Baltic Briefing paper: What navies contribute to merchant shipping

We all readily accept and repeat the mantra that shipping is the lifeblood of the global economy and that we depend on the sea for our prosperity and security. Our confidence is based on a trading regime, almost entirely maritime, of stable global markets and the free flow of raw materials, energy and manufactured goods which are critical to sustaining our way of life.  At the same time when we look out to the wider world we see a challenging diversity of maritime threats and risks to our shipping operations. Terrorism affects UK both domestically and our people overseas and our international connections. Piracy remains a stubborn recurring threat in at least three major sea areas of the world and criminality and illegal trafficking of people, drugs and arms is widespread, and frequently crosses key shipping routes. Military coalitions currently operate in three different sea areas. Of particular note is the humanitarian crisis and loss of life in the last six months and the migrant flows which have quite unexpectedly and adversely impacted Mediterranean shipping routes.

In times of crisis we turn to ‘flag’ and one of the fundamentals of the shipping industry is the nationality of the ship and the reliance placed on flag. It is the flag which gives ships their legitimacy and ultimately guarantees their protection either directly by the navy of the flag State, or indirectly by agreements and other means. Yet this orthodoxy is increasingly challenged by the cumulative shift of tonnage to open registries, evidence in itself of a deliberate move by shipowners to further internationalise their shipping decisions and investments in a globalised industry.

There was a recent flurry of activity by worried diplomats in the US State Department in April this year when the Maersk Tigris was detained by Iranian forces.  As we know it is common for ships to have complex ownership structures involving several interested parties.  In this case the Maersk Tigris was owned by an American private equity fund, and was leased long-term to a Danish company; its daily operations were conducted by a ship management company with offices in Germany and Singapore and the crew were Asians and Europeans. It was sailing between Saudi Arabia and Jebel Ali and the vessel was in Omani Territorial Waters with other international traffic in the westbound lane of the Strait of Hormuz at the time of the incident.

This incident served to remind us that routine, innocuous and entirely innocent shipping operations can quickly become the focus, if not the cause, of tension and potentially of military action.  To counter such threats shipping has relied on the centuries’ old concept of flag State protection.  But open registries do not have navies and national cargoes are no longer simply carried in ‘national bottoms’ as was the case. Or, to put it another away, there is now little correlation between the flag of a ship and national navies. Flag State protection, then, may well be much less a safe assumption than it used to be.

Outside the world of shipping, and but for its importance as a shipping registry, the Marshall Islands is not a country whose name you would expect to read at the centre of a major international incident.  Maersk Tigris was flagged in the Marshall Islands and so the major powers did not know what to do.  At the outset Pentagon lawyers made the plausible argument that a United States and Marshall Islands defence compact obligation extended to ships flying the Marshall Islands flag.  This statement was quickly retracted and it was explained that the willingness for the U.S. to defend the Marshalls Islands did not stretch to a ship registered there. The Maersk Tigris did not have Marshall Islands owners, neither was it under the command of a Marshall Islands’ master, nor did it have a Marshall Islands’ cargo or was it departing or arriving at a port in the Marshall Islands.  The concern for shipowners is, that at the moment when it mattered most, the entitlement of the ship to protection either diplomatic or military was poorly understood and incapable of being acted upon. Cumulatively the Tigris did not make the grade. The incident invites us to consider how the Government of our own flag State would have responded.

It is unlikely, in the absence of any compelling existing reason, that the major Flag Administrations will be willing to do the necessary homework on this at this moment in time.  But it is interesting to look at what navies are doing, to look at models of current defence practice.  A glance at the counter-piracy MSCHOA website covering the Indian Ocean Piracy High Risk Area shows two different protection models in use.  Several countries Japan, China, including Hong Kong, South Korea and India programme nationally flagged convoys; in addition Russian ships can also apply to join a similar national programme.  On the other hand EUNAVFOR on behalf of the navies of the European Union member states offers coalition convoys to ships of their own, but also to ships of all other flags.

So in the case of EUNAVFOR protection is being provided by a collegiate effort of the like-minded navies operating in the region against the common enemy – the pirate.  This is a pragmatic and a promising model which demonstrates a large number of different nations acting with clear unanimity of purpose.  It is also a simple solution made easier because such diplomatic flexibility is possible due to the ‘constabulary’ rather than ‘military’ nature of the EU’s counter-piracy operation. Such a collegiate effort is unlikely to be replicated in any military confrontation even by members of a military or political coalition. In a military conflict the options become much more limited and the tendency will be to revert to flag.

The shipping industry is well aware that although flag defines the nationality of the ship it does nothing beyond that to highlight the nationality of the components of a ship which are in fact at risk.  First and foremost the priority today is the protection of people, regardless of whether those people are citizens of the flag State or on board as seafarers, or as passengers, of a different nationality. The next priority in both safety and commercial terms is in most circumstances likely to be the cargo.  Cargoes maybe hazardous may comprise large volumes of damaging pollutants and will be owned by many different parties; often the value of the cargo will exceed that of the ship itself. Cargo increasingly has a specific risk profile of its own recognised certainly by underwriters but less so by flag authorities. Some energy and other cargoes are described as having strategic value.  So in the current scheme of things – and in the context of recent incidents – what are the defence benefits of flag?  Perhaps in reality ‘flag’ today, by raising a vessel’s national profile, is seen to be more a provocateur, than guarantor?

The nature of today’s maritime threats means defence and security profiling needs to pay more attention to the nationality or nationalities of the seafarers who make up the crew, or passengers. Ships no longer have as much national association with their flag State as they once did; ownership and operations are both fully globalised and ship manned by a rich diversity of seafarers of many nationalities. The combination of the human capital and of the cargo on board a ship, and perhaps also the destination should increasingly be seen as the defining criteria. 

The shipping industry should question the comfortable assumption that shipping will be protected when there is a diminishing group of navies capable of exerting global influence and those which exist largely have lost the link to their merchant fleets.  There is an urgent need for shipping’s relationship to flag to be re-assessed by national navies to enable them to better understand what trade protection they are able to deliver, both individually and as part of a coalition in the future.  Following the flag worked in the past but it far less certain it will work in the future.

July 2015