As Piracy Rises, Shipowners Harden Fleets, Hire Guards

The International Maritime Bureau reported that global piracy hit an all-time high in the first quarter of 2011, driven by a rise in attacks off the coast of Somalia.

Somali Pirates
Mohamed Dahir | Getty Images
Somali Pirates

The IMB's Piracy Reporting Centre in Kuala Lumpur said last week that it recorded 142 incidents over the first three months of the year, up from 67 in the same period in 2010. Of the 142 attacks, 97 took place off the coast of Somalia.

In the most recent hostage crisis involving Somali pirates a multi-million dollar ransom was paid for the ship Asphalt Venture, whose ownership is located in Mumbai, India, but negotiations are still on to get the Indian crew released.

Somali pirates, who are estimated to account for 95 percent of all global hijackings, have now extended their reach hundreds of miles beyond the coast of Somalia, into the Indian Ocean and Arabian Sea.

"It is an enormous problem. There is not enough being done to combat it," Morten Arntzen, president & CEO of Overseas Shipholding Group told CNBC (watch video here). "There are times now when you can't transit safely through anywhere in the Indian Ocean, which is quite a big body of water. The industry is increasingly putting armed guards on ships, something the industry was reluctant to do."

According to a report by the One Earth Future Foundation in Colorado, piracy attacks are costing the global economy a whopping $7 to $12 billion a year, while an estimated $363 million to $2.5 billion is spent on security equipment every year.

As attacks become more violent and costly, the shipping industry has begun to adopt tougher measures to deal with the risks.

One measure is to ‘harden’ ships before they enter the high-risk areas near the Gulf of Aden. Wallem Shipmanagement in Hong Kong, which manages more than 350 vessels, installs physical barriers such as razor wires or concave drums around the periphery of ships to prevent pirates from climbing on board. They also use floodlights and high power hoses to detect and deter pirate skiffs.

"Everyone started against armed protection... However, no ship that has security guards on board has been hijacked in the last 3 years." -Director, Fox Delta, Hugh Martin

In addition, ships are advised to cruise at high speed, manoeuvre to create a bigger wake, and are required to give progress reports every 6 hours via telephone.

However, these measures only go so far in preventing attacks. “As companies adopt new measures, the pirates are also trying to change tactics,” says Captain Chittur Subramanian of Wallem.

The worsening situation has prompted authorities and shipowners alike to change their stance on the use of armed personnel on board. The International Transport Workers’ Federation (ITF) is now advising the use of guards, as are insurance companies.

The trained guards are predominantly former military men. While team leaders cost $600-$800 a day, other guards cost $450-$600 per day.

The numbers employed per ship depends on the risk to the vessel, which in turn is dictated by its speed, size and design. Ships on average travel with 3 to 6 armed men, but this can rise to 20 guards in high-risk cases.

“Everyone started against armed protection; however, in the last 3 to 6 months this attitude has changed as shipping companies are less willing to become a victim,” explains Hugh Martin, director of Fox Delta, a London-based management risk company that specializes in waterborne security. “No ship that has security guards on board has been hijacked in the last 3 years. So the view between all stakeholders is becoming more united.”

Protection measures though are far from uniform, with companies adopting different levels of security. This is due to the industry’s many governing bodies — a ship’s security policy is determined by the vessel’s flag-state, while protection of the crew is a concern of the national seafarers’ organizations. “The shipping industry never really talks as one voice,” explains Arthur Bowring, managing director of the Hong Kong Shipowners’ Association.

“It’s a problem for everybody and nobody,” sums up Lee Wai Pong, executive director of the Singapore Chamber of Maritime Arbitration.

At the human level, crews receive special training in how to avoid attacks and what to do in the event of a hijacking. Most ships contain a citadel, or strong room, in which the crew can lock themselves from pirates, while they wait to be rescued.

While the use of armed guards has proved the most successful measure so far, arming ships presents its own set of problems.

A Hong Kong-based shipowner recalls how one of his ships was recently docked in South Africa to take on armed guards ahead of a voyage along the coast of East Africa to Saudi Arabia, when the crew refused to make the journey saying it was too dangerous with armed guards on board. “It’s counter-intuitive,” he said, “and that shows you the extent of the situation”.

In the end, the ship had to take a longer route, deeper into the Indian Ocean, which extended the voyage by 10 days at an extra cost of at least $100,000.

Some ships regularly avoid the pirate-infested areas off the coast of Somalia. Japanese ships, for example, often make the long trip around the Cape of Good Hope — a rerouting that costs the maritime industry up to $2.95 billion each year.

That cost, along with all the others, ultimately finds its way to the consumer. Ultimately, the solution to the problem lies on land and not at sea, but until the political situation changes in Somalia, shipowners will have to continue spending to harden vessels to protect their cargo and crew.