Canadian Underwriter

Piracy is a bigger problem for Canadian ships than you might think

March 30, 2016   by Jeff Pearce

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The incidents happened in late November, and what we know comes out of reports from Neptune Maritime Security in their Monthly Piracy Update. In East Africa on November 22: “Iranian fishing vessel, ‘Muhammadi,’ reported hijacked by pirates at 1105 UTC… Vessel en route towards Somalia. On November 29th, the crew fought their captors and released the vessel. Reports state that several people were shot and killed.” Only days before in Southeast Asia: “Five robbers armed with knives boarded a berthed bulk carrier during cargo operations… They were noticed by the crew who raised the alarm. Seeing the alerted crew, the robbers escaped with stolen ship’s properties.”

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It’s all in terse, just-the-facts-Ma’am prose, but it’s clear there’s still a lot of drama on the high seas after we’ve all forgotten Captain Phillips. Whether it’s a problem for Canada depends on who you talk to. Ask the nice folks in claims and legal litigation at Northbridge, which insures about $1 billion worth of goods moving overseas, if they’ve ever seen a claim for piracy, and the basic answer is, “That sounds very exciting, but never.” It’s simply not a problem for them. As Matt O’Donnell, director of underwriting for specialty risk, points out, Northbridge more often sees ocean containers picked up out of say, the port of Montreal, by foreign vessels to be taken overseas.

And the risk is often low for Canadian companies, says O’Donnell, because unlike the U.S., there’s no legal requirement for their vessel to be crewed by Canadian citizens. “I mean we had a submission the other day come in for a Canadian ship owner, and the flag was Marshall Islands so it’s going to mean the crews could come from anywhere.”

But it’s telling, perhaps, that our own navy has started up a Maritime Tactical Operations Group, which as the National Post reported last July, is “designed to deal with drug dealers, pirates and terrorists on the high seas” and which is “expected to expand to between 85 and 100 personnel over the next several years.”

And some Canadian-owned vessels certainly do sail in the top three major trouble areas for piracy: East Africa, West Africa and Southeast Asia. While there are fewer large flag vessels from Canada, some experts will tell you that just means we have easier prey out there: supply vessels, particularly for the oil industry, smaller tugs, research and survey ships and cable ships. And even if it’s merely cargo aboard foreign flag vessels, the interruption and delay from a piracy incident can have an impact.

The numbers are hard to pin down on how many sail into troubled waters—for a very good reason. The modern piracy racket is basically K&R on the sea, prompting the same uncomfortable reticence we see over ransoms when corporate personnel are nabbed on land. According to David Rider, spokesman for Neptune Maritime Security, which has offices in London, Dubai and Tokyo and operates mostly in the Indian Ocean but also in West Africa, “under-reporting is a massive issue,” presumably for insurance reasons.

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The modus operandi of pirates can vary, says Rider, depending on where you are and whether you’re dealing with Somali pirates or Nigerian criminal gangs. “In the Indian Ocean, the Somali pirates took [a] ship and saw the crew as an asset as well as the ship to be ransomed. So they’d be quite happy to sit on a ship and a crew for many, many months, up to three years in order to secure their ransom payment from a shipping company.”

Hostages taken by pirates in 2015

Source: International Maritime Bureau Piracy Reporting Centre

estimated average ransom for six ships taken by pirates in 2012

Source: Ince & Co International Law Firm

Rider says the piracy trade has evolved over the last couple of years as successful attacks have diminished. “There hasn’t been an attack on a merchant ship in the Indian Ocean since 2014.” That’s probably because the EU Naval Force’s Operation Atalanta and NATO’s Operation Ocean Shield have both been cracking down in the troubled waters. If such patrols “saw dhows or skiffs coming from Somalia, they would do a board and search, or a sort of cordial boarding, just to say ‘Hi, we’re here, don’t try anything funny.’ And that suppressed a great deal of the piracy. But at the same time, the shipping industry had adopted armed guards and [best management practices]… And you basically find that a group of pirates in a skiff, in a reasonable swell, don’t want to be exchanging gunfire with three or four former soldiers on a nice stable merchant ship.”

Back in the day, a crew of a merchant ship would be kept onboard or stashed at coastal hideouts while cargo was occasionally sold. “But in West Africa there is an increased move towards crew kidnappings.” And in the Gulf of Guinea, as well as the waters of Southeast Asia, there’s still a good business in hijacking a coastal tanker to siphon off crude oil or palm oil.

Avoiding an attack seems to come down to finer points of common sense. Point one, get the hell away as fast as you can. “Pirate skiffs will do up to sort of 20, 24 knots, and if you’re lucky they won’t catch you,” says Rider. But if you’re in a slow ship, “you do need to take things seriously. Lock all the watertight doors, put as much barbed wire up as you can, ensure the vessel has a citadel that the crew can retreat to if the pirates do board.”

If piracy is to ever end off Somalia, Rider thinks what needs to happen is economic development and opportunity in the country itself. “The pirates whowere released from Kenya [more than 60 were repatriated last June], having completed their sentences, a number of them said they would go back out to sea, because the alternative was, I quote, ‘Eating sand.’ So really there needs to be a far greater drive.”

Rider says along the Singapore Strait in the eastbound lane, the trouble is not so much piracy per se as “effectively an armed robbery at sea. You’ll have, men with knives or handguns will board your ship under cover of darkness, round the crew up, rob, them, and then escape again… They’ll board a merchant ship, they’ll steal ships, cash, crew possessions, laptops, cell phones, that kind of thing, and any cash they can get hold of. It’s just basically a mugging.”

Rider says insurance companies have generally been very supportive of the shipping industry in terms of anti-piracy measures “because obviously these are significant assets, and having them holed up off the coast of Somalia for a couple of years is a major cost. So they’ve made certain recommendations. They were firmly behind the use of armed guards where it was legal to do so, because there is no doubt, armed guards have proven to be a highly successful deterrent. No ship with armed security has ever been hijacked.”

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But Hugh Williamson, adjunct professor and lead investigator for Dalhousie University’s Marine Piracy Project, argues that Canadian law doesn’t really allow for armed guards on board vessels. He says Transport Canada and other authorities have “basically said, ‘We have no policy but we expect all relevant Canadian laws to be complied with.’… So that would exclude all of the standard weaponry that’s carried by the protective details on board ships. You know, they usually have machine guns and assault rifles and things like that—that would all be prohibited.”

He says his reading of the law would mean that private maritime security would be precluded as well. But we’re drifting into the waters of “don’t ask, don’t tell,” and Canadian firms “don’t want to know” if vessels do what would be considered “prudent.” And the vagueness of the law can leave ships particularly vulnerable. Williamson suggests the example of a “Canadian vessel that was coming from Southeast Asia through the Straits of Malacca, which is pirate waters, by Singapore and Indonesia, into the Indian Ocean, which is pirate waters, and through the Red Sea… What would happen in that area is, if you’re operating without armed guards on board, you’d be severely at risk.”

Williamson says there are even floating armories on the Indian Ocean: vessels with weapons for quick purchase or rental. And as soon the risk is past, “either they would pick them up before you entered the port on the other side, or in some cases you buy the weapons and then you throw them over the side, because the weapons are only a couple thousand dollars.”

Out in international waters, they’re not really committing any crime—but some countries aren’t too happy about floating weapon caches that could possibly wind up in the hands of terrorists.

Despite the regime change in Ottawa, Williamson says any changes in Canadian law relevant to international law are likely very low on the priority list, especially as the Trudeau government wrestles with the Syrian refugee crisis and other problems. “Right now nobody is really poking the fire and stirring anything up.”

He says it’s certainly true of the shipping industry as well. “We’ve got a very competent military, but how long would it take, or what would it take, for example, for us to get a military detail to do a rescue on a Canadian vessel that was seized off the coast of Africa? You’d be looking at days to weeks, possibly—or months—before they’d be able to get anything organized to do anything like that. It’s so far away, and we just haven’t got the resources. So I think a lot of people are just sort of crossing their fingers and hoping nothing happens on their watch.”

Copyright © 2016 Transcontinental Media G.P. This article first appeared in the March 2016 edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.