Editor's comment: is piracy making a comeback?

Editor's comment: is piracy making a comeback?

A hijacking at sea on March 13 has rekindled the threat of Somali piracy to the maritime sector. The hijacked ship, the Aris 13, is relatively small and unimportant – unless you were one of the eight Sri Lankan crew or one of their loved ones. It was quickly released on March 17, and reportedly without a ransom being paid – after shots were exchanged with local coastguards, followed by some negotiation between the pirates and local authorities. However, the ripples caused by the event have potentially much greater significance. The incident shows that conditions might still be present for piracy’s return, astride a vital shipping lane.

Somali criminality at sea has been successfully suppressed for five years, between the last successful hijacking for ransom of a commercial vessel in 2012 and the most recent incident, for three main reasons: widespread use of armed guards aboard vessels; shipping’s broad adherence to industry-developed Best Management Practices (BMP) while navigating the High Risk Area; and the effective policing of the waters of the Gulf of Aden and the Somali Basin by the world’s major navies.

Not that maritime kidnap and ransom (K&R) has ever gone away. On the other side of Africa, the Gulf of Guinea is still a hotbed of piracy. Elsewhere, parts of Southeast Asia remain plagued by the pirate phenomenon. It remains a threat in the vital trade artery of the Malacca Strait, and also in the Sulu Sea between the Borneo and the Philippines, where Islamist terrorist group Abu Sayyaf has been attracted to the K&R model.

Some particulars about the recently taken Aris 13: the Comoros-flagged Aris 13 is a small product tanker; its type is given more to bunkering other ships with fuel and with short-distance coastal trade than long-distance high-value routes; it is 27 years old – a relic, in shipping industry terms. In short, it is the kind of vessel which is barely worth its scrap value.

Some of the vessel’s details are interesting, however. It is what is colloquially known among maritime security professionals as “low, slow and sh*tty”. Indeed, Reactions understands it was travelling at just 6kts with a 1m freeboard (the distance from water to deck). No armed security was aboard, while its BMP factors were weak. Take into account its course steered so close to Somalia’s coast, and it looks like gambling or complacence.

The ship’s ownership and management are interesting but uncertain. It has been variously reported that the ship or its fuel cargo had UAE and/or Somali links. The fact that tribal elders and local Puntland coastguards negotiated with the occupying pirates to leave without a ransom for their hostages might have something to do with either the ship’s Somali owners exerting pressure via local elders or the particular diligence of the UAE-financed local coastguard. But circumstances might have been different. What if it had been a different ship; would a ransom have been demanded?

Many conditions are still there. Somalia is still poor and deficient in law and order. There is also much less naval protection than five years ago. The EU, Nato and the US have led the West’s naval policing efforts, but this presence, as well as those of other navies in the region, has been reduced by the costs of sustaining it, as well as a host of competing priorities, such as the Mediterranean migrant crisis, proxy wars in Yemen and Syria, and the Middle East’s struggle against Islamic State.

The shipping industry is also under severe financial strain. Marine insurers are all too aware of this when negotiating prices. Too many new hulls and too many old ones are still in service, creating too much supply; meanwhile demand is depressed by China’s economic deceleration, low oil and commodity prices, and a potential global slump in trade.

In that context, ships like the Aris 13 are unlikely to fork out for costs such as armed guards, BMP, higher speeds or extended routes around danger areas. Fewer ships carry armed security in the Indian Ocean’s (shrunken) high risk area these days. The quality of armed protection has also gone down in recent years, as cheaper guards are now understood to charge $15,000 for a transit rather than $60,000 paid previously for the best.

Ships are nowadays less likely to have the best possible insurance covers in place either, despite the industry’s willingness to drop prices. And at the top end of niche insurance buying sits the K&R market. K&R premium for the Indian Ocean is priced at a fraction of its former height. Finding out if a vessel has K&R cover is near-impossible for this secretive business line, but I would be very surprised if vessels as low, slow and subprime as the Aris 13 are buying such covers.

The risk for the maritime industry is that its fears about resurgent Somali piracy are mirrored by a gold-toothed glint among former pirates and their still-rich financial backers, at a period when the pressurised shipping sector is particularly vulnerable. Many criminal financiers had decided their dirty money was better employed in other illegal activities after 2012 – smuggling weapons, drugs or people – but if they sense that shifting tides have moved in piracy’s favour, they could come back.

In a separate note, I wish to offer my sympathies and best wishes to Alex McCallum’s family and friends. Alex was a pleasure to work with, and a valued contributor to Reactions, before he passed away in March.

Latest Issue

May 2018


In this month's Reactions

  • CIO Perspectives
  • Peter Röder interview
  • Dominic Addesso interview
  • Political risk report
  • Ivan Gonzalez interview
  • Digitisation in London
  • Michael Watson interview
  • Demian Smith interview



Follow Us on Twitter @reactionsnet

Catastrophe Centre

Catastrophe Centre