Maritime Security Must Be Seen as a Profit Culture, Not an Overhead
Highlights from the Lloyd's List roundtable: Future security threats for shipping
Lloyd’s List’s digital roundtable 'Future security threats for shipping' brought together some of the leading experts in maritime security to debate the threat of piracy both off the east and west coast of Africa.
However, it also looked beyond this to discuss how the maritime security industry must evolve to meet emerging threats such as cyber attacks. Here are the highlights from the most pressing areas that were discussed.
The panel:
PGI chief executive Barry Roche
BIMCO head of maritime security Giles Noakes
Ince & Co partner Stephen Askins
Marsh Global Marine Practice managing director Nick Roscoe
Chaired by Lloyd’s List senior reporter Liz McMahon
The situation in Indian Ocean and Gulf of Aden
Nick Roscoe: War premiums are down, as is K&R[kidnap and ransom]. A transit that would have cost $20,000 two years ago is now $2,000, which is a huge reduction. Cover for private maritime security companies has also reduced as they are now generally seen as a better risk.
Stephen Askins: There have been no hijackings of commercial vessels since April 2012. Is the Indian Ocean dangerous any more? Cases such as Triton Lark have helped to establish a court’s test of the likelihood of an attack. Legally, it may be possible to say that the Indian Ocean is not dangerous but that is different to saying there is no threat.
Giles Noakes: War premiums are still being charged and we need to think about why we are in this fortunate state [to see attacks in the region fall] in the first place and also remember that conditions on shore have not changed.
Barry Roche: It is a matter of when a vessel is taken, not if.
Askins: I used to wonder if pirates were motivated by lack of risk or reward but now it is pretty clear that it is lack of risk as the rewards have increased. It was a concern that the pirates would have a do-or-die attitude and fight the military to the bitter end but this hasn’t been the case.
Roscoe: If only 30%-40% of vessels in the area carry armed guards, the lack of success does seem strange
Noakes: We are hostages of our own fortune and we must remain in this position until the situation is resolved. It would be dangerously naive to let our guard down.
What about the risk of piracy in West Africa?
Roche: It was only possible for private maritime security companies to operate in the Indian Ocean when certain key changes were made. Until there is a viable way of operating [in West Africa], I cannot see a solution.
Noakes: The situation is complex, legally, as many incidents occur in territorial waters and therefore national law prevails. Littoral states are coming to terms with the fact that they have a problem but we need to see the reality of what they are saying proven by action.
How do you feel about P&I Clubs approving the use of local guards in West Africa?
Roscoe: A weak solution is better than no solution but the risk picture is quite ugly. Underwriters are taking different views on the matter some are pricing it on the same basis as east Africa, which I find quite baffling, while others drill down more, looking at key elements such as what arms the pirates are using. I believe around 80% of the attacks are in territorial waters so local law applies. [There’s] corruption and the unsatisfactory operating model of using local guards that have not been vetted. The team leader, probably western, will not be armed and we cannot be sure who will be liable if a local guard shoots someone he isn’t supposed to. Is it the navy’s problem, or will the PMSC have to look after him? It is very unclear and underwriters are concerned and looking at it quite carefully. They need to offer some sort of solution but it is far from ideal.
Roche: The commercial world moves more quickly than the political world to find a solution.
Looking at global threats, what are your views on the threat of cyber attacks?
Roche: The incident at the Port of
Roscoe: Insurers take this very seriously and are looking closely at Automatic Identification Systems, bills of lading fraud, e-charts and physical risks.
Noakes: Shipowners have a worrying and growing reliance on AIS and e-navigation and if this goes wrong it doesn’t only lead to chaos but to danger too. It is my task, over the next six months, to research cyber risks and report back to the BIMCO committee.
Askins: The threat is more criminal than anything else. Attacking a port in this way is not perhaps spectacular enough for terrorists but it appeals to criminals.
What role will PMSCs play in the future?
Roche: There is a common misconception that shipowners don’t want to employ PMSCs, but they do. We have a responsibility to evolve our offering and this must be customer-led. Shipping companies will decide what is right for them. We need to add efficiency while mitigating risk.
Askins: I worry that the industry is being overregulated. There is a huge accreditation system for east Africa that we ignore for West Africa. There are countries that are not following up on incidents where lethal force has been used. There has been a militarisation of security companies and this puts a huge burden on them. I don’t think it is healthy to be left with two or three huge security companies
Roche: All we want is a level playing field. If PMSCs choose to use mixed teams they should still have a comparable vetting process to us.
Noakes: You can never overregulate the use of weapons on merchant vessels.
What is your view on moves to develop an international standard?
Noakes: There was a point where we feared legislation from 160 separate flag states and this would have been impossible, as you can imagine. With ISO 28007 [the international standard from the International Organisation for Standards], we might get it wrong but we are working towards a standard of the highest order. This is the way forward and we should be insisting upon it.
Askins: Everyone has their own standard and it is a patchwork of inconsistency with states such as Germany still making national requirements. It feels like we are fudging it a bit.
Roche: We are solving it where the biggest problems lie; no company is forced to play in this arena. The bar shouldn’t be set too high for entry but a clear benchmark for quality must be established.
What are your thoughts as we conclude this discussion?
Roscoe: From an insurance angle, it’s important advice to say to shipowners you have proper insurance and not just a licence.
Askins: The level of knowledge in West Africa is much lower, as is the level of the crews being used.
Noakes: A more strategic approach to global maritime security [is needed]. It would be much better to review the [industry] culture and view it as a profit culture rather than an overhead. It’s all based on risk and it requires a change in mind-set that I think would benefit shipowners.
Roche: We must work as PMSCs collaboratively, with governments, to suppress piracy or we will see a return of piracy.