Industry Invests in Maritime Mall Cops

The private sector is stepping up to deal with piracy. This article discusses details of the emerging maritime mall cop business model, which expects to have several ships operating within the next five months.

Convoy Escort Programme Ltd., backed by the marine insurance industry, will initially deploy seven former naval patrol boats, each with armed security teams of eight people on board, Angus Campbell, chief executive officer, said by phone from Swarland, England today. The bullet-proofed boats will charge about $30,000 per ship traveling in a convoy of around four vessels over three to four days, he said.

“We are going to be a deterrent,” Campbell said. “We are not in the business of looking for trouble but if anybody tries to attack a vessel we are escorting, our security teams will deploy force if they have to act in self defence.”

7 boats capable of 5-6 convoys per month at around ~$100,000 a convoy. If we assume 8 months of operation per boat, this is a ~$30 million a year business model. The story adds a bit more detail:

The venture, backed by U.K. insurance and reinsurance broking company Jardine Lloyd Thompson Group Plc, needs about $30 million from investors to complete the first-stage, patrol boat purchase, Campbell said. A second stage adding another 11 former offshore boats, will follow, taking total investment to around $50 million, he said. Venture capitalists, oil companies and marine insurers are among possible investors.

The project, first discussed more than a year ago, experienced some delays in getting a state jurisdiction to register its vessels. Cyprus agreed to add the ships last month, following a U.S. State Department veto for registration in the Marshall Islands, Campbell said.

By my math, that would add an additional $50 million or so a year. Long term, this private sector option is 18 small boats with 144 security personnel that intends to escort less than 2,000 ships if limited to 4 ships per convoy - which is less than 8% of all ships that move through the area. Piracy is big business, and as it becomes bigger business there will be less incentive for governments to do anything about it.

My guess is the maritime security personnel will be former naval and special forces operators from around the world. My guess would also be that most of them will be highly professional, well educated, and well trained operators, but that won't stop accusations and innuendo otherwise, for example, being labeled "maritime mall cops" by folks like me.

Whether the intent is there or not, by action governments could be conceding that the legal problems associated with global maritime piracy are too much to overcome by passively allowing the privatization of maritime security to private security contractors. It is hard to see a scenario where a private security contractor will make an arrest under any sort of legal mechanism, which leaves very few options except to issue warnings, shoot, and ignore questions later. By nature the sea offers private security privacy from their actions, and as nations with sophisticated law support technology have had a hard time generating enough evidence to bring about legal trials, so too will the pirates who attempt legal mechanisms against private security contractors. Short of "blood on the deck" or first person witnessing of illegal actions by a naval power willing to share data with the attorney's of pirates, evidence of any excessive force by private security at sea seems very unlikely.

Which is part of the issue here no country or even the maritime shipping industry is ready to deal with - wide scale privatization of pirate security increases the stakes because it changes the rules of the game as they are today. If actions at sea by private security become more violent, is it not possible the actions by pirate attackers will also become more violent? Any disruption to the status quo can lead to unintended consequences, but with governments giving token efforts (at best) to curb piracy, it isn't hard to see why private security isn't anything other than a natural evolution for protection by the shipping industry. This is particularly true since armed security has a 100% success rate as a protection scheme against modern piracy.