Political risk remains heightened around the globe, and increasingly poses a threat to shipping, trade and supply chains through conflicts, territorial disputes, cyber-attacks, sanctions, piracy and even sabotage. At the same time the growing number of migrants at sea and an increase in stowaways also has serious consequences for ship owners.
“Political risk is increasing and continues to be a major concern. Territorial disputes, trade tariffs, sanctions and the prevalence of just-in-time manufacturing, pile more and more stress on supply chains,” says Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS. Conflicts in hot spots like Yemen – where Houthis rebels attacked a Saudi oil tanker in the Red Sea in 2018 – and the Azov Sea and Black Sea – where Russian ships fired on and seized three of Ukraine’s ships in 2018 – continue to fester. In May 2019, oil tankers were attacked off the coast of the United Arab Emirates, amid rising tensions between the US and Iran.
The South China Sea, a key commercial shipping route connecting Asia with Europe and Africa, is also a source of tension between nation states, in particular the US and China, which are vying for control of Pacific waters. China is also in dispute with a number of Asian countries which claim sovereignty over the Spratly Islands. Such tensions could lead to incidents – in 2017 the USS Fitzgerald collided with a container ship while the USS John S. McCain hit an oil tanker, when they were on patrol in this region. Political risk is also playing out in the cyber space, as some nation states look to target critical infrastructure, including ports, logistics and shipping. The 2017 NotPetya contagious malware outbreak, attributed by the US to Russia, crippled IT systems at Maersk, disrupting its port terminals and container operations. In the same year, some 20 vessels were affected by a GPS spoofing attack in the Black Sea, while similar incidents have also been reported by ships in the Middle East. “Political rivalries and conflicts are being played out on the seas. Whether it is the global economy, cyber or the environment, this is where borders disappear and where we all have to operate in the same body of water,” says Kinsey.
Stowaways are increasingly targeting commercial vessels which can have serious consequences, causing delays in port, while repatriation is a complex procedure. Meanwhile, the ongoing migrant crisis in the Mediterranean reminds ship owners of their obligations at sea.
Operators of commercial vessels are regularly called upon to assist people at sea, including migrants. Photo: iStock.

In December 2018, British Special Forces boarded the Ro-ro cargo ship Grande Tema in the English Channel after a group of stowaways threatened the crew. The 71,000-ton vessel, owned by Grimaldi Lines was en route from Lagos, Nigeria to the UK when its crew discovered four stowaways and locked them in a cabin. However, the four men escaped and demanded the vessel sail close to the coast so they could get ashore.

Ship owners have struggled with the problem of stowaways for a number of years, particularly for vessels travelling from ports in Africa, Latin America and Asia. According to Intercargo and International Maritime Organization (IMO) data there were 658 incidents of stowaways reported between January 2010 and July 2017 at 84 ports, involving a total of 1,713 stowaways [1]. Lagos, Nigeria, was the port which saw the highest number of reported incidents.

Migrants and people traffickers are increasingly targeting commercial shipping, according to UK-based stowaway consultant Robmarine [2]. In particular, there has been a shift in stowaway trends in Europe, with stowaways switching to commercial vessels as security is stepped up at ferry terminals. In February 2019, eight stowaways were found hiding in a container at the Port of Cork Ringaskiddy ferry terminal moments after it arrived off a ship from Spain – it was the second such incident in four weeks. In January 2019, three stowaways were caught on the container ship Diana J heading to the port of Miami.

The presence of stowaways on board may have serious consequences for ships, causing delays in port, while the repatriation of stowaways can be a complex procedure for masters and ship owners and there are no signs of improvements regarding the reduction of stowaway cases. As a result, in 2018, the IMO updated the Convention on Facilitation of International Maritime Traffic (FAL Convention), adding new guidance and procedures for handling stowaways, as well as a new stowaway data facility.

Recent years have also seen an increase in migrants making crossings in unseaworthy vessels, most notably heading to Europe from Africa and the Middle East. Around 113,000 migrants entered Europe by sea in 2018 – the fifth year in a row this total has been in excess of 100,000, according to the International Organization for Migration. In June 2018, the container ship Alexander Maersk rescued 113 migrants [3]. The vessel responded to a request by the Maritime Rescue Coordination Center in Rome to change course and assist in a search and rescue operation in international waters. According to the World Shipping Council, operators of commercial vessels are regularly called upon to assist persons at sea, and have a legal obligation to do so under The International Convention For The Safety Of Life At Sea (SOLAS), however, commercial cargo vessels are not designed to carry large numbers of people. The migrant crisis in the Mediterranean is a reminder that all parties operating under SOLAS have a shared responsibility to bring persons stranded at sea to a place of safety on land as quickly as possible, it says.

Hijacking and boarding of vessels is still tied to inequality and the economic situation in parts of Africa and Asia, which together account for more than three in four cases globally.
Armed patrols have proven to be an effective deterrent against piracy but challenges still remain. Photo: Cassandra Thompson, US Navy.

The number of piracy incidents increased by 12% year-on-year to 201 in 2018, according to International Maritime Bureau statistics (including the boarding of 143 vessels; 34 attempted attacks; 18 vessels fired upon and six vessels hijacked). Given 2017’s total of 180 incidents was the lowest total for 22 years, the 2018 piracy count still represents an 18% decrease in incidents from five years ago (2014 = 245). [4]

However, the past year has seen a marked rise in attacks against ships and crews around West Africa. Increased activity in the Gulf of Guinea (more than 70 incidents overall) is responsible for making Nigeria the top global hotspot for piracy, accounting for 48 incidents or almost one in four of all reported cases globally. 

Many crews are kidnapped and taken into Nigeria where they are held for ransom, while Nigerian pirates have also demonstrated their capabilities further out at sea by hijacking a tanker around 100 nautical miles off Point Noire, Congo in October 2018. Safety of crew continues to be a major cause of concern.

Nigeria replaces Indonesia as the top global hotspot for piracy. Previously, Indonesia had seen the most piracy incidents for every year since 2014 when it recorded 100 incidents. However, in 2018 it saw just 36 incidents – a fall of 64% over five years. Patrols by the Indonesia Marine Police have seen the number of incidents significantly decline, with the majority of incidents low level opportunistic thefts. However, many attacks may still go unreported.

Together, the South East Asia and Africa regions account for over three quarters of all piracy incidents worldwide (77% – South East Asia 67 incidents and Africa 87 incidents). Hijacking and boarding of vessels is still tied to inequality and the economic situation in parts of Africa and Asia, meaning global economic and geopolitical conditions continue to play on the security of shipping. However, piracy as a cause of a total loss of a vessel is extremely rare. Only four of the 1,036 vessels that have been total losses over the past 10 years were down to piracy (less than 1%) with no reported losses since 2011.

More accidents and injuries at sea, stockpiling goods and additional pressure on vessels and crew could be just some of the potential knock-on effects from the new political tool of choice.

In January 2019, the US tightened sanctions against Venezuela, targeting the country’s oil industry against a backdrop of growing political unrest in the country. Unable to sell sanctioned oil, the country’s oil producers were forced to store 8.36 million barrels of Venezuelan crude worth $500mn in a fleet of tankers moored along the country’s coast.

Sanctions have become the political tool of choice. The US and EU has a number of wide-ranging sanctions regimes in place that directly target individuals and sectors, including energy, shipping and financial services like banking and insurance. These include sanctions against Russia and Iran, and most recently Venezuela. In November 2018, the US re-imposed sanctions on Iran’s shipping and insurance sectors, including the National Iranian Tanker Company. It warned other countries that allowing Iranian tankers to call at their ports or transit waterways comes at great risk, as under-insured Iranian tankers are engaging in unsafe behavior and would be unable to cover the loss in event of an accident such as an oil spill.

Sanctions can have a direct impact on maritime safety. The US believes Iranian vessels are disabling location transponders in a bid to evade US sanctions and make it harder to track the country’s oil exports. However, turning off transponders only increases the risk of accidents and injuries.

“Sanctions can increase exposures as companies are forced to stockpile or store goods in ports and on vessels. There are also considerations for vessels trading in a sanction environment, including additional pressures on the operation of a vessel and the quality and training of crew,” says Captain Andrew Kinsey, Senior Marine Risk Consultant at AGCS. With renewed sanctions on insurance, Iranian tankers will also lose access to the international insurance marketplace.

According to the US Department of State, self-insurance and coverage from Iranian insurance companies will only go so far and is unlikely to be sufficient to cover the loss of an oil tanker, where insured values can exceed $1bn. On January 6, 2018, the Iranian-owned tanker Sanchi sank after colliding with another vessel in the South China Sea – the majority of the loss was covered by international insurers.

[1] Intercargo, Stowaway Incidents And Ports Between January 2010 and July 2017, August 2017
[2] Robmarine Shipping, Stowaway Activity Within Europe, June 2018
[3] World Shipping Council, Rescuing Persons Stranded At Sea Is A Shared Responsibility, June 2018
[4] ICC International Maritime Bureau, Piracy And Armed Robbery Against Ships, 1 January – 31 December 2018
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