Piracy Threat: the council's primary international concern
- Ahoy Members and Friends,Our Pacific Merchant Marine Council has multiple concerns. Number one among them on the international scene remain Piracy. Long ago we signed the Save our Seafarers Campaign pledge, http://www.saveourseafarers.com/support.html. The organization's website, http://www.saveourseafarers.com, is possibly the best single source of information on the subject.Reminding us of the scourge of piracy is the well written just published article in our Navy League's SeaPower magazine - October issue - by Associate Editor John C. Marcario.Save our Seafarers in a recent article indicates successful attacks are way down from last year. The number of incidents involving Somali pirates is 69 in the first half of 2012, compared with 163 in the same period last year, according to watchdog the International Maritime Bureau. You can read the article "Insurers face tougher times as Somali piracy drops" below.Yet us not forget there are pirates elsewhere wherever the opportunity exisits.We still have our copy of the DVD Porampo: Pirates of the Malacca Straits.If you have suggestions on what more we can do let me know. Should we co-sponsor a symposium on the subject in the San Francisco Bay Area?Heave Ho,PhelpsPhelps Hobart, PresidentPacific Merchant Marine CouncilNavy League of the United States
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Expert: Piracy Threat Not Going Away
By JOHN C. MARCARIO, Associate Editor
WASHINGTON - The threat of piracy off the coast of Somalia is unlikely to dwindle, said the head of Intelligence at Special Contingency Risks (SCR).
Piracy brings in an estimated $200 million per year to Somalias economy, which relies heavily on ransom money being reinvested in the war-torn state. Piracy is the second largest generator of income for Somalia, according to Tim Holt, head of SCR, which is part of the London-based Willis Group, a global insurance broker company.
As pirate financiers invest more and more in the success of their operations, lucrative opportunities for local business have vastly expanded. A $4 million ransom will be injected back into the local economy, benefiting a community that once lived in abject poverty, Holt said in a Sept. 19 release. There is little wonder why the practice has boomed when Somali per capita income is $600 and a minimum $10,000 is available for each perpetrator of a successful operation. With 90 percent of the worlds trade is transported by sea, the opportunities are vast.
To make a more significant dent in stopping piracy, Holt believes the Somali government would have to implement a strategy that does not solely rely on force.
Communities must be presented with the opportunity to earn a wage that offers them a similar quality of life to what they currently experience. It may initiate this by a sustained investment campaign into the countrys economic infrastructure to kick-start primary sector business, he said. Before this can happen, the new government needs to establish a reliable, transparent mechanism for aid disbursement, something that will not happen overnight.
Until a new government is able to ensure its internal stability, the coast of Somalia will remain dangerous to shippers, Holt said.
As of Aug. 30, there were 210 piracy attacks worldwide in 2012, with 70 of those incidents happening near Somalia. There are currently 11 vessels and 188 hostages being held by pirates, according to the London-based International Chamber of Commerce International Maritime Bureau.
Insurers face tougher times as Somali piracy drops
A dramatic fall in pirate attacks off the Somali coast is forcing down the cost of piracy insurance for commercial ships, taking the shine off a fast-growing and lucrative market for London-based insurers.
International navies have cracked down on pirates, including strikes on their coastal bases, and ship firms are increasingly using armed guards and defensive measures on vessels including barbed wire, scaring off Somali seaborne gangs.
That reduced the number of incidents involving Somali pirates to just 69 in the first half of 2012, compared with 163 in the same period last year, according to watchdog the International Maritime Bureau.
"The chance of pirates being able to carry out successful hijackings are now very slim, which is probably deterring many would-be pirates from going to sea," said Rory Lamrock, an intelligence analyst with security firm AKE.
War torn Somalia is next to the Gulf of Aden's busy shipping lanes, and poverty has in recent years tempted many young men to take up piracy, storming commercial vessels and holding their crews and cargo to ransom.
Last year, they netted $160 million, and cost the world economy some $7 billion, according to the American One Earth Future foundation.
The drop in Somali pirate activity is weighing on the market for so-called marine kidnap and ransom insurance, which has grown for scratch to be worth about $250 million in little more than five years, according to informal industry estimates.
Spending on marine K&R cover, which indemnifies shipowners against the cost of paying ransoms and recovering vessels and crew, has halved compared with two years ago, estimates Will Miller of Special Contingency Risks, a unit of insurance broker Willis (WSH.N).
"We are seeing a softening in the rates that underwriters are charging for piracy cover," Miller said.
"The key driver is the implementation of more robust security measures on board by the shipping community."
Brokers and insurers say a key factor in the downturn is the spread of on-board armed security, which has allowed shipowners to negotiate discounts of up to 50 percent on their premiums in recognition of the reduced risk of being hijacked.
Guards equipped with guns are seen as the best deterrent as no ship carrying them has ever been seized, although critics say they risk escalating conflict with heavily-armed pirates.
Governments including Britain last year dropped their opposition to armed maritime guards, triggering a big increase in their use. SCR's Miller says about two thirds of his clients now deploy armed security, compared with just 10 percent in 2010.
While the cost of piracy insurance is falling, the drop in the number of hijackings will reduce claims, helping to preserve insurers' profits.
That is encouraging a string of new entrants amid lackluster conditions elsewhere in the insurance market, ratcheting up competition and putting prices under further pressure.
"More people are competing for the same slice of cake," said Michael Sharp, an underwriter at Lloyd's of London insurer Beazley (BEZG.L).
"With so many people writing the same business, that's driving prices down."
Still, insurers are confident demand for piracy cover will remain buoyant, pointing to other trouble spots including the Gulf of Guinea on the other side of Africa and the Straits of Malacca in Asia.
"If Somali piracy goes away, sadly there seems to be a number of other hot spots around the world where protection is needed," said Sean Woolerson of insurance brokers Jardine Lloyd Thompson (JLT.L).
Many in the industry also warn that it would be premature for shipowners to let their guard down in the Gulf of Aden. Somali gangs have responded to the drop in successful hijackings by ratcheting up their ransom demands, and the inflationary spiral is expected to tempt retired pirates back into business.
"As far as the pirates are concerned, they are being paid more for less work," said J. Peter Pham, Africa director with U.S. think tank the Atlantic Council.
The average ransom payment this year is $6.5 million, up from between $5 million and $6 million in 2011, according to Peter Dobbs, head of asset protection at Lloyd's of London LOL.UL insurer Catlin (CGL.L).
"I don't think piracy has gone away," he said.
Day of the Seafarer 25 June 2012
Message by Koji Sekimizu, Secretary-General, International Maritime OrganizationJune 19, 2012http://www.imo.org/About/Events/dayoftheseafarer/Pages/Day-of-the-Seafarer-2012-Message-from-Secretary-General.aspx
"The 25th of June marks the annual Day of the Seafarer. It gives us the opportunity to focus once again on how important these unsung heroes are to all of us, in our everyday lives, and to reflect on just how much we rely on their services.Almost 90 per cent of world trade is transported by sea, in ships. Ships carry food, fuel, raw materials, commodities and goods on which we all depend. Seaborne trade facilitates the global economy and it is no exaggeration to say that almost everything we touch has, at some point in its existence, been transported by sea or derived from something that was transported by sea.Today we acknowledge the seafarers who operate the ships, bringing cargo safely to its destination, keeping to the schedules, day in and day out, regardless of the conditions they may have to face. Without seafarers, our lives cannot be sustained. Yet, to most of us, seafarers are virtually invisible.The life of a modern seafarer can be dangerous and lonely. They may spend up to a year away from home, separated from their family and loved ones and facing danger, isolation, loneliness and exploitation. Nevertheless, we rely on seafarers for almost everything we eat or use in our daily lives.On the Day of the Seafarer, let us pay tribute to the worlds 1.5 million seafarers for the unique and all-too-often overlooked contribution they make to the well-being of all of us. Let us take the opportunity to remember all those things that came by sea and which we could not live without. And, most importantly, let all of us make this the occasion on which we say Thank you, seafarers.As we thank todays seafarers, it is worthy of note that, to meet the growing demands of the world trade and the needs of the shipping and related industries, some 20,000 additional trained seafarers are required every year. To this end, in recognition of the vital role those seafarers will continue to play, I urge shipowners to meet their aspirations through providing comfortable accommodation, access to the internet and other facilities that we all take for granted ashore in the 21st century.At the same time, flag States and port States should promote their fair treatment and Training Providers and Educational Institutes should ensure that young persons are trained effectively so that they can perform well on board ships.My final message is to all young persons on the verge of choosing a future career to seriously consider seafaring, as even today it provides the chance to see the world and get paid for doing so! It also provides for a fulfilling and rewarding professional career either as a lifelong seafarer or as a springboard for related professional jobs in the maritime industries ashore."Koji Sekimizu,Secretary-General, International Maritime Organization (IMO)