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Maritime Security Challenges in a Changing World · Look Forward

• 0:06
  Hello, my name's Andy Critchlow.
• 0:07
  I'm head of news at S&P Global Commodity Insights, and welcome to the
• 0:12
  Look Forward Podcast from S&P Global.
• 0:15
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  to navigate uncertainty with confidence.
• 1:10
  So welcome to, the latest episode of the Look Forward Podcast.
• 1:14
  My name's Andy Critchlow.
• 1:15
  I'm head of news at S&P Global Commodity Insights, and I'm here
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  joined by Joshua Hutchinson, managing Director of Risk and Intelligence
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  at Ambrey, the Global Maritime Security and Intelligence Company.
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  And we are here to discuss one of the most fascinating subjects,
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  facing global trade at the moment, which is security on the water.
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  Is the, rule of, of free trade on global sea lanes, free and uninterrupted
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  transportation of goods and services, oil, commodities is that now under
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  threat from, geopolitical actors, from, terrorist actors, from militants?
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  We've seen attacks in the Red Sea.
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  We've seen attacks.
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  Globally on shipping, in multiple different jurisdictions, and we're here
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  to get into the, that subject today.
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  Thank you.
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  Thank you very much for having me.
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  Just how serious, you know, I, I kind of paint somewhat of a dramatic,
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  situation there, or, or picture.
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  But, you know, from our reporting, news reporting, you know, we're
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  constantly reporting about attacks on tankers, attacks on
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  shipping, real threats to trade.
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  Is this overblown or do you think this is, is, this is real.
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  Thank you very much for, for having me.
• 2:31
  Pleasure.
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  I, I think, there's, there's two ways to look at this.
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  The threat today fundamentally is, is as severe as it sounds.
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  You know, we're hearing of unfortunate fatalities within, within the Red
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  Sea and within the Gulf of Aden from a particular threat actor, that I'm
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  sure will, will, will come onto.
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  But also the amount of events that are happening globally are
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  definitely being captured better.
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  So there's two ways to look at an increase of data.
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  You know, Ambrey reports around sort of 5,000 to 6,000 events every
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  single year in relation to security, where we look at really war, crime,
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  narcotics, activism, and migration.
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  If you look back sort of 15 years ago, was the same available
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  data, you know, available?
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  Maybe not.
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  So whilst there is a natural increase of events being captured, yes,
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  fundamentally the severity is increasing.
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  We're seeing, you know.
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  We were talking sort of previously around Somalian piracy.
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  This is, you know, sort of, automatic 762 caliber weapon systems being fired.
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  And in the last sort of two years, we're now seeing anti-ship ballistic missiles
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  that you would usually see in wartime.
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  And the evolution of kinetic, you know, unmanned aerial vessels,
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  unmanned surface vessels, never really seen besu before at this scale.
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  So the severity is as stark as you say it is.
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  It's, it's interesting what you, you say there around the, the, the scale of
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  the attacks and the motive, the attacks.
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  You know, we've gone from, you know, pilots using small arms to,
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  as you suggest, you know, drones, ballistic missiles, et cetera.
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  You know, back in 2007 I was embedded on USS, Stennis actually in the Gulf.
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  And, they were, involved in, in operations in Afghanistan and,
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  at the, I remember talking to the captain and he was saying that.
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  And I asked him the question, you know, how vulnerable, how
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  vulnerable is this ship to attack?
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  And he said, well, you know, this is one of the biggest ships in the world.
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  We can take anything on.
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  The thing that really worries us is, you know, three men in a dinghy,
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  actually, the, it's, is that what they mean by asymmetric warfare?
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  And I think that's, it's, it's interesting, isn't it?
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  It's, you know, you try and build out your unknown unknowns.
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  What could come at you.
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  But I, I think where, you know, we, we've seen recently, over the
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  past couple of months, anti-ship mines being used successfully.
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  It's a rather alarming scale in a certain region.
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  And these are specialists, type of, of equipment being used.
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  Then on the other end of the asymmetric warfare, you've got
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  very low cost equipment that is ballistic, that is able to stop a,
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  a commercial vessel in its track.
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  And, you know, I'm sure for those listening are very aware of what
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  a commercial vessel is in terms of its size and its strength.
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  And actually, you know.
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  So 12 months ago we were seeing ballistic systems being used,
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  but, but vessels were going on.
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  You know, they were, in reality, a double hauled ship is a well
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  armored vessel in terms of its super structure and its hull type.
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  And then all of a sudden we saw that step again in terms of the
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  threat increase and how do we stop the, the engines from moving?
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  How do we bring a vessel to a standstill?
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  And now all of a sudden you've got a sitting duck.
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  And at that point, the threat to life and the threat to cargo and the threat to
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  the environment is extreme at that point.
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  And, and that it's to look back on.
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  I think it's quite alarming.
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  I think, you know, as an industry we're very good at adapting very quickly,
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  both from a threat base, from a commercial, from, from trade, et cetera.
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  But I think it's always good to look back and go, how quickly has
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  that happened and how do we stop that happening again in the future?
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  So, you know, the British Empire was built on the Royal Navy ruling the waves.
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  And protecting global trade.
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  I think, you know where I'm going with this question has,
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  has, has the, has the US.
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  Lost control of, of, of global maritime security.
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  I, I, I think it's interesting that you, you, you bring the US in.
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  I think what the US are very good at doing is setting a clear
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  agenda and vocalizing that agenda.
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  It's, it's, my view is that it's not necessarily the US's responsibility
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  to, to, to, to rule, rule the waves.
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  You know, and, and I think that.
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  It's probably the historic aspect, you know, rural Britannia, that was always
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  our vision as an empire to go out and rule the waves and, and conquer.
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  I think now there are cohesions in place, combined maritime forces that
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  utilize regional assets, international assets to protect waterways to potect
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  commercial shipping clearly as part of the IMO regulations and union costs.
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  You know, there is a. International, freedom of navigation, you know,
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  that never existed back in the day, but what we're seeing more now,
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  especially in the areas of of extreme contention, say we're looking at
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  sort of Persian Gulf, Indian Ocean.
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  Red Sea Gulf of Aden.
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  We're seeing, you know, European funded, Atalanta.
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  We're seeing, speedies.
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  Obviously the US still has dedicated assets in the area, but also part as
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  combined maritime forces, and I think that that's that natural evolution where no,
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  I, I believe no one country can do it all.
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  There is a separate linear discussion in terms of what is the priority for a state.
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  Versus what's the priority for commercial shipping and the
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  security of international waterways.
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  So let's focus in on some of the, the, the flashpoint areas.
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  You know, you mentioned there Gulf of Aiden, Red Sea, Bab al-Mandab.
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  You know, something like three and a half million barrels a day
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  of crude at any one time can flow through that, that that choke point.
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  We, we saw an easing of tensions there, kinda, what's the
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  status there at the moment?
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  I think probably when we had last, had a, a talk couple of weeks ago, we were
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  seeing things sort of settling down and then in, in the past, couple of
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  days we've seen the IDF launch multiple attacks on, on power, outletS&Power.
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  Infrastructure within, within Yemen, and I think naturally that will
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  continue to, increase tensions.
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  It's, it's interesting because usually within a maritime threat actor, it's
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  been very regionalized, both in terms of the opportunity, the capability, and
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  the intent of, of why they're doing it.
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  So, you know, what is the intent of that threat actor?
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  Why are they targeting particular ships?
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  Are you creating an opportunity to them and, and do they have ships?
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  Do they have weapons systems?
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  What's the capability?
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  But, Yemen and the Houthis are very much focused on a situation
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  which is well north of them in terms of the IDF and, and Hamas.
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  Therefore, it's, it's a really interesting but alarming situation
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  where everything that we see that the Houthis react to is done something that.
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  We as an industry can't control.
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  And something that, you know, I don't think anyone has the answer at the moment
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  in terms of what, you know, the Israeli government plan to do within, within Gaza.
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  I think we've seen that, you know, that that has continued to evolve.
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  But then, and they continued to attack the Houthis, so.
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  Right now, you know, we've seen, I think as well reported bias,
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  S&P is a 60 to 80% reduction.
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  There's about 40 odd vessels, you know, in the area at any given town.
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  You know, that's come down from huge, huge numbers.
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  So I think we're all starting to see an effect from that.
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  But that is down to, I think there's an unknown question,
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  an unknown understanding.
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  I think it's easy as always to avoid rather than understand.
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  And I think now as an industry, there, there is a better step forwards in terms
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  of, you know, what's happening there and why, what does that mean to me, a ship
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  owner and, and what can I do about it and what's available to me as a resource?
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  But I, I, I still think with the, the general intent from, from the IDF and
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  the general intent from Hamas and the general intent from the Houthis, we
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  get to see something in, in the next six months that will show a meaningful
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  impact for ship owners to, to reconsider.
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  How, how sophisticated are the Houthis in terms of their intelligence gathering?
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  I mean, how do they target these ships?
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  I think, there are some traditional methods, we would call it digging.
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  So, individuals, fishermen on the water using, radios, making
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  sure they can identify vessels.
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  I think that's the level one we've seen active use of UAVs.
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  Identify vessels.
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  So, you know, Ambrey had a screening area where we knew that UAVs were being
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  used for vessels heading north and south.
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  And, vessels would actually report in UAVs screening in the area.
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  And what they're looking for is IMO numbers, vessel names is the
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  information they've got on their desktop.
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  With what's on the water and that correlates to vessels using Non AS.
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  So even with Non AS you can obviously the, you know, radar
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  systems were being used on land.
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  There's limitation of radar systems.
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  It's usually 12-15 nautical miles.
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  But with that, they can get a ping, they can go identify a
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  threat and they can act upon it.
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  And what the Houthis are good at doing is, is staying as close to the line
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  as possible in terms of their mandate.
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  You know, what vessels are they're targeting and how they're targeting
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  them, and obviously then using those methods to make sure that they
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  are doing what they say they do.
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  I think the Houthis have made three or four mistakes.
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  In terms of potentially their targeting profile.
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  but that's what they've been doing.
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  So
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  Are they the oil tankers that they sank or...
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  So no, there there was some that, I think had an old European manager, but then
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  had Russian cargo, Chinese cargo onboard.
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  So you would say, you know.
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  Politically, it's, it is a misidentification, and there
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  wasn't a follow up attack either.
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  You know, what we're seeing with the hoot is once they've successfully
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  identified and hit a vessel, they will then continuously go through until
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  either the vessel goes, or the threat has, you know, the, the vessel has
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  deceased or, or sunk at that time.
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  So.
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  Yeah, I think, I think we're seeing what is relatively low cost available
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  technology to identify vessels, and that then comes down into mitigations for
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  vessel owners, vessel operators that's been advised by companies like Ambrey or
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  the European Naval, Naval Forces as well.
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  So be, before we started recording, we were talking about the guy I
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  used to, serve in the Army with, who unfortunately got killed.
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  I think that must have been, early two thousands.
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  Um.
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  Sort of offshore, Somalia been on a boat, hard security.
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  What are vessel owners doing now that's different?
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  Are they putting actual more physical security onto boats?
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  Is it electronic countermeasures?
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  Is it more.
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  Even, you know, in the cybersecurity space, how can they protect themselves?
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  What are you seeing?
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  I think, once again, a mitigation is always relevant to, to the threat, and
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  that is how you create risk management.
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  Risk management is, you know, understanding what the threat is,
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  putting together mitigation is, and creating an assessment and the likelihood
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  of something about to take place.
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  And you would always want that risk to be as low as possible.
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  So what can I do?
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  What can I put in place?
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  Sorry, that was my risk management one.
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  Right?
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  Yeah.
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  And for those that aren't,
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  You've sold it to me.
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  Yeah.
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  Good.
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  So, but we're talking about is mitigation.
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  Yeah.
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  So what can I do?
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  You know?
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  So, you know, people re regard them being houthis or piracy boarding my vessel.
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  Bare boats, their weapon systems.
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  Yes.
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  You know, armed guards are still the leading factor for that.
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  Depending on the, the scale of that.
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  Yes, you may encourage more armed guards on board and, and using more rounds.
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  Clearly though there's laws and regulations, you know,
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  this isn't a free militia.
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  There are flag states, flag rules depending where the company's registered.
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  They will have, you know, UK laws that govern them.
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  So there is still a large amount of restriction in terms of what you can do.
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  You can't just turn up tomorrow with 20 guys and put 20 weapons systems and 10,000
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  rounds, you know, that, that is illegal.
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  So that there are, there are natural rules and regulations which, which
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  govern, and should be in place.
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  And there's no sort of, because.
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  The level of attacks have just gone up and up.
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  There's no push from the, the, from the, the, either the, the maritime,
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  governance perspective or to actually ease those restrictions and allow.
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  I, I think more militarization of commercial boats.
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  Anyone that I've spoken to, either UK, European, US sort of leaders,
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  they will always be supportive in terms of supporting seafarers,
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  supporting transit passages.
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  But on a case by case basis, I haven't seen or heard a general.
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  Relaxation because you're still dealing with a very serious thing, which is,
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  you know, a kinetic capability and, and weapon systems, which should
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  be a licensed regulated industry.
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  So I think on a case by case basis, and, and we would always advise depending
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  on the vessel and the asset, then you should be looking at recommending
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  that and working with Flag state and insurers to, to implement it.
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  But that.
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  Once again, we've only talked about one threat there.
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  So when you're talking about aerial threat and, and the ballistic
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  threat, then what can you do?
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  Are we seeing an increase in electronic countermeasures?
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  Personally, no.
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  Why?
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  Extremely expensive.
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  You might have a, a vessel that's worth $5 million,
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  transiting cargo through the Red Sea.
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  Are they gonna spend a hundred, 150 grand on, on a capital outlay for one trip?
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  Of course they're not.
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  You know, on the other hand, you might have a $50 million container vessel that's
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  going, oh, 150 grand's a good investment 'cause I'm gonna be back here next week.
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  So, I haven't seen that, that huge implementation of
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  electronic countermeasures.
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  I don't think there's a, there's, there's a lot of systems that are well
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  tested that's affordable to ship owners.
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  So what a warship is using multimillion dollar pounds of kit.
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  Versus a commercial vessel, you know, there's a big disparity in terms
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  of availability to the industry.
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  So then you start looking, okay, how do we change the current operating procedures?
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  So.
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  Prior to the Houthis where these were sort of, you were boarding a
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  vessel and you'd create a citadel in the engine room, so it's secure.
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  You'd look at boarding measures and BMP practices.
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  Now the citadel is positioned above the water lines in the
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  event that vessel is hit.
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  and it takes on water within the engine room itself.
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  Ballasts, you know, or, and hopefully doesn't, doesn't sink as a prior target,
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  you know, where can we put a safety room?
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  Where can we look after that crew?
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  I know satellite providers are looking at better communication systems on
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  board the vessel that, that weren't used back in the Somalian piracy days,
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  and then actually training the crew.
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  You know, the big thing that I always advocate is, is how do we take this
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  seafarer who's now a humanitarian hero and now also a, a war fighter,
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  to understand these threats better?
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  There was a horrible image right at the back, right at the
• 16:42
  beginning of one of these attacks where a vessel had been targeted.
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  The vessel turned around, rightfully so, and then it continued on its voyage.
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  A couple of hours later, the crew run deck side.
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  Continuing the repairs.
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  They were still in an elevated threat area.
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  Next thing you see on this video is a missile coming in and hitting
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  the hold and blowing the hold up.
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  Luckily no injury or fatalities, but that, that mindset and
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  understanding to seafarers had to be developed really quickly.
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  'Cause we have had fatalities for seafarers in that region.
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  Unfortunately so.
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  And, and I, I'm not putting any of that down to, to bad practice.
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  I think at some point, you know, there is a, a natural 101 of law, you know, of war.
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  It will happen, it will take place whether that is someone in the wrong place at
• 17:24
  the wrong time, or the Houthis get lucky.
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  And, and I, and I, and I don't wanna be the individual that points
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  to each of those cases, but you know, that's the unfortunate, sad
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  reality that, that we're facing.
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  This, this threat is extreme.
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  You know?
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  I, I'm sure the individuals that served on somalian piracy vessels, you know, 10,
• 17:42
  15 years ago would really consider twice serving on a vessel today when you've
• 17:46
  got a ballistic missile flying at you.
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  Given that, um.
• 17:50
  Air to sea sort of missile threats.
• 17:53
  Given the threat from drones now, which definitely you didn't see 10 years ago.
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  Is there a case building to put some form of air defense onto, you
• 18:01
  know, and I'm talking, I think your analogy's good that you know if it's
• 18:04
  a $5 million vessel or maybe not, but if it's $150 million VLCC then.
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  I mean, I, I've always, I've been quite shocked, so working in the industry
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  15 years, you know, being a vessel owner, vessel operator, sort of risk
• 18:16
  manager and have been involved in a variety of products and services.
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  I am always surprised over those 15 years how vessels really haven't developed
• 18:24
  their design to deal with security.
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  And I would love to, to speak to that level of industry that goes.
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  The appetite isn't there, you know, why aren't they doing it?
• 18:34
  Why haven't we designed ship rails to be, anti boardable?
• 18:39
  Why haven't we built in part of the, the bridge or a, a ballistic
• 18:44
  superstructure that has all this in from?
• 18:47
  You know, you're spending $150 million check, I'm sure an extra
• 18:50
  200 grand is, is, is gonna be okay.
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  I, I'm quite surprised that I've not seen that scale.
• 18:56
  I know there's ship security puns, I know there's assessments to go into a
• 19:00
  ship building process, but not to the level as you mentioned it, that you'd,
• 19:04
  you'd see that adaptation to threat
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  Are ship insurers wanting more guarantees though, in, in terms
• 19:11
  of this kind of hard defense.
• 19:12
  I, I, I think there's, there's, there's two sides and, you know, maybe some
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  of your, your viewers, will split at this point, both stop listening or,
• 19:20
  or I, that I that, or, or lean in.
• 19:22
  But I, I think there's two sides I think, I think the insurance industry
• 19:26
  has, has gone from not really knowing.
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  To having to really understand, you know, what they're insuring,
• 19:32
  why they're insuring it, you know, and, and is that vessel vulnerable?
• 19:36
  And, and I've definitely seen an increase of that in the eight,
• 19:38
  the last eight months from major attacks that have taken place.
• 19:41
  Major losses to, you know, yes the insurance price goes up,
• 19:45
  but is a hundred grand check really worth a $50 million loss.
• 19:50
  Not, not so sure anymore.
• 19:53
  whereas actually on the other side, I think there are some very proactive
• 19:56
  insurers in the market that, that are leading expectations and standards to,
• 20:00
  to go, I want to see this warranted.
• 20:03
  I want to know you're doing this.
• 20:04
  And I think that's where the industry will go to, you know, it, it's a balance.
• 20:08
  'cause every insurance company is different, broker,
• 20:10
  underwriter, capacity provider.
• 20:13
  But I, I think collectively that the London market, as I know it has, has.
• 20:16
  Hugely increased.
• 20:17
  And it's exciting to see that evolution within the market
• 20:20
  because someone has to do it.
• 20:21
  Someone has to step forward going, enough is enough.
• 20:24
  Here's the new standard.
• 20:25
  And I think we'll look back in two, three years time and go, yeah, of course.
• 20:28
  You know, we won't question it.
• 20:30
  It's not just, the Middle East where we've seen this threat to shipping though,
• 20:35
  and maritime assets, even closer to home here in the uk, the North Sea itself has,
• 20:41
  certainly come under the spotlight, since the, Russian invasion of Ukraine.
• 20:46
  Mm-hmm.
• 20:46
  What sort of threats have you seen there?
• 20:48
  I mean the north, north, north sea's, an interesting one because obviously
• 20:52
  one, it's, it's close to home, but two, I think we've, we've all had to, to
• 20:56
  learn on a relatively quiet industry.
• 20:59
  You know, even, I would make my own assumptions that, you know,
• 21:02
  you use your mobile phone, it's all satellite communication, aerial
• 21:04
  communication, and you know, the, the.
• 21:07
  Three big power telecoms, power cables, and, you know, oil, gas, you know, it's
• 21:13
  all subsea, you know, because it's, it's more effective, it's more reliable.
• 21:17
  But as part of that, it's a huge level of vulnerability.
• 21:20
  And the UK as people, may not understand is a, is a great connecting hub.
• 21:24
  You know, it's connecting sort of western parts of Europe
• 21:27
  to northern parts of Europe.
• 21:29
  It's connecting Europe to parts of the state 'cause it's
• 21:32
  cheaper to run across land.
• 21:33
  So we as the UK are very vulnerable when we look at those sort of subsea aspects.
• 21:39
  But also, you know, we're, we're a little bit further north in terms
• 21:42
  of, Arctic capabilities coming south.
• 21:45
  I, I, I don't see, something changing dramatically over the next sort of
• 21:51
  12 months in terms of that threat.
• 21:53
  But I do think now companies are becoming more responsible to it.
• 21:56
  You know, the fact that we're gonna start seeing more use of international
• 22:00
  freedom for warships coming into the area.
• 22:03
  We've had reports of, you know, certain state submarines
• 22:07
  appearing near naval bases.
• 22:09
  I think that's all part of the political game show considering the
• 22:12
  battlefields at this moment in time.
• 22:14
  But for me, as a UK company, you know, British National, I look at the UK and
• 22:20
  go, we definitely have to focus on those subsea assets and protection of them
• 22:24
  to maintain our, to maintain our play.
• 22:26
  And then I think the rest of Europe becomes into contention as well.
• 22:29
  They're vulnerable, you know, they are sat there as a fixed asset,
• 22:32
  well-publicized where they are.
• 22:35
  You know, I would put out and say a pretty stark number of say 90% of
• 22:39
  them are unprotected and vulnerable.
• 22:41
  Maybe 10% of them are inaccessible 'cause of depth in areas in the ocean.
• 22:46
  But all of a sudden I think what, you know, Russia has
• 22:49
  shown us is quite quickly.
• 22:51
  You can create a lot of confusion, a lot of, cost and expense
• 22:56
  and distraction by dragging an anchor chain through the ocean,
• 23:00
  Right, 'cause I think, you know, this is another lesson from the last five years.
• 23:04
  You know, what was thought previously to be unimaginable has actually happened.
• 23:09
  No one, if you'd mentioned Nord Stream, that they would be
• 23:11
  damaged by some sort of undersea.
• 23:14
  Attack or whatever it was.
• 23:16
  Well, it's, it's the, it's, it's the, whatever it was that, you know, maybe,
• 23:20
  you know, the, the keyboard warriors or we can sit here and speculate, and
• 23:24
  I never want to be pulled into a level of speculation, but yeah, a Black Swan
• 23:28
  event is something you cannot imagine.
• 23:29
  So I, I've been pulled into rooms where we go, well, what's the next one?
• 23:32
  I went, well, whatever we say now, it'll be something that we can't yet fathom,
• 23:38
  and that's a pretty daunting thing considering, as you say, in the last
• 23:41
  five years we've come from this all been relatively quiet, you know, prior to the
• 23:45
  start of the Houthis, people forget that the, I know I'm pulling out of Europe,
• 23:48
  but, the, the Red Sea was closing down.
• 23:51
  The HRA had shrunk.
• 23:52
  The HRA was about to disappear.
• 23:54
  And then we're into, we're into the midst of it.
• 23:57
  Me, the, the, the Black Sea at the moment is, is extremely confusing for everyone
• 24:01
  involved in terms of what we are seeing within the media versus what we're
• 24:05
  seeing in the ports in the waterways.
• 24:07
  And there's so little reporting actually.
• 24:09
  I mean, it's becoming very opaque what is going on there.
• 24:12
  Yeah.
• 24:12
  And exactly that.
• 24:13
  And look, I'm not gonna get pulled into a land base, land based
• 24:16
  conversation, but, you know, Ukraine is, is heavily dependent upon.
• 24:21
  Grain trade and, imports and exports there.
• 24:24
  Some of its major ports.
• 24:26
  And, and Russia knew that tactically taking out cur, you know, the
• 24:29
  Kursk Dam, obviously the northern ports and obviously me life itself.
• 24:32
  And, you know, Odessa is still operational.
• 24:36
  Same, same with Russia.
• 24:37
  I think they, they probably didn't realize the vulnerability they are at in terms of
• 24:41
  some of their Eastern, black sea ports.
• 24:44
  And then once again, we've seen a slightly different warfare tactic.
• 24:48
  Come about where unmanned surface vessels are very effective.
• 24:52
  And then actually, you know, we talked about this previously, but.
• 24:56
  Both Russia and Ukraine aren't targeting vessels freely.
• 25:00
  You know, they're not acting as a free militia, you know,
• 25:03
  disrupting commercial trade.
• 25:04
  Why they need commercial trade.
• 25:07
  What they are using is using very sophisticated intelligence
• 25:10
  operations where they understand.
• 25:12
  Vessels are importing a threat to their state, be it weapon
• 25:16
  systems, be it component parts.
• 25:18
  And I, and I think that's the question for a ship ownership operator.
• 25:21
  Now, you know, you might own a ship, but you are outsourcing, chartering,
• 25:25
  you're outsourcing ship management, and next thing you know, you've heard of
• 25:28
  attack because a particular container might have been loaded in Turkey that
• 25:32
  had parts going to a UAV factory.
• 25:36
  I'm not expecting the ship owner to be aware of that, but I think
• 25:38
  in today's age, you know, we should be asking the questions
• 25:42
  and making sure that the policies are set where that doesn't happen.
• 25:44
  And, and we've seen this tick for tat, you know, regardless of what's happened in
• 25:47
  Alaska or what's not happened, you know, the threat has not changed in Ukraine.
• 25:52
  In, in fact, you know, on the, on the waterfront it's intensified.
• 25:56
  So the fact that you have several counterparties involved in any
• 26:00
  shipping, transaction, any, any sort of goods being on the water.
• 26:05
  It's impossible as an owner to kind of.
• 26:07
  It'd be completely risk free, right?
• 26:10
  You're gonna offend someone.
• 26:11
  Well, exactly.
• 26:12
  Look, risk is never zero.
• 26:13
  So it, it's at what point of tolerance are you willing to accept?
• 26:16
  And that's quite a big question for a ship owner.
• 26:19
  You know, are you willing to accept high risk because it's high reward?
• 26:22
  Or actually, do you not want to go somewhere?
• 26:24
  IE you avoid the area altogether.
• 26:26
  But now we we're seeing, you know, component level, onboard
• 26:29
  vessels being targeted, because they're going to particular area.
• 26:33
  You know, that's the level that the intelligence systems from both states are.
• 26:37
  You know, getting involved in that, I think we would be
• 26:39
  ignorant to think otherwise.
• 26:41
  that, that you are gonna get away with that.
• 26:43
  And, and this is where we've seen vessels that have been calling Russian
• 26:46
  ports, getting hit by sea mines.
• 26:48
  This is where we've seen vessels on the way to Ukraine, clearly with a
• 26:51
  component factor within their, relating to the war machine being targeted.
• 26:56
  You know, these, these are.
• 26:57
  These aren't, affiliation vessels that called Israel.
• 27:00
  Hey, what the Houthis are doing, this is, this is machine, war focus.
• 27:06
  That, and, and that as an understanding for a ship owner that
• 27:09
  might have, just "hang on a minute.
• 27:11
  I picked up cargo in Southeast Asia.
• 27:13
  I've made my transit through the Red Sea.
• 27:15
  I'm now going through the Mediterranean, you know, the largest sort of migration
• 27:18
  crisis we've ever seen in history.
• 27:20
  And then head up into the Black Sea and it's all changed again." That,
• 27:23
  that is the new world, you know?
• 27:25
  And that is pretty stark from every level of aspect, from a financier
• 27:29
  to the insurer, to the charter, to the operator, to the owner, and
• 27:32
  the ecosystem that sits around it.
• 27:34
  That has never been at the level, I don't think in, in maritime history.
• 27:38
  The, the other thing that's different now in terms of the historical
• 27:42
  context is the shadow fleet.
• 27:43
  Right?
• 27:44
  which is vast.
• 27:45
  I mean, you know, for the benefit of our listeners, shadow fleet.
• 27:49
  Iran, Venezuela, Russia now under sanctions, shippers turning off AIS
• 27:54
  and other methods to remain disguised.
• 27:57
  How big a problem is it?
• 27:59
  I mean, it's, it, it's, it's interesting in terms of, I don't think people
• 28:03
  realize you can never stay hidden.
• 28:05
  You know, technology is at a level, accessibly at a level now where
• 28:09
  vessels, unless within a, 12 hour window, you can somehow change the
• 28:15
  super structure, paint color, and da, you know, dynamics of your vessel.
• 28:20
  In a 12 hour satellite pass, you're never gonna be able to hide.
• 28:24
  So we talk about the shadow fleet or the great fleet, but in reality,
• 28:28
  we all know what they're doing.
• 28:30
  And I think that's where, you know, what does that mean to us
• 28:33
  in terms of safety and security?
• 28:34
  I think the concern comes into the age of these vessels, the
• 28:37
  type of cargo they're carrying.
• 28:39
  There's going to be a major disaster at some point in time.
• 28:42
  And I think that's what everyone's screaming about saying.
• 28:44
  Unless we set the policies and the understanding and start to
• 28:46
  implement changes, we are going to see something that's unrecoverable.
• 28:50
  The fact that, it's been going on for a very, very long time.
• 28:55
  We, we just, I, I, I think the wrong saying to say the industry's
• 28:58
  not been bothered about it.
• 28:59
  I think it's more now, you know, a major concern because of that
• 29:04
  environmental safety impact.
• 29:05
  Doesn't it bring us back to the beginning of the conversation though,
• 29:08
  that, that it's about policing?
• 29:10
  Yes.
• 29:10
  And until someone's prepared to, board one of these vessels.
• 29:16
  Sees it, impound it, take the cargo and say, don't do it anymore.
• 29:20
  Then it'll just go on.
• 29:22
  And, and then who does that?
• 29:23
  You know, the IMO is a technical body.
• 29:25
  They set policies delivered by member states.
• 29:27
  All of those member states that are aware of these activities are in the room.
• 29:30
  And, and those member states that are aware of the activity, I'm sure benefit.
• 29:34
  Why doesn't the US do it?
• 29:35
  I mean, world's largest Navy.
• 29:37
  Yeah.
• 29:37
  Well, I mean, you know, over the weekend we've seen, I, it's been reported that
• 29:41
  the US has positioned seven of its vessels, north northern part of Venezuela.
• 29:45
  So are they looking to implement?
• 29:47
  Are they gonna start applying Russian sanctions, pressure
• 29:50
  on the Venezuelan operations?
• 29:51
  We've seen that, we've seen off the coast of Malaysia in their Anchorage area,
• 29:55
  well reported by Iranian trade coming out of their Russian trade coming down.
• 30:00
  So.
• 30:01
  I, I think we're, we're probably at that tipping point now where, you know, from
• 30:05
  a, an information perspective, we're aware of the areas of operations, we're aware
• 30:08
  of the major players policing, and I think that's where OFAC and others have started
• 30:13
  to really publicize and clamp down.
• 30:16
  Have we then see a, a, a material change economically financially.
• 30:22
  You know, I can't, I can't comment, but I think the fact that we're talking
• 30:24
  about it, the fact that we know where it's happening and who's doing it,
• 30:28
  shows you the increase and shows you that we've had an impact already.
• 30:32
  Because you have seen elements of that in the global campaign to stop
• 30:36
  narcotics being shipped globally.
• 30:38
  Mm-hmm.
• 30:38
  And, and you know, we're, we we're seeing that.
• 30:41
  Is a major, you know, not just criminal risk in, in all around the
• 30:46
  world, but also geopolitical risk.
• 30:47
  It's incredibly instate, you know, destabilizing.
• 30:50
  How big has that problem become on the water?
• 30:53
  I mean, it is a, it is a hundred million plus dollar a year problem,
• 30:57
  especially for the, for the P&I clubs.
• 30:59
  And I think if you, if you pick any of the clubs within the, international
• 31:03
  group P&I's, they will have a very large number where they're paying
• 31:05
  on, you know, loss of higher.
• 31:08
  Or they're paying on, claims and detention fees because a you know, a
• 31:14
  package was put on board their vessel.
• 31:16
  So just from, we talk about narcotics, let alone the social problem that
• 31:20
  exists in terms of how, you know, they export it, but then the impact
• 31:24
  to the industry just on it, delays and detentions alone is huge.
• 31:29
  But then actually you look at the problem in terms of, okay, there's clearly a need
• 31:33
  to transport a shipment illegally using, you know, a very well-oiled machine.
• 31:38
  What the maritime industry is good again, and we talked
• 31:40
  about is sharing information.
• 31:41
  You know, you can download an application in 30 seconds and you've
• 31:44
  got 250,000 ships at your fingertips, and a lot of the time due to the
• 31:48
  technology, it tells you where that ship is going and where it's coming to.
• 31:51
  Excellent.
• 31:52
  If I want free cargo, free transmission, I've got it at my fingertips for free.
• 31:56
  And then, you know, I, I think, you know, it's a, it's a, it's a layman
• 31:58
  way of, you know, of explaining that it's not hard to identify vessels.
• 32:02
  If I want a vessel that's going to Europe, a lot of these vessels, I,
• 32:06
  I said to a ship owner recently, if you don't wanna be targeted, the best
• 32:09
  thing you can do is never leave Latin America, trade within Latin America.
• 32:12
  Why no one wants their shipment to come back, return to sender.
• 32:16
  You know, we, I, I, I've been grateful enough to work in some programs where
• 32:20
  we've worked with ship, container liners going from US, to parts of, the
• 32:26
  Gulf and down, and we've successfully been able to mitigate those threats.
• 32:30
  And it starts with the port staff, the port terminals, the staff on board,
• 32:35
  the SOPs, and how those vessels are communicating out to the industry
• 32:39
  in terms of what they're doing.
• 32:40
  You go on any major ship partners, they'll tell you their liners, they'll tell you
• 32:43
  where they're going, what they're doing.
• 32:44
  They're proud to communicate it.
• 32:46
  So it's really going down through all layers of stopping this.
• 32:49
  So I, I think it's gonna continue to be a major problem, but it's, it's,
• 32:53
  it's whether, unfortunately, whether that problem is big enough for the,
• 32:57
  for the ship manager to want to deal with at that particular time.
• 33:00
  I, I've definitely seen within latam alone, there's been a huge base from
• 33:05
  United Nations focusing on sort of, the drug, and anti-narcotics program.
• 33:10
  I've seen ports step up their levels of security, and, and I've definitely
• 33:14
  heard ship owners doing more, but that, that doesn't mean it's not growing.
• 33:18
  And like you say, going back down to the previous claim, the, the
• 33:21
  amount of events now, I think it's, the reporting is better, so we're
• 33:25
  hearing more of it, coming out.
• 33:27
  But it goes down to just a good basic understanding of threats and, and some
• 33:33
  basic levels of mitigation will reduce that risk for ship owners immediately.
• 33:37
  So Josh, we we're trying to set a precedent on the Look Forward
• 33:42
  podcast, to end on a positive note.
• 33:46
  What, what do you feel optimistic about in terms of global maritime
• 33:50
  trade and global maritime security?
• 33:53
  That's an interesting one, and we've not, we've not prescripted
• 33:55
  this, this is, this is just,
• 33:58
  I thought I throw this one in there.
• 33:59
  No, no, it's good.
• 34:00
  I, I think, I think, yeah, may, maybe a couple of things.
• 34:02
  I am, I've said it already, maybe subliminally within, within the podcast.
• 34:06
  So far I have been impressed by the resilience of the industry and I
• 34:10
  think we can do ourselves proud where if we are willing to work together.
• 34:14
  We are resilient and we're able to overcome quite quickly.
• 34:17
  You know, whether that is a crude oil tanker that's on fire, stopping
• 34:20
  environmental disaster, whether that's a new threat actor, you know,
• 34:24
  the whole industry communicating best practice and deviating for
• 34:27
  me and, and my work that I do.
• 34:30
  It's been impressive to see that.
• 34:31
  It's painful at times, but, you know, never done, never been done before.
• 34:34
  So I think we have to continue that.
• 34:36
  We've gotta be, you know, private, military, commercial
• 34:39
  organizations continuing to drive a stronger agenda together.
• 34:42
  That, and I know that if the IMO Secretary General was in here,
• 34:46
  he'd be saying the same thing.
• 34:47
  It's about that partnership.
• 34:49
  It's about the seafarers.
• 34:50
  I think the, the outlook in terms of, you know, these problems drive change.
• 34:55
  You know, they drive, some, some opportunity for, for traders.
• 35:00
  They drive opportunity for charterers and, and I think we'll see, you know.
• 35:04
  War brings two things.
• 35:05
  It's the manufacturing aspect and then brings opportunity for, for economics.
• 35:09
  So I think even in these challenging times, there's an opportunity for
• 35:12
  companies to do well to accelerate.
• 35:14
  I don't think we can ignore that we're all here because we
• 35:16
  are commercial organizations.
• 35:18
  I think it's almost a dirty word, and I think the sooner we talk about the
• 35:21
  fact that we're all, we're all in this to make money, but we wanna do it in an
• 35:25
  ethical, good practice way, I, I think you get some real transparency between
• 35:29
  people going, well, what can we do in this situation that's good and how do we,
• 35:33
  become more adaptable in the future when this happens.
• 35:35
  And having more conversations like this, I guess, as well.
• 35:38
  Talking about it.
• 35:38
  Exactly, and I think people shouldn't be afraid of doing it.
• 35:42
  You know?
• 35:42
  I think the biggest thing I always try and do both in leadership and
• 35:44
  management is the sooner you hold your hands up and say, well, I don't know.
• 35:48
  But damn, I'm gonna find out as quickly as possible, that as a culture within
• 35:51
  the maritime sector, I, I think, will have years of success to come regardless
• 35:55
  of what challenges come around the corner, regardless of the next major
• 35:58
  launch or, potential war, regardless of the next threat, be it, you know, type
• 36:04
  of asymmetric or type of technology.
• 36:06
  The exactly that these kind of conversations, being honest,
• 36:08
  working together will become a more resilient, more profitable future.
• 36:12
  Thanks, Josh.
• 36:14
  A great way to end the podcast.
• 36:17
  Talk more, listen more and ask more questions.
• 36:20
  And if you want to hear more from The Look Forward Podcast, check us out on YouTube.
• 36:25
  Check us out on www.spglobal.com search for look forward, and also
• 36:33
  you can download, past episodes and future episodes on Spotify
• 36:38
  and the Apple Podcast store.
• 36:39
  Thanks very much.
• 36:41
  Thank you.
• 36:41
  Thank you.