The Good News From the Iran Tensions? A Booming Trade in Maritime Security

The U.S. Navy (NAVCENT) shows the damage in the hull of the Japanese oil tanker Kokuka Courageous off the port of the Gulf emirate of Fujairah on June 19, 2019. The Japanese tanker, attacked in the Gulf of Oman, was damaged by a limpet mine resembling Iranian mines.

Source MUMEN KHATIB/AFP/Getty

Why you should care

New diplomatic challenges offer opportunities for an industry focused on pirates. 

It is one thing to ward off Somali pirates. It is another to tackle the Iranian Revolutionary Guard. The maritime security industry has experienced a flood of demand from shippers spooked by the recent attacks on tankers in the Gulf of Oman, which the U.S. and U.K. have blamed on Iran.

“We have been flat out and have deployed an additional 70 guards in the Gulf since the attacks last week,” says John Thompson, co-founder of U.K.-based Ambrey, which over the past decade has become the largest provider of security personnel to ships.

Thompson expects the number of security guards deployed on vessels to increase by approximately 25 percent in the coming weeks, based on the number of inquiries Ambrey has received. Dimitris Maniatis, chief commercial officer at Diaplous, says his Cyprus-based security firm has witnessed a “12 percent rise in requests” for placing guards on ships in the Gulf.

It’s not the rock star days that it used to be.

Patrick Rogers, security specialist, S-RM

It represents a welcome boost for the industry, which has experienced a lean period as piracy off the Horn of Africa diminished over the past few years just as an influx of cheap labor drove down costs. The cost of hiring a team of three or four guards for a 12-day journey has dropped from the industry peak of $40,000 to well less than half of that. One executive says the previous pricing “wasn’t sustainable.” Now guards on ships have become a “commoditized service.”

“It’s not the rock star days that it used to be,” says Patrick Rogers, a security specialist with S-RM, a risk consultancy that advises a number of major shipping companies

When pirate attacks off Somalia became commonplace last decade — inspiring a Tom Hanks film detailing the capture of the Maersk Alabama cargo ship — the number of security firms offering guards proliferated, often founded by ex–special forces or other elite military personnel. Guards were generally drawn from the ranks of elite military units in the U.K. — usually former Royal Marines, Parachute Regiment, or ex–special forces soldiers such as those that served in the Special Air Service or the Special Boat Service. Jason Franks, a former private marine guard, says that at one stage the high pay meant the Royal Marines were “hemorrhaging” men attracted by what amounted to a cash-lined bridge back in to civilian life.

 

Many found the life testing. Conditions on ships can vary widely: Some modern cargo ships are equipped with gyms and high-end canteens, while older vessels are often basic at best, with guards facing a lottery every time they are deployed. Kieran Ryan, a former Royal Marine who worked as a guard for two years, says that to be assigned to a Greek-run vessel meant “you knew you would eat like kings.” A Chinese-run ship, on the other hand, “often required a strong stomach.”

Increasingly, guards are lower-paid Asian or eastern European contractors who command far lower rates. Ryan says that the level of specialized guard training has improved in recent years because of increased industry regulation and the fact that former marine security officers have set up centers to prepare recruits. But the changing demographic means the average guard does not arrive with as much experience as five years ago.

“Now a lot of the guys going into the industry are from India and Nepal instead,” says Ryan. “They’re brave … but Nepal is a landlocked country.”

Maniatis, who spent four years as a private maritime security contractor, says that increased competition had already driven consolidation across the industry. He estimates that it would soon be whittled down to just a “handful” of major companies.

“Around 2011 or 2012, there were about 460 private maritime security companies,” Maniatis says. “But many have gone missing in action.”

Some companies have thrived under the new conditions. Ambrey, which many in the industry say helped drive down costs when it launched nine years ago, has increased turnover from $33 million in 2016 to approximately $64 million last year, according to its accounts and Thompson.

“It was a frothy market five years ago,” says Thompson. “But it’s gone through a natural evolution.”

The tense situation in the Middle East might not return the industry to the boom times but it does present welcome demand — as well as specific challenges.

Guards deployed in the region tend to be unarmed: Opening fire on elite state-backed forces is considered unwise, even in self-defense, while the rules on carrying firearms vary from country to country in the Middle East. But trained guards can improve the quality of lookouts on board, providing extra manpower and utilizing specialist equipment like night-vision goggles, helping sight potential attackers early.

The nature of the attacks — which is still being hotly debated in maritime security circles — has also complicated the response from shippers. The U.S., U.K. and Saudi Arabia have accused Iran of being behind the attacks, highlighting video footage that appears to show an Iranian military vessel attempting to remove an unexploded limpet mine from one of the tankers. Iran has denied responsibility, while Germany and Japan have cautioned against jumping to conclusions. If, as suspected, though, the attacks were carried out by a state, it presents a very different challenge to piracy or other threats that guards are normally tasked with deterring.

Rogers says that some of the largest tanker operators were likely to proceed cautiously. “We still don’t know for certain what kind of threat shippers are facing,” he says, adding there was still debate over whether the vessels had been attacked with mines, or potentially rockets or even drones. “In the circumstances, improving procedures on board — from monitoring the tanker both in port and at sea, ensuring the crew know what to do in the event of an attack to dusting off crisis management procedures at corporate level — may have more benefit than putting guards on board.”

Maritime security experts say clients with tankers in the region could consider a number of measures, from trying to ensure they travel in daylight through the Strait of Hormuz, the narrow chokepoint separating the Gulf states from Iran where approximately 20 percent of the world’s oil flows every day, to sailing at maximum speed.

Robert Hvide Macleod, CEO of Norwegian tanker company Frontline, whose Front Altair vessel was one of those attacked last week, said the company would “consider all possible measures to ensure the safety of our crews and vessels.”

The mystery has complicated the response. While last week’s attacks were the second on tankers in the region in as many months, consultants warn the next attack could be very different. On Wednesday a rocket hit an area of Basra, Iraq’s southern oil and gas hub, close to the border with Iran.

Security advisers also say that if the attacks did involve limpet mines, it is unclear whether they were attached while the vessel was in port — the two tankers left from Saudi Arabia and the UAE — or after the ships had begun their journey.

“We are not confident of who or what is executing these attacks,” says Ben Stewart, maritime director of Maritime Asset Security and Training, which has provided guards to at least one tanker in the region. “If this is being done by the Iranians, they need to maintain deniability.”

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By David Sheppard and Harry Dempsey

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