Private package includes escort service, insurance cover and an audit of best management practice
Shipowners are set to have a commercially viable alternative to armed guards in their fight piracy after the Convoy Escort Programme confirmed it would launch in the first quarter of 2012.
The CEP package includes the escort service, insurance cover and an audit of the vessel’s Best Management Practice 4 and compliance during the transit period. An initial business plan valued the package at $21,500, but CEP’s chief executive Angus Campbell said the cost would now be higher due to increases in areas such as the price of fuel.
“The project has evolved considerably since the concept plan which was written some time ago. We are now proceeding on a fully commercial basis, so the tariff will have to be adjusted accordingly.”
In comparison, it is understood that employing four armed guards for ships transiting the Indian Ocean and Gulf of Aden typically can cost anything from $30,000 to $250,000 per voyage.
The CEP is facilitated by Jardine Lloyd Thompson. Partner Sean Woolerson first came up with the concept three years ago, it has taken until now to secure a clear start date. This has led some to question whether the project would ever come to fruition.
Woolerson said the launch had been slow because there had been several bridges to cross in terms of flag states, boats type and issues with capital investment. The project was initially due to be funded by the international shipping community but it is now entirely commercial.
Campbell was brought on board in June this year to drive the project.
“Exact timings are difficult as we are 90% of the way there but it is that 10% that is the hardest part,” he said .
“In the first quarter of next year we hope to have the investor backing secured to purchase the first set of patrol boats and at this point phase one should be ready to go.”
Phase one will involve the deployment of seven bespoke rigid-hulled inflatable boats, each with a crew of eight. Phase two will see the purchase of an additional 11 RHIBs, bringing the total number to 18. Mr Woolerson said this number may increase depending on supply and demand.
Woolerson said he was aware that CEP had certainly not been without its critics but that it was by no means a private security firm. He added that all of CEP’s procedures would be audited by third party Lloyd’s Register.
Campbell said: “It is a deterrent force, a barrier to keep vessels safe from the threat and problem. It is a transparent model that is dramatically different and will be in the full glare of the industry. Everything we do will be examined closely.”
A report in IFW’s sister publication, Lloyd’s List reveals that although BIMCO was involved with CEP initially , since it has become a commercial operation BIMCO has had to take a step back. BIMCO head of security Giles Noakes said: “Clearly now, the commercial market will drive the success of CEP or otherwise. When we know more we will be able to comment.”
One point he did raise in favour of CEP in comparison to having armed guards on board a vessel was that the escort service vastly reduced the risk of collateral damage as it took the “firefight” away from the ship.
A criticism CEP initially faced from Intertanko was that if the project got underway, navies would reduce their presence in the high-risk area. But Mr Woolerson said it was now clear that the use of armed guards was far more likely to act as a catalyst for this.
“The project has been seen by the military as a welcome enhancement and we have received an awful lot of co-operation, which is essential,” he said. “Having armed guards on board may very well give nations the excuse to withdraw assets but hopefully this won’t happen as we need to work in co-operation with the navy, so they still need to be there otherwise we will have nothing to enhance.”
Woolerson said that it was not possible to please everyone and that he was aware that this service would not suit all types of vessel. However, he said this was a good thing because phase one could only manage 10% of overall traffic in the high-risk area and even at phase two CEP would only be able to cope with 25%.
The service will be sold via Lloyd’s brokers and the lead underwriter is Ascot Underwriting. Woolerson said: “We have had a lot of interest from insurers in the market and we have not spread ourselves too widely. Ascot’s Andrew Moulton has led the charge, having the vision and guts to stand up. Marketform, RSA , Griffin, Watkins, Montpelier, and Brit have all given us encouragement and are very keen to get involved and make this happen.”
Cypriot company Dobson Ship Management will look after the RHIBs, Moore Stephens has been appointed as the accountancy group, while law firms Ince & Co and Holman Fenwick Willan are advising on legal matters.
CEP has a recruitment team in place looking to take on ex-military personnel. Mr Woolerson said there was a clear preference for UK candidates and that he had already received applications from several senior military
Source: ifw