Feral Jundi

Below I have posted this report that One Earth Future Foundation put together, and have also posted an article that describes a lack of reporting from private security companies that stopped attacks, due to liability reasons. My simple question here is how can we truly tally the cost effectiveness of armed security on boats, if we do not have accurate data inputs?

In the report, I went to page 16 to catch anything that perked me up. One figure talked about the cost of security equipment investments made by all the ships mentioned. Razor wire was the most preferred out of all of the security equipment listed. They averaged the value of all of the razor wire purchased last year at about $434,552,160! Wow, razor wire is quite the business. Acoustic devices like the LRAD came in at second costliest at $133,717,500.

Here are two quotes that I combined for further analysis of the statistics.

Average ransoms increased 25% from approximately $4 million in 2010 to $5 million in 2011…… In 2011, Somali pirates attacked 237 ships and successfully hijacked 28.

So that is 1.158 Billion dollars that shipping companies could have lost potentially if those 237 ships had actually been taken. Not to mention the costs of ransoms, medical care, transport, rescue or lawsuits for every hostage taken, and the rising costs of insurance premiums because of all of those potential hijackings. In other words, these statistics are misleading and they do not show the cost if security measures were not taken.

The other part of the report was the percentages of armed security on boats. Here is the quote.

Varying sources estimate that the additional costs of armed guards are anywhere between $30,000 and $100,000 per transit through the HRA. According to the Independent Maritime Security Association, the use of a private armed security team generally costs around $50,000 per transit. We have estimated that approximately 25% of vessels transiting the HRA employ armed guards. It is important to note that this figure of 25% is an estimation of the entire year of 2011. From discussions with leading shipping industry representatives, we understand that the proportion of vessels employing armed guards increased rapidly throughout 2011, and by the end of the year this figure was closer to 50% of vessels.
If there are approximately 42,450 transits through the HRA each year, then around 10,612 transits employ armed security. At an average cost of $50,000 per transit, the total costs of private armed security are estimated to be in the region of $530.6 million per year.

So here is the question. How can anyone say that if only 25% of the ships last year were covered by armed security, that armed security is not successful? Get back to me when 100 percent of the ships have armed security, and then we can talk about effectiveness.

Also, how many armed guards on boats were the primary reason why any of those 237 ships attacked were not taken, and how many of these hijackings were prevented because of navies? Because if  we want to get technical, only 25% of the boats had armed security, yet the navies of the world with all of their might were involved as well, then who here is truly effective at preventing attacks? Whose cost is more justified?

Which brings us to the other article in my little collection below about the lack of good reportage by private security companies on the attacks they prevent. In order to prove effectiveness, then accurate figures on attacks prevented by private armed security on boats is crucial. Who knows how many actual attacks were prevented by armed security over the last couple of years? Are all the companies from all over the world reporting their actions, or are they not reporting because of fear of liability issues?

“Security teams are shaping this on-board decision-making for reasons of liability, because of the action they may have taken to defend ships against attack,” said Church, who works at a counter-piracy base in Northwood, England……
As many as half of all ships sailing through the region now use armed guards, the foundation said at the forum. That’s up from 25 per cent earlier this year, and companies providing security earn $530.6 million annually, it estimated. A total of 42,450 vessels pass through the region annually, it says.
Church cited a “disconnect” between the number of attacks expected last year, based on military intelligence assessments of pirates’ strength, and levels in 2009 and 2010. A “plausible argument” can be made that the increase in armed guards was the cause, he said.
Somali pirate attacks rose to 237 in 2011 from 219 in the previous year, according to figures from the London-based International Maritime Bureau. No legal framework exists to establish how armed guards should interact with pirates and what happens if any attackers are killed or injured, Pottengal Mukundan, the bureau’s director, said at the forum.”

So those are just a few thoughts on security costs and where we are at. I also like to bring this up to bring some balance to the discussion about cost effectiveness. Most of all though, these statistics and estimations add to the overall picture. If only 25 % of the ships transiting through the HRA had armed security in 2011 and we are now just at 50%, then we have a market with room to grow. –Matt

Security Equipment and Guards: A notable trend in 2011 was the rapid escalation in the use of private armed security. The total cost of both security equipment and armed guards in 2011 was between $1.06 and $1.16 billion.

One Earth Future Foundation Page 16
3. The Cost of Security Equipment and Guards
An increasing number of ship owners are seeking to protect their vessels against pirate attack when transiting the HRA with security equipment and/or private armed (or unarmed) security guards.
a) Security Equipment
According to the latest (fourth) version of Best Management Practices for Protection against Somalia Based Piracy (BMP4), a number of security measures should be taken by vessels to prevent and defend against a pirate attack. BMP4 describes these ship protection measures as “the most basic that are likely to be effective,” and ship owners are encouraged to conduct a full risk assessment prior to entering the high risk area. Suggested measures include (but are not limited to): Enhanced watch keeping/lookout/ and vigilance, maneuvering practice, enhanced protection of/and controlling access to the bridge, closed circuit television , upper deck lighting, razor wire, alarms, water spray and foam monitors, citadels/safe muster points.

THE ECONOMIC COST OF SOMALI PIRACY, 2011 The Direct Economic Cost of Piracy
Because BMP compliance rates are estimated to be at 80%, we estimated the cost of security measures per ship and multiplied by 33,960 unless otherwise indicated (given our estimation that 42,450 ships traverse the HRA each year). We also account for the fact that many forms of security equipment last more than one trip. We find the aggregate cost of security equipment and guards deployed on vessels in the region to be a substantial cost to the industry in 2011. Commercial vessels have employed everything from barbed wire fences around the ship’s perimeter to private armed guards. Further, as technology advances, the cost of security measures is expected to continue to rise.
b)Private Armed Security
In 2011, we saw a rapid escalation in the deployment of private armed security on commercial vessels as a deterrent mechanism against pirate attacks. Over the course of the year, a number of flag states permitted the use of armed security onboard ships. The use of armed guards was also endorsed by the International Maritime Organization (IMO), the International Transport Workers’ Federation (ITF), and some insurance companies.
Varying sources estimate that the additional costs of armed guards are anywhere between $30,000 and $100,000 per transit through the HRA. According to the Independent Maritime Security Association, the use of a private armed security team generally costs around $50,000 per transit. We have estimated that approximately 25% of vessels transiting the HRA employ armed guards. It is important to note that this figure of 25% is an estimation of the entire year of 2011. From discussions with leading shipping industry representatives, we understand that the proportion of vessels employing armed guards increased rapidly throughout 2011, and by the end of the year this figure was closer to 50% of vessels.
If there are approximately 42,450 transits through the HRA each year, then around 10,612 transits employ armed security. At an average cost of $50,000 per transit, the total costs of private armed security are estimated to be in the region of $530.6 million per year. In addition to the costs of security equipment and guards to the shipping industry, private security companies also incur multiple costs themselves. For instance, there exist accreditation standards for private security companies. The Security Association for the Maritime Industry (SAMI) is the main such accreditation body, and on average members pay $3,824 per year. Since the organization has approximately 76 members, the total costs of licensing accreditation is around $290,624 per year. Note that SAMI is not the sole licensing body for private maritime security companies, so this number is likely lower than in reality.

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Pirate attacks under-reported, forum told
European Union force says private guards protecting merchant ships are concealing details
February 9, 2012
Private armed guards placed on merchant vessels to protect them against Somali pirates are under-reporting attacks, according to the European Union naval force patroling in the Gulf of Aden and Indian Ocean.
Security teams are concealing details even though industry practice is to alert armed forces about any attacks or pirate sightings, Simon Church, EU Navfor’s industry liaison officer, said Wednesday at a piracy forum in London.
“Security teams are shaping this on-board decision-making for reasons of liability, because of the action they may have taken to defend ships against attack,” said Church, who works at a counter-piracy base in Northwood, England.
The number of armed guards stationed on ships travelling through the region jumped this year as pirate attacks soared to a record and countries including the U.K. changed laws to allow weapons on board. Somali pirates cost the shipping industry and governments as much as $6.9 billion last year, according to a One Earth Future Foundation report.
As many as half of all ships sailing through the region now use armed guards, the foundation said at the forum. That’s up from 25 per cent earlier this year, and companies providing security earn $530.6 million annually, it estimated. A total of 42,450 vessels pass through the region annually, it says.
Church cited a “disconnect” between the number of attacks expected last year, based on military intelligence assessments of pirates’ strength, and levels in 2009 and 2010. A “plausible argument” can be made that the increase in armed guards was the cause, he said.
Somali pirate attacks rose to 237 in 2011 from 219 in the previous year, according to figures from the London-based International Maritime Bureau. No legal framework exists to establish how armed guards should interact with pirates and what happens if any attackers are killed or injured, Pottengal Mukundan, the bureau’s director, said at the forum.
Military counter-piracy forces are reluctant to co-operate with private companies that provide armed guards, James Butler-Wright of Aegis Advisory said at the forum. The consultant helps companies assess and adjust exposure to risk.
“Private security is desperate to work with the military,” said Butler-Wright, a senior maritime analyst at Aegis. “We get shut down pretty quickly” when seeking information from navies, he said.
Story here.
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Economic Cost of Somali Piracy 2011 Report Launched

In 2011, Somali pirates attacked 237 ships and successfully hijacked 28. Piracy impacts multiple stakeholders, none more so than the seafarers attacked, held hostage, or killed. Oceans Beyond Piracy’s report on the “Economic Cost of Somali Piracy” estimates that piracy cost nearly $7 billion in 2011. The study assesses nine different cost factors, and finds that over 80% of the costs are borne by the shipping industry, while governments account for 20% of the expenditures associated with countering piracy attacks. This project was produced in collaboration with multiple maritime representatives from industry, government, and civil society.

Somali Piracy’s Impact on the Global Economy Nears $7 Billion in 2011 According to Oceans Beyond Piracy Report
COLORADO, USA ? February 8, 2012 ? Oceans Beyond Piracy released a report that raises concerns about the cost of Somali Piracy to the world economy. Approximately 80% of all costs are borne by the shipping industry, while governments account for 20% of the expenditures associated with countering piracy attacks. The report estimates the 2011 economic cost of piracy was between $6.6 and $6.9 billion.“The report assesses nine different direct cost factors specifically focused on the economic impact of Somali
piracy,” explained Anna Bowden, the report’s author, “Over the past year we have had substantial cooperation from maritime stakeholders which has helped to ensure the figures are as reliable as possible.”
The breakdown of the most notable costs includes $2.7 billion in fuel costs associated with increased speeds of vessels transiting through high risk areas, $1.3 billion for military operations, and $1.1 billion for security equipment and armed guards. Additionally, $635 million is attributed to insurance, $486 to $680 million is spent on re-routing vessels along the western coast of India, and $195 million is the estimated cost for increased labor costs and danger pay for seafarers. The vast majority (99%) of the billions spent are attached to recurring costs associated with the protection of vessels – costs which must be repeated each year. This figure is in sharp contrast to the $38 million spent for prosecution, imprisonment, and building regional and Somali capacity to fight piracy. Average ransoms increased 25% from approximately $4 million in 2010 to $5 million in 2011. Although the total cost for ransoms was $160 million for 2011, money collected by pirates represents a mere 2% of the total economic cost. While ransoms provide the incentive for Somali pirates to attack vessels and hold hostages, they represent a disproportionally small cost compared to the nearly $7 billion spent to thwart these attacks.
“The human cost of piracy cannot be defined in economic terms,” Bowden added. “We do note with great concern that there were a significant number of piracy-related deaths, hostages taken, and seafarers subject to traumatic armed attacks in 2011. This happened in spite of the success of armed guards and military action in the later part of the year.”
Officially launched at a press conference held at the Royal United Services Institute for Defence & Security Studies (RUSI) in Whitehall, London, the paper was presented to maritime experts and international press. The report will be used to raise important issues for the Oceans Beyond Piracy Working Group, which is expected to release recommendations for a better coordinated, and longer-looking strategy against piracy in July 2012. For more information about The Economic Cost of Somali Piracy 2011, contact Anna Bowden at
+1.303.709.5498 or by email at abowden@oneearthfuture.org. The publication of the report was made possible through the support of the One Earth Future Foundation, sponsor of the Oceans Beyond Piracy Project, which sponsors project initiatives in London and India.