SHIFT IN SECURITY POLICY FROM UNARMED TO ARMED TRANSITS

1. SHIFT IN SECURITY POLICY FROM UNARMED TO ARMED TRANSITS FLEET MANAGEMENT LIMITED, HONG KONG

2. STATISTICS – ACTUAL AND ATTEMPTED ATTACKS

3. STATISTICS – ACTUAL AND ATTEMPTED ATTACKS

4. STATISTICS • NO. OF TRANSITS THROUGH HIGH RISK AREAS IS ABOUT 23000 PER YEAR. No. OF ATTACKS IS APPROX. 1% OF ALL TRANSITS. • No. OF HIJACKING IS ABOUT 0.2% OF ALL TRANSITS. • AS AT 04/01/2011 – 27 VESSELS AND 625 CREW MEMBERS ARE BEING HELD BY SOMALI PIRATES. • AT AN AVERAGE 650 ~ 700 TRANSITS ARE UNDERTAKEN BY OUR MANAGED VESSELS IN A YEAR. • APPROX 15% (3225 VESSELS PER ANNUM) OF VESSELS TRANSITING THROUGH THE HIGH RISK AREAS, EMPLOY ARMED GUARDS. • SINCE 2008, 24 SEAFARER’S INJURED & 9 KILLED AS A RESULT OF SOMALI PIRACY ATTACKS.

5. STATISTICS – WORLD WIDE Source: IMB annual piracy report.

6. STATISTICS – GoA / RED SEA / INDIAN OCEAN Source: IMB annual piracy report.

7. INCIDENTS IN 2011 BEGINING OF 2011 SAW 13 VIOLENT ATTACKS IN ARABIAN SEA OUT OF WHICH 3 VESSELS WERE HIJACKED.....

8. FORECAST FOR WEEK 20 JAN TO 26 JAN 2011 Source: MSC-HOA / NAVFOR ATLANTA.

9. PIRACY TACTICS – AREA OF ATTACKS – 2008 Source: IMB annual piracy report.

10. PIRACY TACTICS – AREA OF ATTACKS – 2009 Source: IMB annual piracy report.

11. PIRACY TACTICS – AREA OF ATTACKS – 2010 Source: IMB annual piracy report.

12. PIRACY TACTICS • MOST ATTACKS INVOLVED USE OF LETHAL WEAPONS. • VIOLENT ATTACKS ARE A SERIOUS THREAT NOT ONLY TO SEAFARER’S BUT ALSO TO VESSEL, HER CARGO AND MARINE ENVIRONMENT. • ATTACKS HAVE DROPPED IN GULF OF ADEN BY MORE THAN 50%. HOWEVER, INCREASE IN SUCH ATTACKS HAVE BEEN NOTICED IN OTHER PARTS LIKE SOMALI BASIN, INDIAN OCEAN AND RED SEA. • SOMALI PIRATES HAVE STARTED TO USE PREVIOUSLY HIJACKED MERCHANT SHIPS AS MOTHER SHIPS, GIVING THEM ACCESS TO MUCH MORE SEA AREAS FOR LAUNCHING ATTACKS.

13. FOLLOWING 7-LOCATIONS RECORDED 75% OF ALL ATTACKS ON MERCHANT SHIPS WORLD-WIDE Source: IMB annual piracy report.

14. PIRACY IN AFRICAN WATERS REMAINS THE GREATEST CONCERN. Source: IMB annual piracy report.

15. VESSELS WITH LOW FREEBOARD & SLOW SPEED REMAINS AN EASY TARGET DESPITE IMPLEMENTATION OF BMP-3 Source: IMB annual piracy report.

16. REASON FOR SHIFT OF POLICY • WE HAVE A DUTY TO PROTECT LIVES OF SEAFARES AND PROVIDE THEM WITH A SAFE & SECURE ATMOSPHERE. • LACK OF FLAG STATE SUPPORT • BMP-3 DOES NOT PREVENT AN ATTACK. • SINCE A NUMBER OF MERCHANT SHIPS HAVE STARTED USING ARMED GUARDS, THOSE NOT USING WILL HAVE GREATER RISK OF ATTACK. • PIRACY ATTACKS WILL BECOME MORE PROLONGED AND EVEN MORE INTENSE. • A WEAPON IN THE RIGHT HANDS MAY BE THE MOST EFFECTIVE FORM OF NON-LETHAL DEFENCE.

17. REASON FOR SHIFT OF POLICY Crew of the 9,775-dwt Beluga Nominationsurvived over two days in an onboard citadel before finally succumbing to the pirate assault. No naval assistance could be provided despite repeated calls for help ! Source: Tradewinds

18. REASON FOR SHIFT OF POLICY - ARMED TRANSIT MAY BE MORE ECONOMICAL FOR CHARTERER’S / OWNERS.

20. REASON FOR SHIFT OF POLICY - PIRACY ATTACKS WILL CONTINUE IN YEARS TO COME AND IT IS ESTIMATED THAT SOMALI PIRATES WILL START ATTACKING VESSELS BETWEEN SRI LANKA & SINGAPORE IN 2011 !

21. RULES OF ENGAGEMENT • THE SECURITY FIRMS THAT WE WILL ENGAGE ARE DULY LICENSED AND ARE PROFESSIONAL. • PIRATES HAVE NOT SUCCEEDED IN ATTACKING ANY VESSEL WITH ARMED GUARDS AND IN MOST CASES GIVE-UP THEIR CHASE AS SOON AS THEY REALIZE THAT VESSEL IS PROTECTED BY ARMED GURADS. • WEAPONS USED BY PIRATES BECOME EFFECTIVE ONLY WITHIN 300 METERS OF VESSEL, WHEREAS ARMED GUARDS USE WEAPONS OF MUCH HIGHER RANGE (ABOUT 1500 METERS) TO DETER PIRACY ATTEMPTS. • WE WILL ALWAYS SEEK FLAG STATE APPROVAL AND NOTIFY UNDERWRITERS / PNI CLUBS PRIOR ENGAGING ARMED GUARDS.

22. THANKS