Maritime Security in a Race to the Bottom

Written by Thomas Bennett, Protection Vessels International Limited

The number of companies offering armed protection for shipping transiting the Indian Ocean, depending on who you talk to, is between 120 and 320. Industry-wide regulation and enforcement is distant. Maritime security is a market with low barriers to entry and scant regulation.

The commercial shipping market is recessed. Price pressure at every pinch point in the supply chain is forcing all in the sector to preserve cash and compete at previously unseen economies. Poorly provisioned businesses will wither; all businesses, small to large, retract, reorganise and reduce costs.

Piracy attacks are down; piracy activity has reduced. The investment proposition to a Somali investor is very different when your $ investment in vessel hijack proffers scant return compared to the recent halcyon days. It is better to wait and sit it out. Somalia is unlikely to change, after all.

The mix of commercial imperative and hijack risk facing the commercial shipping sector is stark. With fewer pickings, the business of piracy extracts a higher price and incarcerated seafarers suffer to force the issue. For a shipping company to look at the commercial bottom line, equate that with the latest pirate activity report and risk the HRA without security is, on the face of it, negligent. Legal actions will invariably follow.

Then again, choosing armed guards is fraught. Glossy websites specifically designed to convey the impression of size and professionalism is the norm. So are horror stories. In the absence of clear and tough barriers to market entry, choice can be by repute, recommendation or price. When uninformed procurement departments get involved, guarding is seen as a commoditised service. Increasingly, price is the only differentiator in an uninformed world.

In this bidding war, the pressure on weaker service providers has led to the recommendation of ever-smaller teams guarding vessels that require four guards. Many security companies simply tell shippers what they want to hear - from three to two to one man teams; and from commercial rates to prices which mean guards get next to nothing (and sometimes go unpaid) resulting in poorly trained men working hours outside of normal legal safeguards guarding multi-million dollar maritime assets. It is a race to the bottom. And security becomes nothing of the sort, rather a tick in a box somewhere in middle management.

Guardcon recommends four guards. It does so for a reason. The strategic and tactical case for four guards is definitive. Under attack, with four men on guard, the Team Leader (TL) stays at the Master’s side. The Master is in charge. Whilst the Master retains command at all times the Team Leader advises the Master on control of the incident. If three guards only, if two, if one guard is used and a vessel comes under attack, the TL invariably must leave the Master’s side to defend the vessel. The Master must have the facility to order the guards to stop. This is easy if a TL is next to the Master, on a large crude carrier, the TL could be two hundred metres away. The Master may have lost control of the vessel.

Yet the Master bears responsibility for his vessel. Who would be a Master in such circumstances? The prospective burden of criminal and civil legal responsibility weighs heavily - all a derivation of commercial pressures resulting in a partially defended ship, prospectively defended by poorly trained men.

And who would be an insurer having to pick up a tab for totally avoidable claims had a suitably skilled, properly staffed team of armed guards been used? Using poorly trained and too few armed guards may vitiate the very insurances written on the assumption of a properly defended ship. Insurers should insist on a robust risk assessment of the defence requirements of every vessel they insure. Often, they do not. The truth is that some underwriters are writing insurances for one, two and three man teams when four guards are required. Insurance provides a veneer of respectability. The truth too, is that underwriters know almost nothing of what it takes to defend a vessel. This is more than risk and probability. At the current rate, crew and guards will be kidnapped, tortured and some will be killed.

This is the inevitable lesson of our unregulated space with commercial pressures on all sides. More is offered for less. Untrammelled commercial imperatives are driving an unsafe environment for seafarers and armed guards; and it is only a matter of time before a vessel, nominally guarded, is taken.

Whether one is the Master, Chief Security Officer or indeed, a Chief Executive, one bears legal and corporate responsibility for putting an unsafe vessel to sea. Reputation protection is one thing - the safety of men risking their lives to drive the wheels of commerce is another. In what sense, in this race to the bottom, are the lives of decent men worth the risk?

PVI uses four man teams and former Royal Marines only. Since 2009 PVI has conducted over 3100 armed transits of the High Risk Area in the Indian Ocean.

Thomas Bennett LLB MSc (Oxon) has been PVI’s General Counsel since April 2010. He is a solicitor and business consultant.