By Ceylon Association of Shipping Agents
Strategically located at a key midpoint for trade and as a major logistics hub for naval and coastguard visits from around the world, the potential for Sri Lanka’s role in regional maritime affairs knows no bounds. At present, the Port of Colombo, Sri Lanka’s main maritime gateway, primarily handles container transshipment in the Indian Ocean.
However, over the past two years, 95 foreign warships from around the world have visited the island. Moreover, Sri Lanka Navy, which is widely experienced in combating maritime terrorism against the lethal Sea Tigers, remains an invaluable asset to the region.
In this article, the Ceylon Association of Shipping Agents (CASA), the voice of the shipping industry in Sri Lanka, attempts to identify the key challenges faced by the maritime security companies in making the world’s oceans a safer place.
Piracy and maritime security
Piracy dates back to the 14th century BC, when pirates attacked the ships of the Aegean and Mediterranean civilizations. From then to now, piracy has evolved over time, threatening the global maritime sector. In the recent past, the Red Sea and Arabian Sea, in a maritime area confined by the Suez and Strait of Hormuz, have become prime targets of pirates.
Approximately 35 percent of all crude oil shipped by sea, and one-third of all liquefied natural gas, pass through the Strait of Hormuz. Consequently, this has resulted in the Straight and Arabian Sea in general becoming a prime area for pirates to operate in and threaten the global maritime security.
As the threat of piracy escalated, the insurance companies requested the shipping lines to deploy armed security personnel on board vessels plying regions with enhanced security risks. Such regions, known as high-risk areas (HRA), are designated by the United Kingdom Maritime Trade Organisation (UKMTO) as areas of high risk for piracy and within which self-protective measures are most likely to be required. Thus, armed guards get on board the vessels entering the HRA and disembark from the closest port after passing the HRA.
One can be happy that incidents of piracy have sharply declined in recent times. This is due to multiple reasons: development of coastal shipping services by various countries, formation of ship convoys by ships crossing the Arabian Sea by banding together, improvements in the situation in Somalia and most of all, due to the service of on-board security teams (OBST) on the ships.
Opportunities for Sri Lanka
Sri Lanka’s strategic position immediately after the HRA creates opportunities for Sri Lanka to get involved in the embarkation and disembarkation of Sea Marshalls. The naval base located in the southern port city of Galle has been used as an armoury by several maritime security companies and consequently, many support services such as logistics for arms and ammunition, as well as embarkation and disembarkation of Sea Marshalls have emerged. Sri Lankan private sector companies, working through the Defence Ministry, have provided on board security to a large number of commercial shipping lines and fishing trawlers that operate in this region.
Initially, most weapons were stored in state-run, land-based armouries. But foreign governments around the world became increasingly uneasy about having such large quantities of arms, ammunition, body armour, night-vision goggles and other military equipment being on other territories. Thus, the floating armoury was born.
Tugs, patrol boats, de-mining craft and other vessels have been converted by private companies into floating arms stores. Most of such vessels are based in international waters around the edges of the Indian Ocean. Private maritime security companies can, for a fee, keep their weapons on board, ready to be collected and transferred onto merchant vessels when required.
Some floating armouries also offer weapons for hire. Apart from the storage of weapons these companies engage in providing hotel services for security guards, arrange airline ticketing and other value-added services during their stay in Sri Lanka. All these economic activities generate foreign exchange for the country which contributes largely to the country’s economy.
In October 2015, upon an industry review of a threat assessment from military intelligence, the size of the piracy HRA in the Indian Ocean was reduced. This reduction of the HRA is in response to the ongoing containment of pirate attacks in the Indian Ocean but a group of shipping and oil industry organisations (BIMCO, ICS, INTERCARGO, INTERTANKO and OCIMF) stressed that a serious threat remains and that correct reporting and vigilance remains crucial.
With this revision, a large sea area bordering Sri Lanka was excluded from the HRA and therefore, reduced the strategic advantage Sri Lanka enjoyed. However, it has been proven that revising the HRA was only possible due to the strict measures taken over time and therefore, loosening regulation will only benefit the pirates. Due to the shrinking of HRA, the deployment of security teams has become unnecessary for vessels trading between the Gulf and Far East. This has had an adverse effect on Sri Lanka.
Additionally, there are many regional players, such as Malaysia, emerging as maritime security hubs by offering competitive rates which are 50 percent less than Sri Lanka. Along with the HRA shrinking and the threat from pirates reducing over time, many shipping lines are negotiating better terms to reduce the maritime security charges, which have made the industry more price sensitive than ever before. In such a situation it is very important to remain competitive to ensure that Sri Lanka does not lose any business to regional competition.
Sometime back, Sri Lanka was identified as a place where there were live firing refresher courses for private maritime security companies (PMSC), which were not available in many other ports. This is also one aspect which helped Sri Lanka position as a maritime security hub. Gunsmith services or armourer services were commonly requested by the PMSCs and reintroducing such services could attract more PMSCs to Sri Lanka.
Regulators, such as the Defence Ministry and Navy, have the obligation to facilitate and protect merchant vessels from piracy attacks, which to date have taken many hostages and innocent lives. In this context, Sri Lankan regulators will have to provide facilitation to OBST transfers and handle and store weapons and other equipment through the competent bodies.
Also, they must systematically remove ‘red tape’, which hinders the operation of marine security companies, resulting in the country losing its hub status and foreign revenues to locations such as Malaysia and the Maldives. Procedures related to Sea Marshalls and carrying weapons onboard vessels calling the Port of Colombo should be established with the consultation of all stakeholders. Currently, these procedures change from time to time which results in uncertainty and affects ‘ease of doing business’ for many PMSCs.
As a part of the country’s vision to become a maritime hub, it is important to establish public-private partnerships to promote Sri Lanka as a preferred destination for maritime security. This involves infrastructure support such as floating armouries, a competitive pricing structure and more importantly, a dialogue with key stakeholders in policy formulation.
The Defence Ministry and Sri Lanka Navy should continue to play a lead role whilst the public-private partnerships focus on the commercial aspects of maritime security. Continuing with the same old pricing structure will make Sri Lanka uncompetitive in the region. Therefore, a more competitive pricing structure needs to be developed, considering the current challenging business environment. This needs to be done expeditiously, lest risking the loss of business to regional competition and fighting an uphill battle to win it back.