BY MICHELLE WIESE BOCKMANN
One Earth Future Foundation says Somali pirates cost the shipping industry and governments as much as $6,9bn last year as average ransom payments rose 25%,
SOMALI pirates cost the shipping industry and governments as much as $6,9bn last year as average ransom payments rose 25%, One Earth Future Foundation said yesterday.
Ships are spending an extra $2,7bn on fuel to go faster through the area because no vessel has been captured while travelling at 18 knots or faster, the Colorado-based nonprofit group said. Governments had spent $1,27bn on military operations, including patrols, and ship owners spent another $1,16b n on armed guards and security equipment.
Attacks in the Gulf of Aden, the Red Sea and off the coast of Somalia, an area larger than Europe, jumped fivefold in the past five years to a record 236, according to the London-based International Maritime Bureau. An estimated 42450 vessels a year pass through the piracy-prone region, One Earth said.
About 20% of world trade goes through the Gulf of Aden between Yemen and Somalia, which is used to get to Egypt’s Suez Canal, connecting the Red Sea and the Mediterranean. It is the fastest crossing from the Atlantic Ocean to the Indian Ocean.
"The human cost of piracy cannot be defined in economic terms," Anna Bowden, the author of the report, said. "We do note with concern that there were a significant number of piracy-related deaths, hostages taken and seafarers subject to traumatic armed attacks in 2011." Attacks off the east African country’s coast last year led to 1118 seafarers being taken hostage and 24 killed, One Earth said. A total of 31 ransoms were paid, with the average amount increasing by 25% to $5m.
Shipping bore about 80% of piracy costs, totalling between $5,3b n and $5,5b n.
The highest ransoms were paid for tankers carrying oil, because cargoes are worth about $200m on the biggest ships, One Earth said. About half of all ships used armed guards, up from 25% a year earlier. Vessels using this form of protection have so far been safe from hijacking.
The industry paid maritime security firms $530,6m a year, One Earth estimated. Owners and operators were also spending nearly $37000 a year on security equipment such as razor wire and electric barriers for ships.
Rerouting vessels away from the piracy areas probably added as much as $680m to shipping costs and owners paid $635m in insurance premiums, One Earth said.
Vessels are diverting from piracy-prone areas by sailing closer to the western Indian coastline rather than around the Cape of Good Hope, the standard practice when attacks began nearly four years ago, the report says.
About 30% of seafarers are paid twice as much for going through the area, adding an estimated $195m in labour costs.
About $38m a year was spent on prosecuting and jailing pirates and building capabilities to fight them, One Earth said. Citing a United Nations report published in January last year, it said 90% of pirates caught by military patrols were not prosecuted.
"The international community seems to be approaching a saturation of willpower and/or capacity to accept further pirates for trial," according to the report.
About a third of pirates caught between 2008 and 2010 were arrested, with more than 1000 tried or awaiting trial in 20 countries at the end of 2010. Piracy also cut regional trade and affected tourism in neighbouring Kenya, according to the report.
Kenya lost between $129m and $795m in tourism revenue and between 3% and 20% of its tourism jobs after kidnappings last year.
One Earth also said counterpiracy patrols would decline this year, from about 18 vessels to about 11 or 12, as European and North Atlantic Treaty Organisation-led operations signalled that deployments of vessels would be curbed.
Bloomberg
The average ransom rose 25% to $5m. Shipping bore 80% of piracy costs, totalling between $5,3b n and $5,5b n
Source: Business Day
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