Pirates vs. Congress - And Why Congress Is More Dangerous

Okay this is a little old – from August of last year – but it’s still well worth reading and still relevant.

These are remarks made by Stephen M. Carmel, Senior VP of Maersk Line, Limited at the Commander Second Fleet Intelligence Symposium where he explains why piracy (especially Somalian piracy) isn't quite as bad as it’s made out and why the shipping industries worry far more about what Congress is up to than pirate attacks.

He goes into detail on the economics of shipping (shorter distance is not always cheaper) and provides some insight on how shipping companies view piracy and why they haven’t done all the ‘obvious’ things that people call for.

So what is the true cost of piracy?

From personal experience hiring highly trained (in fact all ex- US SOF folks) as security on our ships I can back of the envelope it for you. ...A team sufficient to protect the ship costs about $5000 per day all inclusive, for a total of $70,000. On a 2 Million BBL VLCC that means security to get it to the US costs about 3.5 cents per bbl. While it varies a little by grade of crude, a rule of thumb is that each BBL of crude will produce about 20 gallons of gas. That means piracy adds a little less than 2 tenths of a cent to the cost of a gallon of gas, or a nickel or so to a 25 gallon fill up. This as opposed to the approximately 43 cents per gallon or $10.75 in taxes you pay on a 25 gallon fill up.

On why they haven’t armed all their ships and just killed the pirates…

Lastly I would note there is no internationally agree framework for dealing with liability issues, where if we shoot a pirate off a US flag ship there is nothing to prevent that aggrieved pirate from suing us in a Pakistani court and having our ship arrested next time it shows up in Karachi. Unlike you folks, our ships do not enjoy sovereign immunity and port state authorities are free to board, search, and arrest our ships and crew at their discretion and/or whim. There has been some legislation passed in the US providing such liability protection, which of course is very helpful for piracy off the coast of New Jersey, but does nothing to help us where it actually matters. At this point the single most helpful thing regarding piracy (aside of course from solving Somalia) the worlds governments can do would be to push through IMO a rule set that standardizes training and certification of shooters, a standard weapon set, and international protocols for entry and clearance of armed merchant ships in ports and a standard framework for liability cover.

Read the rest to find out what he's really afraid of.

And on what his main fears are:

But, while worrying about pirates I also worry about the effect of MARPOL Annex VI and the cost of complying with increasingly harsh emissions control requirements, something that will cost our industry roughly $6 Billion a year to comply with now and that figure will go up as tighter standards kick in in the 2014 time frame. I worry about the requirement to cold iron in LA, something that is very expensive and disruptive. And since while common for Navy ships to go on shore power, commercial ships never do it and are not fitted with a system to do so, a modification is required that will cost the equivalent of one ransom for each ship it is done on.

I worry about things like a proposal fronted by the World Bank, UNEP and others for a $50/ton carbon tax on ships bunkers, which will cost our industry about $17.1 Billion dollars per year. I worry about invasive species related ballast water mandates which will cost our industry approximately $15 Billion a year and I worry even more about California not going along with federal ballast water control mandates and instead implementing their own program at even greater cost to us. So tree huggers and environmentalists are costing us a heck of a lot more than pirates ever will, but interestingly I don’t see anyone agitating for the Navy to get underway to get the quasi-failed state of California under control. But if any of you are up for the mission I’d like to see it.

So compared to all that pirates are a minor and ultimately more manageable threat since at least you can get insurance against their attacks and/or just shoot them. Not so much with Congress.

posted by Maetenloch at 08:35 AM

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