Will a New Treaty Slow Down Illegal Fishing ?, by Marex

The fishing vessel Yin Yuan is transferred from the custody of the crew of the Coast Guard Cutter Morgenthau to China coast guard vessel 2102 in the North Pacific Ocean June 3, 2014. The Yin Yuan crew is suspected of three serious fisheries violations including: use of prohibited fishing gear of more than 3.3 kilometers of high seas drift net, failure to maintain sufficient records of catch and catch-related data, and fishing without a license, permit or authorization issued by a sanctioned authority. U.S. Coast Guard photo by Coast Guard Cutter Morgenthau.

The fishing vessel Yin Yuan is transferred from the custody of the crew of the Coast Guard Cutter Morgenthau to China coast guard vessel 2102 in the North Pacific Ocean June 3, 2014. The Yin Yuan crew is suspected of three serious fisheries violations including: use of prohibited fishing gear of more than 3.3 kilometers of high seas drift net, failure to maintain sufficient records of catch and catch-related data, and fishing without a license, permit or authorization issued by a sanctioned authority. U.S. Coast Guard photo by Coast Guard Cutter Morgenthau.

Early this month, the Port State Measures Agreement (PSMA) on combating illegal fishing went into effect, putting an array of new tools for coordination and action between nations to deny safe haven to fishing vessels operating outside the law. “The PSMA will drive the seafood industry toward greater sustainability and have significant ripple effects throughout the entire fisheries supply chain. Let no port state be known and targeted by [illegal] fishing operators as a shelter for non-compliance,” said the director general of the UN Food and Agriculture Organization, Jose Graziano Da Silva, at a ceremony marking its entry into force. 

FAO estimates that illegal, unreported and unregulated (IUU) fishing is a $20 billion dollar-per-year industry, and says that in the pursuit of revenue, illegal operators endanger the health of local and national fisheries. In West Africa, two thirds of animal protein comes from fishing, and IUU operators (notably heavily subsidized Chinese firms) threaten to deplete stocks, potentially leading to food insecurity for populations ashore. It is a global problem, and the practice has led to dramatic disputes in territorial waters, with several recent incidents in which national military forces opened fire on Chinese distant-water fishing vessels suspected of illegal operation. Indonesia has even taken to the highly publicized practice of confiscating and blowing up IUU fishing vessels with explosives in an effort to deter future violations.

The new treaty attempts to hamper IUU operations by denying easy access to port facilities for suspected illegal operators. It requires that parties designate specific ports for use by foreign fishing vessels, making inspection and control easier, FAO says. These vessels must request permission to enter ports ahead of time and inform authorities about the fish they have on board. Once in port, they must permit inspection of their log book, licenses, fishing gear and actual cargo. Even vessels that are just refueling will have to comply with inspection requirements –and the measures also apply to fishing tenders, vessels which support fishing activities by providing refueling and ship-to-ship fish cargo transfers at sea. 

Additionally, the treaty asks ratifying countries to deny entry or inspect vessels that have been involved in IUU fishing. Parties to the agreement must share information regionally and globally regarding vessels discovered to be involved in IUU fishing – and flag states must be notified of suspected vessels, adding an additional possibility for enforcement. Even in environments which are already well-regulated, the reporting measures will help to focus enforcement activity, says the U.S. National Oceanic and Atmospheric Association, enabling agents to “prioritize vessel inspections based on available information related to the vessel and catch onboard. Expanded, thorough inspections . . . will become more routine.”

For all of the treaty’s promise, activists say that enforcement will be a challenge in many of the most affected parts of the world, like West Africa, where local and national governance may be weak – or in areas where the government is seen as complicit in the practice. 

Dr. Lisa Otto, writing for Coventry University’s Center for Trust, Peace and Social Relations, expressed skepticism of the PSMA’s ability to drive change. She notes that six of the world’s top ten fish-producing countries – China, Peru, India, Japan, Vietnam and Russia – have not ratified the agreement, leaving a large number of ports accessible to the world’s largest fishing fleets, without the application of PSMA’s rules. “The FAO has called [PSMA] ‘groundbreaking,’ and whilst the organization should surely be hailed for the work that it has done to bring the PSMA into effect and to develop the capacity needed to implement the measures it entails, it surely can’t be considered groundbreaking until it begins to generate critical mass,” she wrote. Dr. Otto called for an even stronger treaty: “Evidently, more work needs to be done to generate consensus around the need for an agreement on IUU fishing that could bring practical outcomes in making it difficult for illegal fishers to continue to operate.”

Dr. Dana Miller, a research scientist with the University of British Columbia’s Fisheries Center, also suggested that the challenge for PSMA would be in ratification and implementation. “[The PSMA] provides the opportunity for port states to have a stronger role in regulating the global fishing and seafood industries and reduces reliance on flag state responsibility. The use of flags of non compliance should also become less of a problem,” she said.  “However, it is very important that the agreement is universally ratified and enforced, otherwise there is a high risk that more ‘ports of convenience’ will appear and illegal fish will find alternate routes through which to access global markets.”

 The opinions expressed herein are the author’s and not necessarily those of The Maritime Executive or Marigon.

Boat Migration Surges as Seas Calm, by Marex

Boat surge

By MarEx By Reuters

Ships manned by humanitarian organizations, the Italian navy and coast guard helped rescue about 4,500 boat migrants on Thursday as calm seas returned to the Mediterranean, prompting a surge in departures from North Africa.

Rescue operations were continuing, an Italian coast guard spokesman said. The corpse of a woman was taken from a large rubber boat, and the migrants were collected from a total of about 40 different vessels, he said.

The Topaz Responder, a ship run by the Malta-based humanitarian group Migrant Offshore Aid Station (MOAS), said earlier in the day that around two dozen migrant boats had been spotted in the sea about 20 nautical miles from the Libyan port city of Sabratha.

Libya’s navy intercepted about 1,000 migrants on board eight rubber boats off Sabratha on Thursday morning, spokesman Ayoub Qassem said. He said the migrants were from Arab as well as sub-Saharan African countries.

“The mass movement is probably the result of week-long, unfavorable weather conditions” that have come to an end, MOAS said on Twitter.

The Topaz Responder picked up 382 sub-Saharan African migrants from three different large rubber boats. The Bourbon Argos, a ship run by humanitarian group Doctors without Borders, plucked 1,139 migrants from 10 boats, and two other humanitarian vessels picked up 156 more.

The Italian navy said it had rescued 515 from two dinghies, German humanitarian group Sea-Watch said it had 100 on board, and the Italian coast guard, which coordinates rescue operations, said it had deployed several boats.

An agreement between Turkey and the EU to stop migrant departures for the Greek islands has reduced boat arrivals by 98 percent during the first five months of the year from the same period of 2015, the International Organization for Migration (IOM) said.

But arrivals in Italy continue at about the same clip as last year, and the deadly central Mediterranean route has already claimed 2,438 lives, IOM said.

Italy has been on the front line of Europe’s worst immigration crisis since World War Two and now in its third year. More than 320,000 boat migrants came to Italy from North Africa in 2014-15.

As of Wednesday, 56,328 boat migrants had been brought to Italy in 2016, a 5.5 percent decrease on the same period of last year, according to the Interior Ministry.

Nigerians, Eritreans and Gambians were the top three migrant nationalities this year, the ministry said, and more than 125,000 are now living in Italian shelters.

BHP Billiton Cancels $500 Million Port Debt Plan, by Marex

Coal loading

Coal loading at Newcastle (file image)

By MarEx By Reuters

Australian mining giant BHP Billiton canceled a $500 million debt refinancing plan at one of Australia’s biggest coal export terminals after banks were reluctant to lend to the sector, said three sources with knowledge of the process.

The decision earlier this month sets back efforts to simplify complex debt arrangements at the Newcastle Coal Infrastructure Group (NCIG) project and stalls BHP’s plan to release cash tied up in the terminal as it looks to strengthen its balance sheet amid a global commodities slump.

It also underscores the plight of the industry in trying to attract financing from lenders wary of coal’s commercial outlook and contribution to climate change.

BHP had approached existing and new financiers for around $500 million of new debt to replace $685 million taken out in 2007. Under the now-defunct plan, BHP was to supply $185 million of the debt and would get the rest from lenders at generous terms, according to the three sources who spoke on the condition of anonymity because of the sensitivity of the subject.

“It wasn’t a problem with BHP, it was more a coal market-specific problem,” said Alen Golubovic, director of infrastructure and fixed income research for FIIG Securities, adding that banks were more open to rolling over existing debt than taking on new commitments.

BHP declined to comment.

Smaller coal miners are facing similar issues in trying to refinance another Australian coal port, the Wiggins Island Coal Export Terminal, where Glencore is the main backer.

NCIG is owned by a handful of coal mining companies. BHP holds the biggest stake at 37 percent. Partners include Yancoal Australia, Peabody Energy Australia, Whitehaven Coal and Banpu.

NCIG in a June 10 statement said it was deferring the capital restructure of the $500 million tranche of debt, citing adverse market conditions.

Ratings agency Moody’s promptly cut the rating of the debt to junk status.

Moody’s also noted that over the past three months, Peabody Energy in the United States has filed for bankruptcy, although its Australian subsidiaries to date were unaffected, and that China’s Yanzhou Coal Mining Co, which owns Yancoal Australia, has been downgraded with a negative outlook.

Maersk Group May Split Up, by Marex

Maersk

File image courtesy Maersk

By MarEx By Reuters

Danish shipping and oil group A. P. Moller-Maersk could be split up into separate companies, its chairman said on Thursday after naming Soren Skou, the head of its container business, as chief executive.

Maersk shares rose more than 10 percent on the news with investors speculating on a break-up of the company and seeing the appointment as a sign of a more profound restructuring.

“The question is whether we should be a large group, or whether we should be a number of independent companies,” Chairman Michael Pram Rasmussen told Danish online media Finans.

He was speaking after company veteran Skou, 51, was appointed to replace Nils Smedegaard Andersen as group chief executive. Andersen had been in the job since 2007.

Skou will begin in his new role on July 1, while remaining the head of Maersk Line, the company said in a statement. Andersen will leave the group, it said.

The board of directors had told Skou to “investigate the strategic and structural options to further increase agility and synergies.” It plans to report on its progress by the end of the third quarter of the year.

The change comes just days after the grandson of Maersk Mc-Kinney Moller, who transformed the shipping group into an international conglomerate, was appointed chief executive of the holding company behind the group.

Maersk Line is fighting to remain the world’s leading container shipping carrier as a wave of mergers and acquisitions, particularly in Asia, creates new challengers trying to grab a bigger share of a depressed market.

Maersk revenue stood at $40 billion last year, with its shipping business of more than 600 container vessels as its biggest.

The oil division, which produced 312,000 barrels per day of oil equivalent last year, has also been hit by weak energy markets..

The company is also active in oil drilling, operates terminals and has a large fleet of tankers and other marine services.

“The board wants a change of strategy for the group. There has probably been some disagreements about that, and I think that’s clear from the statement,” said Michael Friis Jorgensen, analyst at Alm. Brand Bank in Copenhagen.

Skou has been with A.P. Moller-Maersk for 33 years, becoming a member of the executive board in 2006 and appointed CEO of Maersk Line in 2012.

The change could open new possibilities for the group which has faced record low shipping rates for its container business and a more than 60 percent drop in oil prices.

“Will they delist, enter new business areas, focus investments further away from the oil business?,” said Jorgensen, who expects the management to update investors on such questions at it Capital Markets Day in September.

Value of Environmental Crime Rises Twenty-Six Percent, by Marex

UNEP

Environmental crime has been valued at $91-258 billion, compared to $70-213 billion in 2014, according to a report published by the United Nations Environment Programme (UNEP) and INTERPOL. This is a rise of 26 percent.

The Rise of Environmental Crime, released for World Environment Day (June 5), finds that weak laws and poorly funded security forces are enabling international criminal networks and armed rebels to profit from a trade that fuels conflicts, devastates ecosystems and is threatening species with extinction.

Environmental crime dwarfs the illegal trade in small arms, which is valued at about $3 billion. It is the world’s fourth-largest criminal enterprise after drug smuggling, counterfeiting and human trafficking. The amount of money lost due to environmental crime is 10,000 times greater than the amount of money spent by international agencies on combatting it – just $20-30 million.

The report recommends strong action, legislation and sanctions at the national and international level, including measures targeted at disrupting overseas tax havens; an increase in financial support commensurate with the serious threat that environmental crime poses to sustainable development; and economic incentives and alternative livelihoods for those at the bottom of the environmental crime chain.

Illegal Fisheries

For example, illegal fisheries are estimated to be worth $11-23 billion per year and often involve criminal networks organized as mafia-style hierarchies. Other criminal groups operate with the implicit support of their governments. There are several inherent factors that make the fisheries sector particularly susceptible to crime, states the report. The industry is a truly global enterprise, with fish caught both in areas within and outside national jurisdiction, and in remote areas beyond the scrutiny of ordinary law enforcement agencies. There is great mobility of actors, infrastructure (vessels) and commodities. 

Added to this is a vague international legal framework governing the law of the sea, which fails in many respects to fully take on board the implication of transnational organized crime taking place at sea and particularly in the fisheries sector. An example of this is that, despite the well-documented harmful consequences of allowing anonymous ownership of vessels in states that are unable or unwilling to exercise their law enforcement jurisdiction over the vessels on their flag. This practice continues unabated, states the report. 

Since the turn of the millennium this trend has but increased. Of particular concern is that private companies can, and do, buy the right to register vessels in vulnerable flag states in order to offer vessel owners the opportunity to register their vessels in countries unable or unwilling to enforce their laws over them. These companies sell impunity to criminals at sea, states the report. In 2013, INTERPOL established a focus project to assist its member states investigate criminal offences committed within the fisheries sector.

The last decade has seen environmental crime rise by at least five to seven percent per year. This means that environmental crime – which includes the illegal trade in wildlife, corporate crime in the forestry sector, the illegal exploitation and sale of gold and other minerals, illegal fisheries, the trafficking of hazardous waste and carbon credit fraud – is growing two to three times faster than global GDP.

Wild for Life Campaign

To combat the illegal trade in wildlife, the United Nations system and partners have launched their Wild For Life campaign, which draws on support from celebrities such as Gisele Bündchen, Yaya Touré and Neymar Jr. to mobilize millions to take action against poaching and the trafficking of illegal wildlife products.

Already, thousands of people and more than 25 ministers have chosen a species to show their commitment to protecting wildlife. The host of this year’s World Environment Day, the Government of Angola, has joined the fight, promising to shut down its domestic trade in illegal ivory, toughen border controls and restore its elephant population through conservation measures.

More than one quarter of the world’s elephant population has been killed in a decade. Some of world’s most vulnerable wildlife, like rhinos and elephants, are being killed at a rate that has grown by more than 25 percent every year in the last decade.

Funding Terrorists and Criminal Cartels

The report looks at how money generated from the illegal exploitation of natural resources funds rebel groups, terrorist networks and international criminal cartels. 

The report notes that transnational organized criminal networks are using environmental crime to launder drug money. Illegal gold mining in Colombia, for example, is now considered one of the easiest ways to launder money from the country’s drug trade.

International criminal cartels are also involved in the trafficking of hazardous waste and chemicals, often mis-labelling the waste to evade law enforcement agencies. In 2013, the U.N. Office on Drugs and Crime (UNODC) reported that the illegal trade in e-waste to Southeast Asia and the Pacific was estimated at $3.75 billion annually.

Carbon Trading Fraud

Carbon trading is the world’s fastest growing commodities market. Carbon credit fraud cases have involved profits that stretch into the hundreds of millions of dollars, states the report. The combined value of carbon pricing instruments was just under $50 billion in 2015. Carbon taxes and emission system trade sales generated over $15 billion in government revenues across the world. The vulnerability to crime of this trade derives from the market’s immaturity and the intangible nature of the product, which is based on the lack of delivery of an invisible substance to no one.

The report is available here.

The opinions expressed herein are the author’s and not necessarily those of The Maritime Executive or Marigons.

Indian Navy Commits to Solar Power, by Marex

Solar

The Indian Navy has set a target of producing 21 MW of solar power as part of its move to reduce its carbon footprint. 

In a statement on World Environment Day, June 5, the Navy described the “aggressive target” will be met in phases, with some naval bases deploying rooftop solar panels where available land is scarce.

The Times of India reports that the Navy has pledged 1.5 percent of its work budget for generating renewable energy.

The Navy is also looking at using ocean power. “Towards this, in consultation with pioneers in the field and the Ministry of New and Renewable Energy (MNRE), feasibility of exploiting ocean thermal energy and wave energy as sources of power, are under discussion,” the statement said.

Elsewhere in India for World Environment Day, Gangavaram Port, India’s deepest port established a green belt and planted 10,000 trees as part of a program to create greater awareness for environmental sustainability. Throughout the year, another 50,000 trees will be planted in the area.

This year’s theme for World Environment Day is “Go Wild for Life..Fight against the illegal trade in wildlife,” and the port prepared posters stressing the need to stop poaching and the illegal wildlife trade.

 

Shipowners Sue Coast Guard Over Pilotage Rates, by Marex

Ships sued

By MarEx

Six Canadian and European shipowners – Brochart, Spliethoff, Wagenborg, Polsteam, Fednav and Canfornav – have joined in a suit against the U.S. Coast Guard over pilotage fees on the St. Lawrence Seaway / Great Lakes, alleging that the USCG has not taken commercial needs properly into account in its latest review. They contend that the agency has set the 2016 season rates so high that “pilotage is now one of the largest single cost items for foreign-flag vessels that enter” the area, and they have asked a federal court to reverse the Coast Guard’s decision. 

The U.S. and Canada jointly manage the St. Lawrence Seaway, which connects the lakes with the Atlantic, but the USCG is charged with administering pilotage rates for both Canadian and U.S. pilots on the waterway.  

The owners contend that in its latest ruling on pilots’ wages, the Coast Guard did not consider the different sizes of vessels transiting the Seaway, unlike in prior years, and also did not make account for the seasonal demand fluctuations in determining pilot staffing requirements – assuming instead a constant peak level demand (a measure the Coast Guard justified in part as a way to have enough pilots to comply with rest period guidelines). 

The six owners also disputed USCG claims that higher wages were needed to recruit and retain pilots. In its rulemaking announcement, the USCG asserted that “the career-long prospects a recruit or new pilot faces for lower compensation than their counterparts [elsewhere]” was an obstacle to maintaining a qualified pool for the Seaway. 

The current rate structure would  “effect a dramatic increase in costs for all vessel owners, and this effect may be especially harsh to vessels that operate on certain routes,” the plaintiffs said. As relief, the shipowners are asking a federal district court in Washington, D.C. to vacate the Coast Guard’s rulemaking action and to grant a 20 percent cut in pilotage rates.  

As of June 3 the Coast Guard has not yet filed a response with the court.