Hong Kong Island: From a small stall to a global supplier

Visually, it was already within 10 nautical miles. At that time, ship radar was still very backward, especially civilian X-band radar. When the wave height was close to 1 meter, ships under 60 meters could not be detected beyond 10 nautical miles. This was especially true for military ships, which were long and narrow, with an even smaller radar cross-section.

Of course, this also depends on the professional skills of the personnel operating the radar. In 80, the Coast Guard Cutter Blackthorn collided with the oil tanker Capricorn in Tampa Bay, resulting in 23 deaths.

In maritime litigation in the 80s, courts generally accepted "radar limitations" as a defense to mitigate liability.

Upon receiving communication from the front, Hai Dazhao, the temporary commander of 037, ordered: "Flank and engage!"

The distance quickly closed to 5 nautical miles, and the 10,000-ton bulk carrier opposite finally spotted the approaching 037 and immediately sent a communication to warn it to take evasive action.

avoid!

I came here specifically for you!
037 showed no sign of slowing down, and the bulk carriers finally sensed something was wrong; the approaching ship was moving too fast.

The captain of the bulk carrier immediately sent a communication request.

"Manager, the ship opposite has sent a communication request."

"Connect me." Hai Dazhao took the communicator.

"Hello, this is the dry bulk carrier Eucalyptus Voyager. I am Captain Barbos. Your vessel should give way."

"The Eucalyptus Voyager, a 5-ton 'Handymax' dry bulk carrier, departed from Tanjung Bala, right?" Hai Dazhao asked in a deep voice.

Captain Barbos had a bad feeling. The spotter saw 037 through the binoculars. The ship's shape was clearly that of a military vessel.

"You, what do you want to do!"

Hai Dazhao didn't shut down the communication system; he directly ordered the person next to him, "Fire! Let's greet our new friend."

"What!" Babos exclaimed in surprise.

"Target 2 kilometers, main guns fire two rounds, prepare!"

"Target 2 kilometers away, main gun fires twice, ready."

"emission!"

Barbos didn't understand Cantonese, but he could tell from the tone that something was wrong, so he shouted into the channel, "Stop, sir, please stop!"

"Boom!" "Boom!" "Boom!" "Boom!"

"Boom!" "Boom!" "Boom!" "Boom!"

Two twin 57mm naval guns fired eight shells directly at the sea surface to the side of Eucalyptus Voyager. The shells, each with a TNT equivalent of 0.8 kg, detonated the moment they hit the water, and the explosive energy compressed the seawater through the shock wave, forming an upward water column.

Standing in the captain's cabin on the bridge, Barbos could not feel the waves, but that did not prevent him from hearing the explosion hundreds of meters away and seeing the water column that was more than 7 meters high!
"No, no, no, stop, stop, sir, please stop! We are a civilian ship. The Eucalyptus Voyager belongs to the Greek shipping magnate Dynacan family. I know you are Chinese. You should think carefully about the consequences if you hurt us!" Barbos's first reaction was to threaten.

"Heh, they don't believe in our strength," Hai Dazhao chuckled lightly. "Let's open two holes in them."

"Aim at the enemy's flank, water level 3 meters, two high-explosive shells, prepare."

"Target flank, height 3 meters, two high-explosive rounds to be launched, ready."

"Fire!"

"No, no, no, stop! I said stop! You're crazy..."

"Boom!" "Boom!"

The steel plates on the hull of this type of dry bulk carrier are very thin, generally around 8-15 millimeters. It is a typical case of thin skin and large dents. It cannot withstand even a full-power 7.62mm shell, let alone a 57mm shell.

Two high-explosive shells instantly pierced through the steel plate and exploded inside the hull. The shockwave from the explosion swept out a large amount of coal slag from the breach, leaving a 600-millimeter-sized hole in the side hull.

In the 80s, shipboard monitoring and alarm systems were all mechanical, so it was impossible to immediately see the hole alarm in the pipeline damage. Two shots in a 5-ton bulk carrier wouldn't cause any tremors, and it wouldn't even be as bad as larger sea conditions and waves.

But the muzzle flashes were visible, and since no water columns were blasted out of the sea, how could they not know that the ship had been hit by cannon fire!

"Stop, stop, sir, please, sir, don't hurt us. You can ask for anything, we're not in any danger." Barbos instantly went from threatening to pleading, his voice breaking with tears.

The smoothness of the transformation was so great that even Hai Dazhao, who had grown accustomed to seeing foreigners bullying the weak and fearing the strong under Wang Yaotang's guidance, found it amusing.

For the crew members on the ship, who haven't been recruited for very long and have short haircuts, it's an even more novel experience.

Aren't these foreigners supposed to be tough?
They surrendered after only two shots?

They seem even more timid than those Annamese monkeys.

In the past... they often encountered the fishing boats of the Annamese monkeys. Those guys had very dilapidated fishing boats, but they were very difficult to deal with, and they were always very tough in every conflict.

That's how Westerners are: the ship belongs to the owner, but their lives belong to themselves.

Besides, pirates are after money and almost never actually sink ships. Even if he makes a foolish mistake that causes serious damage to the ship, the owner and cargo owner will not let him off the hook even if he returns alive.

"Slow down, my men will be coming up. You'd better cooperate obediently, after all, killing you all and throwing you into the sea won't take me long," Hai Dazhao said sternly.

“OK, OK, no problem, I will definitely cooperate.” Barbos immediately surrendered, while signaling to the person next to him to immediately call for help from the port, ship owner, and cargo owner via satellite phone.

These are definitely not ordinary pirates; what kind of pirates would use warships?

How can a 60-meter warship not be called a warship!

An hour later, under the surveillance of 037, the Eucalyptus Voyager obediently changed its radio silence and entered the South China Sea via a completely unknown route, with Captain Barbos also being transferred to 037.

……

"Brother Yao, it's Da Zhao calling via satellite phone," Wei Tao said in a low voice.

Wang Yaotang waved for the person reporting to leave before answering the phone, "This is Wang Yaotang."

"Brother Yao, it's done. Two shots were fired, and two small holes were blown in the hull. They won't affect navigation. We've entered a new channel. I'll arrange for someone to repair them later. What's next?" Hai Dazhao reported to his superior.

"Find a place to stop and wait. I'll call you back once we've discussed it," Wang Yaotang said.

"Okay, Brother Yao."

After hanging up the phone, Wei Tao handed over the information about the Eucalyptus Voyager. "This ship belongs to the Greek shipping magnate Dynacon. It's a 5-ton bulk carrier, and its destination is Japan. The ship is registered in Liberia."

"The Greek shipping magnate?" The first person that came to Wang Yaotang's mind was the shipping magnate Bao, a world-class shipping magnate who was on par with Bao.

"Shouldn't the ship belong to Greece?"

"No, boss. The vast majority of ocean-going freighters in the world are registered in Panama or Liberia and sail under the flag of convenience," Wei Tao explained.

The "flag of convenience" was initially promoted by American shipowners, who supported the establishment of open registration systems in countries such as Panama and Liberia. Of course, 75% of their ship registration revenue was controlled by American companies, and it was later accepted globally.

There are many advantages. First, American shipowners can avoid the Jones Act (the Poor Dead Act), which allows them to avoid international restrictions on crew members. This makes it easier for flag states to allow the employment of crew members from other countries. Crew members from Southeast Asia, South America, and Eastern Europe are paid more than 60% less than those from Europe and America.

Take the Greek shipping magnate as an example: by employing Eastern European crew members, he saves $50 in labor costs per ship per year. Secondly, there's the tax aspect. Panama exempts ships from income tax, charging only an annual fee of $0.01 per net ton, while US shipowners, if registered domestically, must pay 6% VAT and 25% corporate income tax.

Many small countries actively emulate the Panama model in order to obtain foreign exchange earnings.

Third, technical standards have been lowered.

Security standards that fail to meet in major countries are no problem in Panama and Liberia. Old ships and safety hazards are disregarded, and the emergency generators and lifeboats required by SOLAS are omitted. This investment can be used to purchase high-value insurance to cover potential risks.

Fourth, there is lax regulation and extremely low safety standards.

Flag-of-convenience countries generally do not accede to the International Convention for the Safety of Life at Sea (SOLAS Agreement). In the 1980s, the maritime accident rate of Liberian-flagged vessels was three times higher than that of normally registered vessels, while ship owners only had to pay a symbolic fine.

Fifth is risk transfer.

In the Exxon Valdez oil spill, the vessel was flying the Liberian flag, and the compensation was ultimately borne by the parent company, ExxonMobil. The flag state did not assume any responsibility, and the United States was not involved.

Finally, there is the geopolitical buffer.

Flying flags of convenience can circumvent trade sanctions imposed by the East and West blocs.

“Take the fleets of shipping magnates like Bao and Xu as examples. Each of their ships is separately registered as a company in a country under a flag of convenience, so they don’t have to bear any responsibility if something goes wrong,” Wei Tao explained.

"Holy crap, capitalists are such beasts! I love them!" Wang Yaotang laughed and slapped his thigh. "The flag of convenience doesn't come without a price, does it? This ship is registered in Liberia now, so if there's an accident, Greece won't be responsible. But now that it's been robbed by pirates, Greece can't even speak up?"

“Of course not. Legally, the ship and crew have no connection with Greece. They resolve any issues through their own connections. However, the cargo on board still belongs to Rio Tinto and BP, and the British and Australian companies behind them can make a statement,” Wei Tao explained.

"Don't worry about them, it was all done by pirates, what does it have to do with me? I'm just an honest, law-abiding businessman," Wang Yaotang said with a laugh, completely unconcerned.

Wei Tao: Hehe.

……

At the same time, Tanjung Bala Port, KPC Coal Mine, and the Greek shipping magnate all received news that the cargo ship had been hijacked by pirates.

Let's just call them pirates for now.

After the last communication, all contact was lost, and the three parties are now unaware of the situation on the cargo ship.

A few hours later, BP Asia Pacific General Manager Distin Miller and Rio Tinto Indonesia General Manager Mason flew to Tanjung Bala Port to meet with KPC Coal Mine General Manager Henderson, who was there.

"Henderson, how is it going?" Miller asked eagerly as soon as they met.

“This is very bad. In the last communication, Captain Barbos said that the other side was sailing a small warship and had bombarded them with cannons, hitting the ship twice.” Henderson’s face was so dark it was almost dripping with water.

"What! A warship? How is this possible? Could he have made a mistake? Is the ship alright?" Mason asked urgently.

They didn't care whether anyone died or not; that was the Greeks' business. Besides, it didn't matter if anyone died, since they were flying a flag of convenience and the crew were all from Eastern Europe.

Their concern was whether the goods were alright.

That's 5 tons of coal, worth $150 million.

Of course, this amount of money is incomparable to the value of the cargo ship itself; a 5-ton Handysize dry bulk carrier costs around $2000 million.

Okay, actually, $150 million isn't an insurmountable loss, but if the other party can do it once, they can do it again. If the flight route is threatened and delivery cannot be made on time, the company will suffer huge losses.

The losses were heavy due to stock price fluctuations alone.

“There’s no mistake. Barbos is an old captain; he can’t possibly not recognize the difference between a warship and a civilian ship. By the way, he said the pirates were speaking Chinese, so they must be Chinese,” Henderson said with a dark face.

"They're warships, how can they call them pirates? Damn it, this is definitely a military force in disguise!" Mason yelled.

This kind of thing is not uncommon in Southeast Asia. These countries have very poor control over their military, and they secretly go out to plunder. No, it's not secret at all; they often go out to plunder openly!

Especially in Indonesia, the Philippines, and Vietnam.

“Wait, Henderson, you said those pirates spoke Chinese?” Miller didn’t realize it at first, but then he suddenly remembered the message that Owen Walker, the general manager of BP in Hong Kong, had given him a while ago.

"What's wrong? Do you suspect the target?" Henderson and Mason immediately noticed the odd expression on Miller's face.

"No, no, it shouldn't be possible..." Miller's face was filled with disbelief.

“What exactly happened, Miller? This is no small matter. If it can’t be resolved immediately, once the news gets out, both of our companies will definitely be shorted in the stock market!” Mason said in a deep voice.

Miller opened his mouth, picked up the coffee next to him and drank it all in one gulp, before telling him about how Wang Yaotang had contacted BP to try and acquire a stake in the KPC mining area.

"You're saying a Hong Kong businessman sent warships to hijack our cargo ships just because you refused his offer to acquire KPC shares?" Mason exclaimed, his eyes wide. "Do you even know what you're saying? This is impossible! A Hong Konger, what gives him the right to own warships? What gives him the audacity to use such force against Rio Tinto and BP?"

"It's as ridiculous as a monkey flying a plane and bombing London."

“Yes, I think so too, that’s why I said it’s impossible.” Miller shrugged.

There was a knock on the office door. Henderson's secretary pushed the door open and whispered, "Manager Henderson, there's a call from Athens. They want more information about the hijacking of the cargo ship."

Barbos was a man of the Greek shipping magnate. During the brief gap in external communication, he only briefly informed KPC of the situation, hoping to have another party rescue him. He spent most of his time calling his boss, who knew more information.

No matter where you are in the transportation business, you first need to smooth things over with both the legitimate and underworld figures. Greek shipping magnate Dynacom has been operating on various shipping routes around the world for so many years that he has already laid out his relationships. Otherwise, how could he have signed a 20-year shipping contract with Rio Tinto and secured one-third of the freight orders?

He was certain that he had not provoked any force capable of operating warships recently. If the problem wasn't with him, then it could only be that the cargo owner company had gotten into trouble!
As the one who was implicated, he is very angry now!

Henderson glanced at Miller and Mason. "I have to say something."

“We signed a freight contract with him, and he has an obligation to ensure the safe delivery of the goods.” Miller immediately tried to shirk responsibility. “Besides, we have an insurance company. Let the insurance company handle it. We have insurance, so they should guarantee the safety of our goods.”

“We’ve taken out ICC (B) insurance, not (A) all-risk insurance. That’s 5 tons of coal, worth only $150 million. No pirates would rob coal. How much could their ships carry?” Henderson rolled his eyes.

Insurance premiums are free!

This is different from BP's tanker business, where tankers are more frequently robbed, and it's normal to extract hundreds or thousands of tons directly, which can then be easily sold at sea. Both cargo ships and fishing boats love to buy this black oil because it's cheap.

Therefore, BP's tankers are insured.

Of course, BP and Rio Tinto operate in different ways.

BP built its own tanker fleet and integrated operations from oil extraction to transportation, refining and sales to maximize profits.

Rio Tinto outsources all its transportation and focuses on the mining industry.

“Alright, stop arguing.” Mason interrupted the two. “Explain everything. Our goal is to resolve the issue as quickly as possible. As a shipping magnate, I believe Mr. Dynacom has the means to figure out the cause of the problem.”

Henderson looked at his secretary. "Put the phone in."

He'd say it publicly; he didn't want anyone to misunderstand. (End of Chapter)