it is vital to keep them in the loop. Better still, give them the opportunity to opt out of the voyage if they want to.
If the crew are happy to go through a high risk area, make sure that you have their full details including medical information before the voyage starts.
The decision will be impacted by the logistics of the ship in questions. If the vessel is hijacked then it may be at anchor for several months. Food will not be a problem but fresh water and fuel could be. Analysis of the daily consumption figures is a vital part of this type of voyage planning.
What type of cargo are you carrying and what is the sustainability of that cargo?
Do you have a crisis response team in place with clearly defined decision making powers? If the worst happens then life will be 24/7. For executives these decisions will affect peoples lives and not just their livelihoods.
The cost of piracy can be huge and so getting the right insurance in place first is essential and bear in mind that there could be a multitude of law suits to deal with after the event.
The hijack itself comprises 4 stages and there will likely be separate teams of pirates for each phase.
1. attack and capture
2. move vessel to anchorage
3. ransom payment
4. departure of pirates
Being surrounded with the best possible team is critical and keeping the families of the crew informed and ensuring that they know that repatriation is the first priority is without doubt the number one task.
If you can the ransom then get the cash into the area as soon as possible. Having it ready, with a delivery plan is important because once you agree a price, you’re going to need to pay in 24-36 hours.
The average time for a ship to be held is 50-60 days .
Make sure that you have replacement crew in place so that the repatriating crew can be reunited with families and undergo medical checks. Make sure that your technical managers are ready to get on board – the assessment of the vessel and associated repairs may take many months.
The lack of a Somali coast guard, as a result of Somalia being a failed state, is significant in the fight against piracy. There is a developing trend resulting from the military pressure in Afghanistan and Iraq that means that a number of militants are leaving the Middle East for Somalia, and the Taliban are attempting to topple the Transitional Federal Government (TFG) with suicide bombers. There is little appetite to intervene at this stage and no strategic beach head to do so and with the Battle of Mogadishu – Black Hawk Down – still relatively fresh, there is a difficult, uncomfortable history in this region. However, if Al Qaeda and similar groups keep moving to the region, the theory is that it won’t be allowed to go unchecked (as it did in Afghanistan before 911)
One response has been the use of the transit corridor, however, this has been somewhat counter productive as it places all ships in a similar area. Overall, foreign military intervention isn’t providing a real solution and the general feeling at the moment is to expect things to go from bad to worse.
Passage through the Gulf of Aden is a business decision and therefore needs thought… Risk mitigation strategies are important: the implementation of long range acoustic devices, onboard Fire Fighting equipment and barbed wire on low lying areas of ships are all sensible measure. Pirates are looking for easy targets, so having a presence on board is important and having a safe-room (Somewhere for the crew to retreat to with supplies of food, water and comms) on board has proved effective.
A popular question these days is should piracy be legally equated with terrorism? The short answer is an unequivocal No… Under US law, a US related company would not legally be allowed to pay any ransom as this would breach terrorism laws: if payment as an option is removed from the table, then that can’t be good. So, is piracy crime or terrorism? CRIME… Should an owner be able to pay ransom… YES… Are pirates becoming more violent – yes – see Lloyds List article
Intertanko view on protecting ships against armed pirates.
Merchant ship protection
How can pirate attacks and/or armed robberies on merchant ships be deterred, delayed or even prevented? How can merchant ships prepare before entering a high-risk area? and how to minimise the risk of being attacked?
The vulnerability of ships transiting such areas varies greatly. A prudent operator and his seafarers will take into account and deploy the necessary self-protection measures contained in the IMO’s MSC Circular and the industry’s widely circulated Best Management Practices whose primary aim is to ensure the safest possible conditions for the crew, which is paramount. They will also take into account a ship’s freeboard, its transit speed and its ability to manoeuvre; they will also note the latest information received from any protective naval forces in the region.
Private security companies and Armed guards
There has been some debate regarding the use of firearms on ships to protect seafarers. INTERTANKO, and more importantly its Members, are convinced that:
The use of any arms carried on board ships will escalate the violence of pirate attacks and armed robberies and increase the risk of loss of life.
There should be no arming of ships’ crews. Crew members are not trained in the use of firearms and should not be required to defend themselves and their ship.
Where a private security service is employed, the personnel should be unarmed and their role should be an advisory one.
The risks associated with live fire arms on an oil or chemical tanker are evident.
Private Security firms offering armed guards and escort services should be avoided. There is no accepted quality control process in place; there are inherent problems regarding liability; there are command and control issues regarding the use of lethal force; and there are a number of insurance-related problems.
The use of government armed guards is of course a different matter. Where used, these should preferably be sourced from the ship’s flag state.
However, it needs to be borne in mind that if government armed guards were to be introduced on a large scale, the logistical issues of enabling the embarkation and disembarkation of government Vessel Protection Detachments (VPDs) would be enormous, as several thousand would be required. How and where would they board the vessels? Where would such a large military force be billeted in-between transits? Where would they billet when onboard the vessel?
Gulf of Aden (GoA) and Somali Basin
INTERTANKO has welcomed the European Union’s agreement to extend EUNAVFOR’s Operation ATALANTA and the associated Maritime Security Centre Horn of Africa. We strongly believe that the operation has now fully established itself and has demonstrated a proven track record of success. The coordination with NATO, and the Combined Maritime Forces (CMF), and the other navies in the region is, we believe, unprecedented. The extension of the operations demonstrates that EU governments are continuing to support their navies and assets in the region, addressing the ongoing sustainability of this support not only for existing assets but also to ensure more assets are provided with appropriate air support, by way of helicopters and/or Marine Patrol aircraft
INTERTANKO’s Marine Director Capt Howard Snaith says “Ensuring that the operator and its vessel is registered with MSCHOA, that the vessel regularly reports its position to MTO Dubai, and that the vessel submits its vessel movement form to MSCHOA, are the main key elements. With the information provided by the vessel and its operator, and using its own tried and tested methodology, MSCHOA can compile the necessary Vulnerable Shipping List (VSL).”
Since the Internationally Recommended Transit Corridor (IRTC) started operation for ships transiting the GoA, there has been a noticeable drop in successful piracy attacks in this region. There is no doubt that the implementation of ships’ self protective measures, as contained in the Industry Best Management Practices, and associated proactive actions by the ship and her operator, significantly lower the risk of a successful attack.
Owners/Operators should :
Register with and submit their vessel movement forms to MSCHOA and provide regular reports to MTO Dubai, when within their reporting area.
Apply the industry Best Management Practices (BMP) to reduce the risk of a successful piracy attack;
Follow the recommended routing guidance as provided by MSCHOA.
Capt Snaith also says, “While the protective naval forces are addressing the symptoms of the piracy problem, the root cause behind the problem is to be found ashore in the absence of a strong and stable government in Somalia. While this root cause is unresolved, the risk/reward balance remains attractive for the pirates. We therefore expect the piracy situation, and the need for government naval protection in the GoA and off the Somali coast, to continue for a considerable time until matters are resolved ashore. We therefore welcome the ongoing commitment by these governments to their military forces and to the long term sustainability of government naval protection in this area”.
INTERTANKO – Activities in support of anti-piracy measures
INTERTANKO has made a long-term commitment to tackling the piracy problem worldwide with quiet but firm leadership, although the focus is at the moment on the GoA and the Somali Basin in particular.
We have been providing a Merchant Navy Liaison Officer on part time secondment to MSCHOA since January 2009, helping to facilitate a two-way dialogue between MSCHOA and the industry, and at the same time providing oil and chemical tanker expertise.
We were instrumental in coordinating the initial production of the Industry Best Management Practices.
OCIMF and INTERTANKO produced the first version of the piracy “blue book” (Practical Measures to avoid, deter or delay pirate attacks). To date many thousands have been distributed free of charge within the industry.
We provided testimony to the U.S. House of Representatives.
We have been a regular attendee and participant at the U.N. Contact Group and WG3, and also WG1.
We provided an industry spokesman at the Djibouti meeting which established the Djibouti Code.
We organised a conference with the Philippines government – “Taking the message to the seafarer” – where INTERTANKO played a major and pivotal role in helping to achieve a way forward with the Filipino Aden rule covering how Filipino seafarers will work on ships transiting the Gulf of Aden.
We participate in the SHared Awareness and DEconfliction (SHADE) meetings which provide a working-level opportunity for navies to come together to share information and deconflict counter-piracy efforts off the coast of Somalia.
We send out regular bulletins with advice to our Members
We cooperate and coordinate with our industry partners in the shipping, oil and insurance sectors