Friday, 26 December 2008

Industry Snapshots

UN empowers land operations against Somali pirates. The United Nations Security Council has unanimously passed a resolution authorising international land action against Somali pirates. Secretary of State Condoleeza Rice, who said that there was need to send a “strong signal to combat the scourge of piracy and end the impunity of Somali pirates”, hailed the US initiated plan. Resolution 1851 authorises states to "take all necessary measures that are appropriate in Somalia against acts of piracy and armed robbery at sea.” Concern about the pirates expanding their operations southward are said to have promoted this move. The US has also proposed the setting up of a contact group on Somali piracy. Meanwhile, the Pentagon has warned of problems with military operations inside Somalia; analysts feel that the US will think twice before it risks a repeat of the famous ‘Black Hawk Down’ incident of 1993 in which 18 American soldiers lost their lives. Ms. Rice told the UN session that it was “time to authorize a UN peacekeeping operation" in Somalia. This is the first UN resolution authorising use of force on land in Somalia in response to piracy.

Entire Indian coastline to the covered by Radar and additional Coast Guard stations in the aftermath of the Mumbai terror attack. The Central Government has cleared up to nine additional Cost Guard stations, radar installations and speedboats in an attempt to shore the country’s maritime security. Defence Minister Antony has also stressed the need for better coordination between the intelligence agencies, the Indian Navy and the Coast Guard. Intelligence sources say that the government seems to have realised the urgency needed to take these measures on a war footing. It has been pointed out that Indian nuclear installations are situated along the coastline, and a terrorist strike there would be catastrophic. Indian Navy hands over 12 Somali pirates and 12 Yemeni fishermen to the Yemeni Coastguard at Aden. Analysts are relieved that the initial reports saying that the Yemeni’s were pirates have now turned out to be false. It turns out now that the fishermen’s’ boats had been attacked by pirates and they were held hostage while their boats were being used to hit merchant ships. The government in Sana’a had officially requested India to hand over the pirates to Yemen so that action could be taken against them. The legal issues in connection with captured suspected pirates are murky, and coalition navies have been grappling with ways to deal with these. Yemen claims it has the right to try Somali pirates because their arrest took place inside Yemeni waters.

Cosco hit by $577 million derivative loss. The Chinese company is said to have been hit hard by mistimed freight forward agreement calls. FFA agreements made as hedging tools have been widely used in the industry, although many operators indulged in heavy speculation amidst soaring freight indices in last year’s boom. The sudden and vicious fall in freight markets in the last six months caught many wrong footed. Cosco said that losses of up to 5.38 billion Yuan on freight forward agreements were partly offset by gains of 1.43 billion Yuan on discharged agreements. To add to its woes, the logistics and shipping company’s container arm has been hit hard by falling demand. Others like Air China Ltd. and Citic Pacific Ltd. have also suffered huge losses on derivatives; ironic, when one considers that FFA agreements were actually meant to guard against volatility.

Indian shipping companies ask government for a bailout, reports Livemint, saying that the Indian maritime industry has asked Prime Minister Manmohan Singh, who is also in charge of the finance ministry, for a slew of sops for the beleaguered industry, including easy credit, export incentives and lower taxes. “We are seeking a stimulus package from the government to maintain the current share of Indian vessels carrying international cargo of around 12/15%,” Livemint quotes Atul Agarwal of Mercator Lines as saying. INSA has reportedly sent a letter to Mr. Singh underlining the need for the government to take speedy action. The move comes as the industry struggles with funding for its expansion plans and replacement requirements to modernise its aging fleet. Indian ship owners have also demanded lower taxes in line with international norms to help them compete against foreign shipowners. Meanwhile, financial newspapers report that Indian shipping companies have put their expansion plans on hold. SS Kulkarni, secretary of INSA has admitted that there is a possibility of cancellation of orders unless the situation improves. At least SCI and Great Eastern have denied these reports, saying that they have no such plans at present. Indian firms have placed orders for 1.3 Billion dollars in the last two years; observers say that unless commodity prices improve, absorbing this additional capacity will be very difficult.

First cargo ship runs (only partly) on solar energy. Japanese Nippon Yusen KK and Nippon Oil Corporation have launched a merchant vessel that runs partly on power from the sun. The solar panels on board, reported to cost almost 1.7 million dollars, provide just 0.2 percent of the propulsion energy required. Engineers say that this is an excellent start for an industry that is responsible for up to 3 percent of greenhouse gas emissions globally. The move comes as the IMO plans to reduce sulphur emissions in a phased manner by 2025, and as States in the US, notably California, tighten up further on the use of bunkers in port and along the coast. A renewable source of energy would be a path breaking alternative.


Wednesday, 24 December 2008

Managing Climate Change.

Mumbai, 19 December: The United Kingdom’s apex representative body for commercial shipping, the Chamber of Shipping, announced this week that it is recommending a global and open emissions trading regime in response to the threat of climate change. Martin Watson, President of the Chamber, said, “This is a bold and far reaching decision that gives a lead to the rest of the shipping world. We recognise that shipping, which carries 80 per cent of all world trade goods, and 90 per cent of the UK’s trade, must make a significant contribution to the battle to reduce mankind’s carbon emissions.

Commercial shipping remains a global industry that has been, so far, one of the few to remain outside the purview of any country’s carbon emission reduction legislation. This is because the complex web of global operations, ownership and registry makes it unclear where exactly the emissions should be allocated. The Chamber of Shipping recognises this and sees a global regime as the best way forward; it also feels that an international law will stop ships being moved between legal jurisdictions to avoid carbon regulation.

Shipping is the most ecologically friendly way of transporting goods and therefore needs to be encouraged. Mr. Watson quoted in a media release, says, “The carbon cost of carrying a ton of freight by ship is 10 times less than by road, and 100 times less than by air. Shipping is by far the most carbon friendly transport mode. However, because so much freight is carried by sea, shipping does produce nearly three per cent of total emissions. We need to take whatever action is needed to try to limit those emissions, but without accidentally causing freight to be shifted from ships to other, less carbon friendly forms of transport. That would be catastrophic in terms of total emissions.”

Substantial improvements with new technologies have been made by the industry. Economies of scale and applied research have resulted in huge improvements; a container ship today emits about 25% of the carbon dioxide that a box ship did in the 1970’s, while it carries ten times the number of containers. In fact, the maritime industry has been far ahead in promoting carbon efficiency compared to others.

The Chamber’s thinking is in line with IMO moves to create a ‘ship design index’ that will encourage technical innovation for new ships as well as the UK Government’s ‘Climate Change Act’ adopted last month. The Chamber believes, that “shipping can most effectively contribute through emissions trading. This will enable ship operators to decide whether to invest in emissions reducing technology/research or operating practice and thereby qualify for carbon credits. Alternatively, ship operators can decide to support significant improvements in efficiency in high polluting industries, particularly those in the developing world.”

Mr Watson said, “Although an emissions trading scheme for the shipping industry remains a concept rather than a defined path, we believe that the industry, if it wishes to remain in control of its own destiny, must decide upon a direction of travel and strive to deliver it. I believe that if we can provide leadership and make a coherent and compelling case then other national associations will follow.”

Environmental groups have welcomed the Chamber’s bold move. Peter Lockley, Head of Transport Policy at WWF UK said that he was pleased at the initiatives. “If designed well, the scheme would put a price on maritime carbon emissions, speeding up the drive for cleaner ships and helping to pay for low carbon development in poorer countries. It would position shipping as a progressive and responsible industry”, he said.

Saturday, 20 December 2008

Industry snapshots

Indian warship INS Mysore captures 23 pirates in Gulf of Aden. In the largest such capture, 12 Somali and 11 Yemeni pirates and a large cache of arms, ammunition and equipment was seized. These included seven AK-47s, three assault rifles and magazines, a RPG launcher with rockets, grenades, a GPS set and a mobile phone. The skirmish occurred on 13 December when an Ethiopian ship ‘Gibe’ was attacked and sent out a distress message. A Chetak helicopter with marine commandos was launched from the warship which then intercepted the hijackers as they were planning to board the Gibe. The pirates abandoned their attack on seeing the helicopter and boarded their mother ship, the dhow “Salahaddin’ in the vicinity. The Mysore forced the dhow to stop, boarded her and arrested all the pirates. The Mysore, a replacement for the frigate ‘Tabar’ which was in action last month, will resume its patrolling duties after handing over the criminals to appropriate shore authorities.

The United States seeks support at the UN Security Council to attack pirate bases on land. U.S. envoy Alejandro Wolff, said, "We will leave no stone unturned in dealing with this issue." Any military action on land would be undertaken with the agreement of the Somali government, he said. A U.S. draft resolution calls for "all necessary measures ashore in Somalia," including air attacks, to tackle piracy. It also calls for the maritime community to resist paying ransoms for hijacked ships. Some observers say that the UNSC needs to do more to bring stability to Somalia, a country which has had no government since 1991. The Nigerian ambassador to the UN feels that, "It is because we are not engaged on the ground that we see so much threat on the seas."

Maersk warns shipping industry of tougher times ahead. A senior manager at Maersk warns that 2009 will be critical for the company; the Danish giant has reportedly laid up eight 6500 TEU box ships recently in the Far East for an unspecified time. Michel Deleuran, head of network and product at Maersk, said: “We are certainly seeing a dramatic slowdown. The decline we are seeing in recent weeks is faster and deeper than what most people had expected only a few months ago. If we don't see improvements, we will be laying up more. The failure of a big shipping group cannot be ruled out. ” Rates on the Far Eastern/US routes have been slashed by up to 25% recently, strangling profits and cash flows across the trade, which has dropped 12% in November. Chinese ports and Hong Kong are reporting reduced volumes; rumours are rife in the market that container manufacturers have stopped production as a result. Lloyd’s list says that the box ship market is particularly vulnerable as it was anticipating a capacity expansion of 50 per cent over the next three to four years. At present, over a hundred container ships are reported to be without cargoes.

World Bank says global trade will shrink for the first time since 1982, a statement which will send shudders down the spine of maritime operators as they recall the 1980’s depression. The slowdown, a result of shrinking demand and fall in economic activity will include developing economies. The apex bank says, in its annual report ‘Global Economic Prospects’, that the credit crunch is adding to trade bottlenecks, and that a slowdown of demand in developed economies is continuing to stymie foreign investment worldwide. Meanwhile, the proportion of India's exports going to the US fell from 17.1 per cent in 2004 to 15.3 per cent in 2007 but the proportion going to China rose from 5.5 per cent to 8.4 per cent, making analysts optimistic that Asia may take up some of the slack.

Hapag Lloyd cruise ship ‘Colombus’ evacuates passengers to avoid risk of piracy. Almost 250 passengers will disembark at Hodeidah, Yemen and rejoin the Colombus at Salalah, Oman, after spending a few days in five star comfort in Dubai as the cruise ship transits through the pirate infested Gulf of Aden with minimum crew. The company called it a "precautionary measure", but observers point out that the recent attack on the Nautica has made operators jittery. A cruise ship hijack with headlines splashed across the world’s newspapers would kill business. In addition, the German foreign ministry has issued a travel warning for the area. A mariner noted wryly, “I wish ship owners would give us sailors the same option.”

Amidst the gloom and doom, some good news: tankers may do better, according to industry experts. New York brokers Poten & Partners have pointed out that tanker rates have stood up ‘reasonably well’, even as dry bulk rates have collapsed. Experts believe that most new build tankers are ordered at premier yards which should withstand the downturn better. Poten feels that although newer yards may be hit, the situation may be well controllable. “More importantly, market sentiment has given little indication that ship owners are itching to walk away from commitments.” Poten told Seatrade Asia.

Ralph's missing breasts found. Marex had earlier reported of the devastating loss of more than 100,000 pairs of missing inflatable breasts shipped to an Australian magazine, Ralph. The breasts were intended to be given away with the men’s magazine’s January edition. It now transpires, a week later, that Chinese officials had lost the documentation on the breasts, which were then loaded on the wrong ship and landed up at the wrong port: Melbourne instead of Sydney. Editor Santi Pintado was relieved that the breasts had been found, but complained that the mix up had cost Ralph $30,000. "You'd think the Chinese economy was in enough trouble without misplacing 130,000 pairs of boobs,” he said.

Saturday, 13 December 2008

S. Korean jail terms for ‘Hebei Spirit’s’ Captain Chawla and Chief Officer Chetan

“Incomprehensibly vindictive”, says ITF

Mumbai 11 December: The international shipping community reacted with rage, disgust and dismay after a South Korean court jailed Capt. Jasprit Chawla and Chief Officer Syam Chetan of the ill fated Hebei Spirit on Wednesday. The two officers of the tanker involved in an oil spill in South Korea in December 2007 were convicted of criminal negligence and violating anti pollution laws by the Daejeon District Court, which overturned a lower court’s ‘not guilty’ ruling.

The court jailed Capt Chawla for 18 months and fined him Won20million (US$ 14000) after finding him guilty on two charges related to the oil spill. The court said Capt Chawla should have gone ‘full astern’ to drag anchor to prevent the collision with the drifting crane barge Samsung No 1 that had earlier broken its tow.

Mr. Chetan was sentenced to eight months in prison and fined Won10m (US$ 7000). The court said that Mr. Chetan should have been more vigilant and called the master by 0550 hours. They also criticised Chetan for pumping inert gas into the cargo tanks and taking too long to transfer oil. The owner of the tanker, Hebei Spirit Shipping Co., was fined 30 million won (US$21000), the maximum allowed under South Korea's pollution laws.

The court said that the ship failed to take sufficient measures to limit the spill. The use of inert gas was also criticised, the court saying that this had increased the spillage of oil when the explosive risk was low. In addition, the ruling stated that the crew of the tanker should have ballasted to create a ten degree list to decrease the oil spill, and that the time taken to transfer the oil was ‘too long’.
Reacting angrily to the verdict, ITF maritime coordinator Mr. Stephen Cotton went on record to say, “This is not justice. It’s not even something close. What we have seen today is scapegoating, criminalisation and a refusal to consider the wider body of evidence that calls into question the propriety of the court. This decision is incomprehensibly vindictive and will impact on all professional mariners”.

Speaking to Lloyds List, NUSI general secretary Abdulgani Serang angrily said, “We are furious. We condemn this decision. It is unfair and unjust. There is a strong possibility Indian seafarers will not sail on ships to South Korea. The seafaring and shipping communities are deeply disturbed. Reactions are bound to follow.”

Office bearers of NUSI, FOSMA, INSA, MASSA and MUI are expected to attend a meeting on the weekend to decide on the Indian maritime community’s future course of action.

In a further slap in the face of world opinion, the appeal court simultaneously reduced the prison sentences of the two tug captains involved in the accident. One of them is now sentenced to two and a half years instead of the original three, while the other one will spend just eight months in prison instead of the original sentence of one year.

Bob Bishop, the CEO of V.Ships, the manager of the Hebei Spirit, lambasted the verdict, "This will surely go down as one of the most disgraceful examples of a miscarriage of justice in a supposedly advanced nation state. For Captain Chawla and Chief Officer Chetan to be sentenced to prison terms and led from the court in handcuffs is a disgrace and insult to the whole shipping industry." VShips will appeal to the South Korean Supreme Court as soon as possible.

The accident occurred a year ago after the ‘Samsung No 1’ broke its tow and collided with the fully loaded Hebei Spirit’ at anchor. Three tanks ruptured on the tanker and more than 10000 tonnes of oil caused South Korea’s worst environmental disaster. (See Box)

Indian media and Lloyd’s list have reported that representatives of Samsung Heavy Industries visited some crewmember’s homes in India and China earlier this year, promising them jobs abroad and leaving them gifts as ‘souvenirs’ in return for testifying in South Korea.

Many international industry bodies made angry statements condemning the South Korean ruling yesterday. InterManager general secretary Morel has called the ruling unacceptable. He said, “They (two officers) have behaved professionally throughout this sorry affair and are being made scapegoats by South Korea. We believe that the evidence against them was flawed and manipulated and we will campaign vigorously on their behalf to overturn this unfair decision.”

InterTanko, which had earlier sent a letter to South Korean President Lee Myung Bak urging that the Daesan Court of Appeal ‘carefully consider’ all evidence, expressed its anguish at the verdict. “Intertanko expresses disappointment with the Korean authorities given all the efforts of owners, managers and the industry in general which seem to have fallen on deaf ears,” said Peter Swift managing director of Intertanko.

BIMCO has voiced its concerns too, and the Singapore Shipping Association and the Asian Shipowners Forum have echoed this sentiment, calling it “a clear violation of the principle set forth in the IMO guidelines on the Fair Treatment of Seafarers in the Event of a Maritime Accident.” The Hong Kong Shipowners’ Association added its voice of condemnation, saying, “The ever increasing criminalisation by nations from Korea to the USA, for seafarers involved in accidents – not criminal acts – must stop.”

ITF’s Cotton said that the fight would go on, “The one thing we can promise today is that this isn’t over. The campaign to free these men will go on growing until the justice that was so glaringly absent in this court today is done.”

“How can we encourage young people to take up a career in shipping when they see experienced and innocent crew criminalised in this way?” asks Mr. Morel of InterManager. Marine recruitment agencies in Mumbai agree that these latest developments will demoralise mariners further and make a career at sea even less of an attraction for new recruits. “Along with Somali piracy, this may well be the last straw on the camel’s back”, a manager told Marex on condition of anonymity.

Ironically, Capt Chawla and Mr. Chetan were sent to prison on International Human Rights Day. Bishop of V Ships called this “the final indignity”.

The saga of the ‘Hebei Spirit’

In December 2007, a crane barge owned by Samsung Heavy Industries collided with The Hebei Spirit, a VLCC at anchor and awaiting berth near the port of Daesan, South Korea. The accident happened after the barge tow rope parted; the two tugs towing the barge had been warned twice on VHF by local authorities that they was too close to the Spirit.

The collision punctured three tanks on the Spirit. Approximately 11000 tonnes of crude oil leaked into an area which is a prime tourist destination as well as an ecologically sensitive one. The cost of the cleanup, the worst in South Korean history, was estimated at 330 million US dollars.

The Captain of the Hebei Spirit, Capt. Jasprit Chawla and Chief Officer Syam Chetan, along with the two Samsung tug masters involved were charged with negligence and violating Marine Law after a preliminary Coast Guard investigation. A trial was held and concluded on 23 June this year; both tug Master's were found guilty and sentenced to jail terms. Capt. Chawla and Chief Officer Chetan were exonerated. Besides other reasons, they had taken all prudent steps to avoid the collision even when they were at anchor on a huge vessel.

Appeals to South Korea to let the seafarers return to India pending the prosecution’s appeal at a higher court failed, despite protests by national and international industry organisations including FOSMA, MASSA, MUI, NUSI, BIMCO, ITF and ILO. Representations and memoranda issued by seafarer unions, owners’ and ship management organisations to the DGS and the Korean consulate in Mumbai were rejected. Appeals made to the Prime Minister by the CMMI to intervene in the case were unsuccessful.

The Hebei Spirit's P&I club tried in vain to make the Korean authorities accept a bond that would allow the men to go home until required in Korea for the appeal. Meanwhile the two officers were prevented from leaving the country pending appeal and a possible retrial. A horde of maritime organisations and professionals of standing condemned the South Korean attitude. Concerns were also expressed by the ICS and ISF at the IMO, all to no avail.

The appeal process began in September. The December 10 ruling has now found the Indian officers partly responsible for the spill and awarded fines and prison sentences to both, while reducing the jail terms of the two Samsung tug masters.

There is clear belief in the seafaring community that the South Koreans are looking for scapegoats, protecting their own industrialists and are in clear violation of the principle set forth in the IMO guidelines on the “Fair Treatment of Seafarers in the Event of a Maritime Accident.” Indian media and Lloyd’s List have independently reported that representatives of Samsung Heavy Industries visited some crewmember’s homes in India and China earlier promising them jobs abroad and leaving them gifts as ‘souvenirs’ in return for testifying in South Korea.

Ironically, the Nautical Institute had, in April this year, "highly recommended" Capt J.S. Chawla during its Ship Master of the Year 2007 award deliberations for professionalism displayed during the Hebei Spirit accident.

Are Somali Pirates expanding the war zone?

MOGADISHU December 10: After heavily armed Somali pirates attacked a Dutch container ship off the coast of Tanzania on Saturday, maritime observers are now getting increasingly concerned that Somali pirates are expanding their operations Southward into the vast swathe of the Indian Ocean off the East African coast. The vessel was about 500 miles east of Dar Es Salaam when she was fired at by eight pirates and set on fire.

"The problem is that the pirates are no longer just attacking ships off the Somali coast but are going further east and south where there is no naval protection," Noel Choong, head of the International Maritime Bureau piracy reporting centre in Kuala Lumpur told AFP. Eight pirates reportedly fired on the Dutch operated and Hong Kong registered vessel with assault rifles and RPGs. The vessel evaded them after the Captain increased speed to outrun the pirate boats.

The Sirius Star hijack had sent shockwaves around the world a couple of weeks ago; the fully laden VLCC, on a passage around the Cape of Good Hope, was attacked on Nov 15 in the same general area, hundreds of miles away from the Gulf of Aden. This latest attack on the Dutch vessel has resurfaced fears that even ships deciding to go around the Cape instead of transitting the hitherto pirate infested seas of the Gulf of Aden may not be safe any longer. The Eastern coast of Somalia was a hunting ground for pirates a few years ago before they shifted operations to the more frequented (and lucrative) waters around the Horn of Africa. Shipmasters must be undoubtedly wondering how far they would have to stay off the African coast now to be outside the range of the marauding pirates, who operate out of mother vessels and can thus extend their tentacles almost anywhere.

Military ships from Denmark, India, Malaysia, Russia, United States, NATO and the EU have been powerless to reduce the number of attacks on merchant shipping despite wider rules of engagement. No doubt, the pirates are becoming bolder now. The latest attack took place even as the EU’s naval ‘Operation Atlanta’ took over protection duties from NATO warships and is seen as a slap in the face for the international community. The EU's first naval operation has been described by EU foreign policy head Javier Solana as one with ‘robust’ rules of engagement, “with the possibility of using all means including force to protect, to deter and to prosecute all acts of piracy."

The challenge facing the EUNAVFOR Atlanta mission was huge even before the expansion of the kill zone. Half of the 80 attacks reported in the past three months have been in the ‘safe’ corridor patrolled by coalition navies. "This is impossible," said Jean Duval of French maritime security firm Secopex.
Piracy in the region threatens to choke an industry already struggling with collapsing freight rates as the result of the slowdown in economies worldwide. It now seems that the pirates have expanded the ‘war zone’ to include areas hundreds of miles away from the Somali coast, and, in the words of one observer, “impossible to police without a huge armada of warships and aircraft.” Analysts remain convinced that the solution to the piracy problem lies in resolving the civil war like situation in Somalia, a country without any effective government since 1991. There is no hope of that happening anytime soon, though.

Somali Piracy Update

Cruise ship Oceania Nautica escapes Somali pirates on November 30. The 11 deck tall cruise ship was on a month long cruise from Rome to Singapore when she was chased by two skiffs that fired at her. The Nautica was carrying almost 700 passengers and 400 crew at the time. The Oceania Nautica is one of the cruise industry’s highest rated vessels; many of the tourists were Americans. Oceania spokesperson Mr. Tim Rubacky confirmed that the luxury liner was transiting the Gulf of Aden in the Maritime Safety Protection Area which is patrolled by international navies when two skiffs were seen approaching the vessel on an interceptory course. Capt. Brajcic increased speed and began evasive maneuvers, besides other prescribed precautions. Despite eight rifle shots being fired at the Nautica, she managed to outrun the pirates. "All guests and crew onboard are safe and there were no injuries." Rubacky said.

Pirate mother ship or trawler? Marex had earlier reported that the Indian Naval stealth frigate Tabar had confirmed the sinking of a suspected pirate mother ship on Nov. 18 in the Gulf of Aden. The sunken craft now appears to have been a Thai fishing trawler which itself was a pirate target, according to reports. The incident took place about 320 miles off the Omani coast, when the Tabar sank the vessel as pirates fled in small boats. It now appears that the Ekawat Nava 5 was on a passage to Yemen to deliver fishing equipment when it was attacked by pirates. The pirates were taking control of the trawler when the Tabar approached, according to a Cambodian crewman who was rescued six days after the incident. It is believed that two dozen crew of the trawler are still missing; one is confirmed dead, according to the Thai owner. These reports highlight the growing chaotic conditions in the Gulf of Aden as piracy escalates. Analysts believe that it is impossible for a warship to ascertain whether the pirates are firing at them from a hostage vessel or one of their own, especially if the hijacked trawler (in this case) has not been reported as such. The Tabar was fired upon by the pirates as she approached them after several warnings.

Faina may be released on Tuesday with its 17 crew. The Ukrainian ship has been in the eye of a storm more because she was carrying 33 tanks and other weapons manifested for Mombasa when she was seized. The final destination has been controversial, with reports alleging that the arms were actually bound for Sudan. It is now believed that negotiations for the release of the Ukrainian ship are nearing completion. The Faina was hijacked about two months ago, an event that prompted the Russians to send in its Navy to add to the many who now patrol the pirate infested waters, seemingly with uncertain effect. Andrew Mwangura of the East African Seafarers' Assistance Program has said that the ship may be released early this week. Other reports quote Somali pirates confirming this.

Deadline runs out for Sirius Star USD 25 million ransom. A pirate on board the hijacked supertanker said over the weekend that they were expecting a resolution to the ransom demands even as the ultimatum issued by the group was about to expire. The pirates had demanded a 25 million dollar ransom soon after the hijack of the ship with its hundred million dollar cargo; later reports suggested that this amount had been reduced by almost two thirds. The Sirius Star was hijacked on November 15. The Saudi Government has refused to negotiate with the hijackers, but Prince Saud has said that the final decision would be up to the owners. The Sirius Star hijack, so far the biggest, shocked the industry and caused many owners to re route their ships via the Cape of Good Hope instead of the Gulf of Aden; ironically, the Cape route was the one the Sirius Star was on when she was seized. Reports suggest that about a half dozen more ships have been hijacked in the Gulf of Aden since the Star incident.

British security operatives jump overboard to escape pirates in the Gulf of Aden. The three personnel belonging to a UK based ‘ship protection’ company, were on board a Singapore operated tanker, MS Biscaglia, when she was attacked by Somali pirates. Even though she had these three as ‘protectors’ and sent out a distress message, she was overrun and taken hostage. It is not clear at what stage the three guards jumped overboard leaving the mainly Indian crew to their fate; these three were themselves rescued by a German Navy helicopter. The owners and crews of ships will now certainly rethink the hiring such security firms in future. It is believed that the guards were not armed, and a spokesman for the security company says that they feared for their life after they had spent “considerable time” trying and failing to repel the pirate attack.

Finally, a sobering thought. Three hundred and fifty seafarers continue to be held hostage by Somali pirates. The navies of the world continue to extend their presence in the Gulf of Aden, but maritime experts say that the incidence of attacks on ships have not decreased at all since the patrols began. There have been about a hundred reported attacks this year, with almost forty reported hijacks so far. Unreported attacks are said to be numerous, and hijackings of small coastal ships, trawlers and the like remain under the radar.

Industry shocked by ‘Sirius Star’ hijack

Location and brazen seizure of loaded VLCC rings alarm bells.

[Mumbai 18 November] The hijacking of the VLCC Sirius Star on Saturday, November 15, has sent shock waves through the maritime and oil industries. Described as “ an unprecedented attack” by the US Navy, the seizure of the 2008 built VLCC carrying more than a hundred million dollars worth of oil and 25 crew has resulted in widespread international newspaper and television coverage; many speak of the hijacked ship carrying ‘almost a third of Saudi Arabia’s daily oil production’. What is alarming is not only the fact that a VLCC was successfully hijacked for the first time ever, but also the location of the hijack: over 450 miles South East of Mombasa and what would have been hitherto regarded as almost the middle of the Indian Ocean and safe from pirate attacks.

The Liberian flagged, 330m long Sirius Star, owned by Saudi oil giant Aramco, can carry about 2 million barrels of oil and has a deadweight of 318000 tonnes. It was fully loaded and heading to the United States when it was attacked. The crew includes Britons, Croatians, Poles, Filipinos, and Saudi Arabians. Vela, the Saudi operators of the Star, say that "all 25 crew on board are reported to be safe. Vela response teams have been established and are working to ensure the safe release of the crew and the vessel". Reports suggest that Vela is in contact with the hijackers of the VLCC.

By far the largest ship to be hijacked, the Star has been forced near the Somali coast and is reported to have reached the pirate stronghold of Eyl. Local Somali fishermen and reports from the US Navy seem to confirm this. The US Navy, which earlier reported the hijacking, said it had no information that the vessel had been released; this, after confusion over a Gulf based TV news channel’s report on Tuesday that the giant ship had been freed.
Saturday's attack comes after a flurry of recent hijackings and attacks that have raised threat perception levels across the Gulf of Aden. A chemical tanker owned by Japan was also seized on Saturday, and up to two dozen ships are presently captive while ransoms are being negotiated.

However, the Sirius Star’s hijacking, far to the South of the coalition navy’s so called safe zone in the Gulf of Aden, was described by one analyst as ”the pirates showing two fingers to the navies of the world”. Maritime security experts say that the widening of the kill zone involves an area which will be extremely difficult to patrol, as it covers thousands of square miles. They also link the spread in piracy incidents to recent developments within Somalia as Islamist groups capture new territory and threaten the transitional government there.

The incident also raises serious doubts about the ability of international efforts to patrol the Somali coast. Saturday's hijacking rings warning bells in that the pirates are capable of expanding operations far beyond the Somali shores, using mother ships, advanced satellite communication and logistical acumen. Maritime experts worry about the potential ecological catastrophe should there be any attempts to retake the tanker.

Meanwhile, The Times of London reported that the hijacking has had a ripple effect on the price of crude in international markets. At the time of writing this report, crude oil was about $58 a barrel, making the cargo on board the Sirius Star worth almost $120 million. A new VLCC costs more than that to build. No doubt insurance premia, too, would be set to go even higher.

At the Pentagon in Washington, the Chairman of the U.S. Joint Chiefs of Staff, Admiral Michael Mullen, said that he is "stunned" at how far the pirates are able to reach.


Industry sickened as prosecutors demand 3 year jail terms for Hebei Duo

Mumbai, November 12: The shipping industry was shocked today at the continuing victimisation of Capt. Jasprit Chawla and Chief Officer Syam Chetan at the hand of the South Korean judicial system; it was learnt that Korean prosecutors have demanded a three year prison sentence for the two officers of the ill fated ‘Hebei Spirit’, in addition to a fine of 30M won (about $22,000). The Daejon District Court is scheduled to give its verdict on appeal in December, six months after the two were found innocent by a lower court.

The prosecutors allege that the Hebei Spirit did not do enough to contain the oil spill after the collision with a Samsung barge almost a year ago; about 10000 tonnes of oil leaked into the sea when the barge collided into the Spirit, at anchor, after the tow rope parted in rough weather. The prosecutors now claim that the oil spill could have been restricted to just 1437 kilolitres, a claim that V Ships, the managers of the Hebei Spirit call ‘ridiculous’. A spokesman for the company told Fairplay that oil was gushing out of three tanks and that there was nothing that the crew could do about it immediately. “Their top priority was to ensure seafarer safety and check further damage and they succeeded in that”, he said.

The initial trial of the two officers in the lower court had found the Hebei Duo innocent in June and sentenced the two tug Masters involved in towing the barge to jail terms. There had been an international outcry against the continued detention of both the Indian officers of the Hebei Spirit in South Korea at the time.

There was consternation for awhile in Indian shipping circles as a premier shipping magazine erroneously reported that Capt. Chawla and Chief Officer Chetan had been sentenced to jail terms. That report has now been corrected by the magazine. Although prosecutors have demanded jail terms, the verdict is expected to be delivered next month.

Meanwhile, the International Chamber of Shipping and the International Shipping Federation said last week that they have expressed serious concern at the IMO Legal Committee at the continued detainment in Korea of the two officers. The two organisations have reportedly pointed out that this was despite assurances then given by the managers and the two officers that they would return to attend further hearings in Korea. The ICS/ISF have also claimed that Korea is behaving contrary to the principles established by the Joint IMO/ ILO Guidelines on the Fair Treatment of Seafarers in the Event of a Maritime Accident. “The industry is disappointed that this incident creates the impression that Korea does not respect the principles agreed by IMO and ILO. It is hoped that the Government of Korea will now do all in its power to ensure that the seafarers are permitted to return to their homes and families immediately,” they said.

Industry watchers are dismayed at the intransigence displayed by South Korea thus far. They indicate to possible collusion between Samsung, a mammoth and powerful conglomerate, and others in Korea in this case, and are convinced that the two innocent officers are just convenient scapegoats. Many senior officials and analysts agree with this assessment off the record.

The Nautical Institute had, in April this year, "highly recommended" Capt J.S. Chawla during its Ship Master of the Year 2007 award deliberations. Paradoxically, in an earlier interview with Lloyd's List, Capt. Chawla and Chief Officer Chetan had admitted to feeling, ever since the incident, "anger, fear, depression and frustration" in the aftermath to the incident. Capt. Chawla was also quoted at the time as saying that he never wanted to see a ship again.

One senior Shipmaster told Marex today, “We should forget appealing any longer to the Korean authorities; they are not listening. Unless the Government of India and the Indian shipping fraternity take more much aggressive action right now against this shabby injustice, many more seafarers will kiss the industry goodbye. ”


Mercenary vessel to combat hijackings

Blackwater’s “MacArthur” offers protection in Gulf of Aden.

[Mumbai, October 24]
Blackwater Worldwide, the controversial private military contractor headquartered in North Carolina, USA, revealed last week that it has plans to dispatch the MV MacArthur, a 55 metre vessel, to the Gulf of Aden to provide escort services for clients’ ships. The MacArthur, a multipurpose vessel redesigned in 2006 to support military training, carries an armed crew of 14 and has helicopter landing facilities. The ship and its helicopters are able to patrol in the vicinity and route of client merchant vessels’. Blackwater’s selling proposition seems to be that owners would not need to pay for onboard private guards, an alternative that has legal and operational problems. The company later plans to expand its presence in the region by increasing its fleet to two or three such vessels.

In a press release, Bill Matthews, executive vice president of Blackwater Worldwide, “Billions of dollars of goods move through the Gulf of Aden each year. We have been contacted by ship owners who say they need our help in making sure those goods get to their destination safely. The McArthur can help us accomplish that."

A Blackwater spokesperson has confirmed that the company will need a State Department license to sell its services to a foreign government or business.

Analysts say that some ship owners, hit by insurance costs for the region which have risen tenfold, ‘war zone’ allowances to crews and by ransom payments if vessels are captured, may well be exploring options such as Blackwater has to offer. One expert told Marex that he felt that the hijacking of the Ukrainian ship Faina with military armament on board was the flash point that triggered Blackwater’s clients’ interest in the region.

The outfit, described as mercenary and trigger happy by many of its critics, was started by ex Navy seals Eric Prince and Al Clark in 1997. Mired in controversy in Iraq and elsewhere, its licence to operate in that country was temporarily suspended after it killed 17 Iraqis in September 2007 , 14 of them ‘without cause’, according to an FBI report. The shadowy organisation continues to garner 90% of its revenues from US State Department contracts and is the largest private security firm employed by the US Government. A majority of these contracts are ‘no bid’ contracts, adding to the unease with which the organisation is viewed internationally. Senior officials at Blackwater Worldwide include ex CIA personnel and Navy Seals.

Industry experts say that ship owners are getting increasingly worried as Western naval coalitions express their inability to successfully control hijackings off Somalia, and in fact seem to be recommending private security firms such as Blackwater. The recent dispatch of an Indian naval vessel to the region does not inspire much confidence either; its rules of engagement and its place in the naval coalition are still unclear and it is reported to have limited endurance and coverage abilities.

It is also felt that Blackwater’s services would be expensive, though may be partly set off against presumably lower insurance premia. An industry source said that he saw US oil companies with deep pockets as Blackwater’s main clients, as “many smaller shipowners will not be able to support these costs”.

Another analyst was cynical. “Given Blackwater’s murky connections with US administrations, this seems to be another attempt to secure the oil flowing into that country without overt or official US government involvement”, he said. “This should not be seen as an anti piracy measure by the rest of the world.”

It is felt that there may be considerable industry disquiet at this development, given Blackwater’s controversial history and reputation.


Al Qaida behind ship hijackings in the Gulf of Aden?

Terrorist group reported to have claimed responsibility. US Navy asks owners to protect themselves.

[Mumbai, 23 September 2008]: In a revelation long suspected but one that will nevertheless have huge consequences for the world maritime fleet, the Al Qaida is reported to have claimed responsibility for hijackings of ships for ransom in the Gulf of Aden and off the Somali coast over the last year.

The Middle East Times’ Oliver Guitta reports that “Al Qaida has claimed responsibility in a communiqué for piracy operations that took place during the past year, off Yemen (and Somalia). The communiqué stressed that "orders were given to the Mujahedeen to monitor maritime waterways, particularly in the Arabian Peninsula." Maritime terrorism requires, according to the document, "a new strategy which permits mujahedeen" to hijack commercial, tourism and oil vessels. According to this strategy, "fighters, who aspire to establish the Caliphate, must control the seas and the waterways."

The Al Qaida strategy seems to be a simple one: Control one of the key shipping lanes in the world; 20000 ships and a large part of the oil trade use the Gulf of Aden annually to transit into the Red Sea and the Suez. Finance operations with ransoms running into millions of dollars. “Al-Qaida believes that "the enemy will not be able to protect its bases scattered on land in the Arabian Peninsula, and subject to mujahedeen attacks, if its waterways were weakened by acts of piracy" says the Middle East Times, quoting the unconfirmed communiqué.

Marex had reported the ascendance of Al Shabaab, a terrorist linked group, in Somalia in its last issue (article on the Stolt Valor hijacking). This organisation is now in control of much of Somalia’s coastline. Attacks in the last few days in areas of Mogadishu, the Somali capital, have also been blamed on them. The organisation, which is almost certainly funded in part by hijackings, has taken over key ports and cities in Somalia, including Kismayo in the South. Born when the Islamic Courts Union (ICU) Somali government was overthrown by US backed Ethiopian and other forces, Al Shabaab is now a major force in war torn and warlord controlled Somalia. Critics accuse the US of collaborating with warlords in the past to keep the ICU out of power.

Across the waters, in Aden, the situation is not much better. The US Embassy in Sanaa was attacked again recently. Aden, like Pakistan, has often been accused of flip flopping with respect to terrorism. The USS Cole was attacked in Aden harbour in 1980. In 2003, the Yemeni regime had a non aggression pact with Al Qaida in place. Osama Bin Laden’s family migrated from Yemen. The Hyundai Fortune was attacked and destroyed in the Gulf of Aden in 2006.

Though pressure from the US and internal politics has made the Yemeni government change to an anti terrorist stance recently, including the killing of at least one Al Qaida leader and a crackdown on many others, the fact remains that Yemen is unstable. Therefore, like Pakistan and Somalia, it is a breeding ground for terrorism.

The Yemeni coast guard has formed units to police pirates recently. 16 boats have been imported from Australia; up to 60 marines would be aboard each one of them. They will have artillery and advanced communications.

In other developments, Reuters has reported from London on Monday that the U.S. Navy says that “allied warships were doing all they could to thwart piracy in the strategic Gulf of Aden, but shipping companies should take their own measures to protect their vessels and crews.”

It quotes Combined Maritime Forces commander, U.S. vice admiral Bill Gortney as saying,
"The coalition does not have the resources to provide 24 hour protection for the vast number of merchant vessels in the region. Shipping companies must take measures to defend their vessels and their crews," he said in a statement, urging merchant ships to employ their own security teams.

It must be stressed that the Al Qaida communiqué has not been widely reported, and Marex has not been able to confirm this development from other sources. Nevertheless and clearly, threat perceptions of the crisis have to change quickly and dramatically within the international community.

With powerful coalitions throwing up their hands admitting defeat and asking owners to take measures to protect their crews and ships themselves, the situation looks bleaker by the minute. If Al Qaida is indeed directly involved, how long do we have before a major catastrophe involving a VLCC?

Meanwhile, maybe we can ask seafarers to throw the ISPS code book at the pirates.