Woollerson would also like to see it involved in trying to remove the causes of Somali piracy through land-based initiatives.
“I see the CEP as a self-destructing company. Maybe in many years’ time we will no longer be needed and could donate the tonnage to a Somali coastguard,” he said.
This is a very interesting quote, and actually the entire article below is filled with some great stuff. Bravo to the author for getting the scoop and putting it out there for all to read. Here are my older posts with comments that first talked about this venture.
Now for my take on the whole thing. In order for this Convoy Escort Programme (CEP) to be a ‘self-destructing company’, it must take part in destroying their ‘Raison d’être’ –the pirates. Escorting ships does not alone create this kind of market mechanism. Especially if they only plan on capturing 27% of the merchant traffic going through the GoA, and allowing the pirates to feast on the other 73% of the merchant traffic. If anything the consequence, intended or unintended, will be a higher concentration of armed pirates attacking undefended vessels.
The other angle on this is that merchants and insurance companies will see how this works, and they too will fire up a similar business model. That other 73% of the merchant market might shrink pretty fast with a higher concentration of pirates coming down on them, and an increase of insurance backed protective services available to them at a decent price.
But this is where the quote up top really grabs me, and that is the land based initiatives of this CEP team. Could there be something going on here, like JLT taking a hint from what is going on with Saracen International and their proposed private militia? I bet JLT wouldn’t mind attracting some of that funding coming from this middle eastern mystery donor either.
Finally, there is the quote about a reputable flag state sponsoring these CEP vessels, and the concept of a government and military granting them ‘legitimacy’. That sounds like all the makings for a Letter of Marque or some kind of similar license to do what they are going to do. We will soon find out in the coming months exactly what kind of arrangement we have here. –Matt
‘Private Navy’ Is Close To Kick-Off
December 10, 2010
An insurance broker’s plan to create a “private navy” to combat Somali piracy is close to being launched.
Shipowners could be asked to back the project as early as late January or February with private military-escort vessels sailing alongside merchant ships by mid-2011.
A reputable flag state prepared to register the 18 patrol boats has been lined up, shipowner support is being canvassed and preparations made to secure funding for the vessels and crew.
Sean Woollerson of the Jardine Lloyd Thompson (JLT) insurance-broking group says there are still issues to overcome but the key task of securing government and military support to give the project “legitimacy” is almost there.
The venture, now branded as the Convoy Escort Programme (CEP), estimates it needs only £15m ($23.5m) to buy secondhand vessels suitable for use as patrol boats and the rest of the infrastructure.
Greek salvage entrepreneur George Tsavliris is already seeking support from fellow shipowners and Bimco has indicated a willingness to help facilitate the project.
Woollerson estimates that if the CEP attracts 27% of the merchant traffic transiting the Gulf of Aden — up to 32 vessels on any one day — the service will cost shipowners no more than their present outlay on physical security and additional war-risks insurance premiums.
The concept is that shipowners will buy the armed-escort service packaged with seven days of war-risks cover from Ascot Underwriting’s Lloyd’s syndicate 1414, backed by Chartis, the insurer created from the rebranding of American International Group. They will therefore not need to pay the normal additional premium required to transit pirate-infested waters.
“We have a unique framework. The concept is that shipowners will not be paying any more than at the moment and maybe a lot less. But they will be afforded proper protection and the presence of the escorts will be a great morale booster for the seafarers,” said Woollerson.
The patrol boats will have a flat decked area suitable for launching rigid inflatable boats (RIBs) but will not have fixed machine-gun positions or other armaments so a wide range of working craft are suitable.
But the 150-strong security team that the CEP plans to deploy will be heavily armed to deter or take on pirates attempting to hijack a merchant ship.
“We are moving in the right direction and securing the legitimacy we see as essential. We will be an independent company with shipping-industry representation and harnessing the critical mass of the industry,” added Woollerson.
“We have taken on board everyone’s concerns. Once we have ticked all the boxes, we will go to the shipping industry to say this is what we have designed and to seek support.
Woollerson says there are potentially funds available from the European Union (EU) and United Nations (UN) as well as national governments and such public funding would be his preference.
But private-industry funding or a mix of public and private is also possible.
Although the CEP has been promoted by hull broker Woollerson, a JLT partner, the concept is that it will be available to other brokers and shipowners.
Woollerson would also like to see it involved in trying to remove the causes of Somali piracy through land-based initiatives.
“I see the CEP as a self-destructing company. Maybe in many years’ time we will no longer be needed and could donate the tonnage to a Somali coastguard,” he said.
Story here.