Feral Jundi

Wednesday, April 7, 2010

Kidnap And Ransom: Piracy Premiums Take A Breather But Menace Remains

   This is a first.  I want to thank the insurance company Maritime and Underwater Security Consultants who sent me this excellent article, and here is a link to their website.  Their intent was to promote that their company has the most extensive insurance plans for kidnap and ransom, and that other companies fall short in their coverage.  If you are a shipping company owner or yacht owner and you are reading this right now, feel free to check these guys out–but still, buyer beware. This is not an FJ endorsement, but I will definitely provide a link for your research.

   The real story here though, is that with all of this competition between insurance companies in providing K and R insurance driving down cost, as well as the increase in protective measures on the boats, premiums are dropping.  Now of course Reuters and the authors won’t say it, but I think armed security contractors on the boats are what really give them a better rating. That, and all these navies floating around and hunting pirates have got to help as well. But what happens when these navies burn out, and their governments call them back because of the cost?

   For one, if you read further down the report, there is already some buzz in the industry about starting up a private navy to help supplement today’s naval operations.  I personally think this is a move to provide a back up plan, if a navy or two decides to bow out. Piracy is not going away anytime soon, and I wonder how long countries can keep up their deployments–both politically, and economically.

   I also took interest in this Automated Voyage Risk Assessment system, designed to analyze a boat’s protective capabilities in dangerous waters.  AVRA I hope is a complete assessment system, that includes lethal and non-lethal factors in protecting a boat. If this is one of those mechanisms developed by the Juicebox Commandoes I keep talking about, who continue to promote non-lethal as the only suitable protection for ships, then I have no respect for AVRA. –Matt

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Piracy premiums take a breather but menace remains

Thu Apr 1, 2010

By Myles Neligan and Lorraine Turner

LONDON (Reuters) – Stiff competition and moves by owners to protect ships better has taken the edge out of insurance costs after pirate attacks off Africa’s east coast created a two-year boom for specialist cover.

But analysts say the menace of piracy is far from contained, and unchecked growth in the rest of Africa, possible attacks in other key shipping channels and higher ransom demands will keep insurers interested in the long term.

While official estimates are not available, brokers reckon sales of so-called marine kidnap and ransom (K&R) insurance have soared to about $100 million (66 million pounds) a year since 2008, when the product was first developed in response to an upsurge of vessel seizures and ransom demands by Somali gangs.

But the cover now costs less than it did two years ago, reflecting mounting competitive pressure as more insurers enter the fast-growing market.

The marine K&R market is currently dominated by six players, led by Bermuda-based Hiscox (HSX.L) and Travelers (TRV.N) of the U.S., up from just three when the product first became available, and more are expected to join.

“There’s an increase in supply and the price is going down,” said Sean Woollerson of insurance broker Jardine Lloyd Thompson (JLT.L).

(more…)

Tuesday, March 30, 2010

Maritime Security: Combating Piracy 2010, Hamburg

    It would be great to attend an event like this, just to meet some of the players and get a feel for where the industry is going.  I would especially like to sit in on the lethal versus non-lethal discussion, and hear the various arguments.  My guess is that you will have the same dorks promoting the same non-lethal drivel when it comes to dealing with the kind of piracy we are seeing these days.  But you never know.  There might be a few courageous souls in this conference who are willing to tell it like it is.

   I really like the lessons learned aspect of a conference like this, and I really think that will pay big dividends. If any readers are able to attend and give a quick report about how it went, feel free to do so in the comments section. Follow the links below if you want to register for this thing. –Matt

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Combating Piracy 2010

Date 26 Apr 2010 – 28 Apr 2010

Location Hamburg, Germany

Venue Crowne Plaza Hamburg

Organisation Hanson Wade

Type event Conference, Workshop

Category Defence / Security

“There is a great business out here. You go with friends, you seize a ship and weeks later you come back with big money,” said the 23-year-old, who gave his name only as Gure. “We prefer to do this piracy thing until change comes to this country.”

As each hijacked vessel is released, the ransoms are dramatically rising with a reported payment of over $7million in January 2010.

But what’s most concerning is that as more money is paid the more sophisticated the pirate groups are getting. They’re investing ransom money in equipment and each hijacking leads to an increase in pirate intelligence. They’re learning vulnerable pressure points so each time they can secure the highest possible ransoms are paid. And as the military perfect their act, so do the pirates, who venture hundreds of miles into the Indian Ocean, where naval forces are stretched too thinly to create an effective net.

(more…)

Tuesday, March 23, 2010

Maritime Security: The Evolution Of The Somali Piracy Business Model

     “The Piracy Business Model” describes a system that guarantees every participating pirate a defined share of the ransom money. It is sophisticated enough that it includes “A” shares and “B” shares similar to preferred and common shares in legitimate publicly traded companies around the globe. Just like with preferred stock, there is a premium for entering the game. Piracy “A” shares are earned by bringing weapons and being the first pirate to board a ship during attack. The lower-level militiamen that fill the roster each earn a “B” share. Once a ship is hijacked and brought to port, it’s time to balance the books by paying suppliers, investors, local elders for anchoring rights, and “B” shareholders. The remaining funds are split among the “A” shares and distributed accordingly to the “A” shareholders. 

*****

   I have to tell you that I find this evolution of piracy or ‘privateering’ in Somalia to be fascinating. What is interesting to watch is that the Somalis are applying modern day business practices and finance to the concept.  If you would like to study a similar model, just check out early America with our privateers during the Revolutionary War and War of 1812.

   So let’s go over a couple of the points in these two articles I posted, that caught my eye.  The first is Fourth Generation Somali Piracy.  The idea being, is that pirates would hijack ships, use key valuable personnel as human shields, and then convert that boat into a operations platform or ‘mother ship’.  Makes sense, and I could see them doing that.

   The idea being is that sailing that hijacked ship all the way back to their failed state’s harbor is time consuming and inefficient.  You could stay out at sea, live more comfortably on a newer hijacked vessel, and continue to expand your piracy operations in places where navies are not operating at. I will keep my eyes open for any proof of this happening.

   These pirates are smart, and they will find a way to get to waters in which the EU, NATO and the US is unable to reach.  They will also go after weak and unsuspecting vessels, which means going to places where piracy really isn’t a big thing of that region.

     Armed security details on boats will really be the only counter to this, because today’s navies are just not able to cover the kind of territory we are talking about.  Plus the cost for today’s naval activities is astronomical.  Billions of dollars are being spent every year to go after pirates in small boats armed with AK’s. The pirates are the small and many–western navies are the few and large. ( a reference to the ‘new rules of war‘)

     The other article is just a touch up on the politics of piracy.  Now that these guys are making the fat cash, they are able to sling dollars to politicians so that they can protect their business.  Pretty standard for organized crime or any venture that wants to expand their horizons and add stability to their operation.  And with the stock market approach, politicians and jihadists can all invest in these pirate ventures.  The quote up top indicates that their little stock market concept is evolving and dare I say, the pirates are applying Kaizen to their set up? lol

   Now to finish up on my solution to this thing.  We are now in a prime opportunity to once again apply the concepts of yesteryear to today’s piracy.  We should be encouraging the shipping industry to outfit their boats with competent security teams, complete with sufficient firepower to deal with all potential threats.  We should also have a legal system in place that can effectively deal with and integrate with this private security apparatus. And with the advent of pirates being captured, having an effective international courts system that these thugs worry about and fear, would be highly advantageous. And of course, the world’s navies should continue to hunt and destroy/capture these folks, and work with the security teams of boats, in order to effectively deal with this scourge.

    I would mention using the Letter of Marque as another tool to combat piracy, but I doubt today’s modern navies would appreciate that kind of thing.  Maybe when countries are financially drained from their anti-piracy ventures, will they consider such tools. Until then, anti-piracy will give these large lumbering navies something to do.  They have to justify their budgets and existence somehow, right? lol But my point with the LoM, is that creating a free market kill/capture mechanism to go after these guys, is one of the only ways to really keep up with this ever evolving piracy business model, and especially in the commons of the open sea. –Matt

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Somali Piracy Tactics Evolve; Threats Could Expand Globally

April 2010

By Michael G. Frodl

Underwriters and shippers are as concerned about what the United States and other powers won’t do against Somali pirates, as they are about what the pirates will do against ships they insure, own and operate.

While the Gulf of Aden is a relatively safe passage for the deployment of warships through a narrow corridor in a vast gulf, some Somali pirates have retaken the initiative in the waters of the Indian Ocean off East Africa.

Continuing to treat Somali pirates as a homogenous, if not a monolithic threat, is not working.

The current approach is showing diminishing returns on investments in anti-piracy. The deployment of modern warships costs easily more than a billion dollars a year, if not more, to sustain. Risks to shipping and the costs of underwriting continue to rise in the ocean where 60 percent of global commerce transits.

Meanwhile, the return on investment in piracy, which basically involves arming and supplying a handful of men and sending them out on a mother ship and two skiffs, only continues to rise.

(more…)

Friday, March 5, 2010

Maritime Security: Somali Pirates And Armed Security Personnel In 4 Shootouts, Pirate Season Begins

     So according to this article, and the history of modern piracy in the GoA, this is the pirate season.  A perfect combination of weather and sea conditions are allowing pirates to do their deed.  And guess what?  Naval forces, as well as vessels that have armed security, are ready for them and giving the pirates a run for their money.

     From the looks of it, folks have been busy out there.  The one story to clue in on, is the results of putting armed security on Spanish tuna boats.  This was endorsed by Spain’s government, and it looks to me like this is working out for them. The pirates attacked their boats, and armed security repelled the attacks and called for backup.  Perfect.

     As for the Juicebox Commandos who continue to promote this idea that putting armed security on boats will cause an ‘arms race’ or is just ‘too risky’, is just dumb. It also shows a lack of compassion for the crews of these boats. The right to self defense is a basic human right that no one should be denied, and especially on the high seas.

     What is causing the arms race in my opinion, is the ship owners and insurance companies that keep paying these multi-million dollar ransoms to pirates, and in turn, the pirates are able to buy better and more lethal weapons and equipment for piracy ventures.  Until piracy becomes a high risk and low odds venture for them, they will continue to attack.

     Now that more and more boats are getting armed security and the navies of the world are finally getting aggressive, these pirates are starting to learn the hard way that their business venture is becoming increasingly more dangerous.  I think that is great news, and bravo to all the security forces out there that are dishing it back to these booger eaters. Bravo to the ship owners who care enough to put armed security on the boats. That is called ‘taking care of your people’, and that is the way it should be out there. –Matt

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Somali pirates, security personnel in 4 shootouts

By KATHARINE HOURELD

3/5/2010

NAIROBI, Kenya — Swarms of Somali pirates are moving into the waters off East Africa, triggering four shootouts Friday including a skirmish with French military personnel that sunk a pirate skiff, officials said.

The end of the monsoon season and the resulting calmer waters signal the beginning of the most dangerous period for ships traveling the Gulf of Aden and Indian Ocean. Nearly half the 47 ships hijacked off Somalia last year were taken in March and April.

Cmdr. John Harbour of the European Union Naval Force said a spike in attacks was very likely in coming weeks. But this season, ship owners and sailors are more prepared to try to evade pirates, fight back, or have armed security onboard, raising the likelihood of violence.

“We know the monsoon is over. We know they’re coming,” Harbour said. “We’re taking the fight to the pirates.”

In the most serious skirmish Friday, six pirates attacked a vessel before breaking off and chasing the French fishing boat Torre Giulia, Harbour said. Two other French fishing vessels nearby — the Jalenduic and the Trevignon — aided the Torre Giula.

A French military detachment onboard the Trevignon fired warning shots at the pirates, but failed to stop the attack. The Trevignon approached the skiff and collided with it, said Harbour, sinking the skiff and throwing the pirates into the water. Four were rescued and a military aircraft was searching for the other two, he said.

(more…)

Monday, February 15, 2010

Maritime Security: Defending Ships From Pirates ‘Slightly Smacks Of Vigilantism’, What?

     Small, fast boats with a handful of armed mariners are an “emerging way to handle the [piracy] problem in a safe way,” said Jim Jorrie, CEO of Espada Logistics and Security-MENA, a San Antonio-based company offering such services.

     But shipping industry experts frown on the practice.

     “It slightly smacks of vigilantism to me,” said Tony Mason, secretary general of the International Chamber of Shipping and International Shipping Federation. 

*****

   Yet again, who the hell does this Tony Mason dude think he is? This kind of leadership and commentary, is exactly what has made the piracy problem flourish in the first place. Where is the mention of the right to self defense?  Or does Tony not care about this basic human right on the high seas? This attitude just kills me, and it is guys like this that keep promoting it.

   If a company wants to protect it’s boat and people from armed pirates, then they should have every right in the world to do so.  If they want to put armed guys on a boat, or hire out the Yemeni Coast Guard to protect their goods and people, then so be it.

   And where does Mason get off on calling this Vigilantism?  What a terrible choice of words, and it is this attitude that got the shipping industry into the trouble it is in today.  You have pirates who are applying a business model that works, and is only empowering them to do more, and you have a shipping industry that would much rather roll the dice with pirates, or just pay the ransom.  It is this attitude of ‘non-action’, which is allowing this vile practice of piracy to flourish. Pffft. I call arming the boats self-defense, and certainly the right of all companies that care about the lives of their people.

   The other point that I wanted to mention, is the Yemeni Coast Guard and the Tanzanian Navy both being hired by shipping corporations, is pretty wild.  Talk about pre-Westphalia. lol –Matt

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Hired guns secure ships, stir controversy

By Sandra Jontz, Stars and StripesEuropean edition, Monday, February 15, 2010

NAPLES, Italy — As the world struggles to stop piracy in the waters off the coast of Africa and the Middle East, several companies have stepped forward to provide armed escort boats for commercial ships.

Small, fast boats with a handful of armed mariners are an “emerging way to handle the [piracy] problem in a safe way,” said Jim Jorrie, CEO of Espada Logistics and Security-MENA, a San Antonio-based company offering such services.

But shipping industry experts frown on the practice.

“It slightly smacks of vigilantism to me,” said Tony Mason, secretary general of the International Chamber of Shipping and International Shipping Federation.

(more…)

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