Increasing pirate attacks in Somali waters have triggered undesired results globally. Let us know what are these.
1. Sea borne piracy gets redefined.
By allowing the piracy to thrive in Somalia,
- piracy has become a socially acceptable profession in Somalia.
- it takes just 16 minutes to hijack £65million worth VLCC Sirius Star with estimated value of oil cargo onboard USD 100 million.
- pirates use with confidence sophisticated weapons like Rocket Propelled Grenade launchers.
- terrorists may take up piracy for their mission and also for funding their operation.
- likely to spread to more areas globally.
2.Global awareness has increased but no solution found yet.
Somali piracy has increased global awareness about piracy but how to deal with the pirates successfully is yet to be defined.
Here are some interesting views:
- ship owners appeal to UN to control piracy.
- the Combined Task Force (CTF) 150 says “The Coalition does not have the resources to provide 24-hour protection for the vast number of merchant vessels in the region. The shipping companies must take measures to defend their vessels and their crews.”
- the UN Security Council votes unanimously to impose sanctions on pirates, arms smugglers, and perpetrators of instability in Somalia in a fresh attempt to help end lawlessness in the Horn of Africa nation.
- private agency Blackwater Worldwide is ready to assist shipping industry from piracy.
3.Suez canal shipping traffic is bound to reduce.
Egypt depends on the Suez Canal as a major source of income. Increasing pirate attacks off Somalia, is bound to reduce the shipping traffic in the Suez Canal. The canal’s revenue growth is expected to slow by 10 percent in the 2009/2010 year. Egypt’s foreign currency earnings are bound to reduce. A.P Moller-Maersk have advised their vessels without adequate speed or freeboard to avoid time being the Gulf of Aden and seek alternative routing south of the Cape of Good Hope and east of Madagascar. Norwegian shipping group Odfjell SE have decided to avoid Suez Canal route, to avoid pirate attacks. BIMCO urgent piracy advisory advises all members urgently to route vessels east of Madagascar and take advantage of varying routes to maximize the sea area to hide during transit.
4.Marine Insurance costs are to go up.
Marine insurance costs for vessels transiting the Gulf of Aden vary between zero to 0.05% of the value of the ship per voyage. Further, insurance costs for voyages to Somalia, are higher and vary between 5% and 10% per call, because of the added danger. Marine insurance costs are further expected to go up.
5.Shipping company profits to come down.
Increasing piracy attacks have increased the operating costs of the shipping companies. Profit is expected to reduce. Also freight rates are likely to increase by 25% to 30%.
If ships prefer to avoid the Gulf of Aden, the operating costs increase due to
- increase in voyage duration (A typical voyage from Saudi Arabian oil port Ras Tanura to Gibraltar would almost double in length and take an extra 12 days, delaying replenishment of European and U.S. oil stocks)
- increase in fuel consumption.
Further there is going to be increase in carbon dioxide emissions due to increase in fuel consumption.
If ships prefer to transit through the Gulf of Aden, the operating costs increase due to
- ransom payment if caught by pirates.
- delayed cargo delivery, loss or damage to cargo if caught by pirates.
- payment of hazard pay to seafarers to transit in Gulf of Aden.
6.Seafarers disappointed and demoralized.
One-third of the world’s seafarers are Filipinos and the Philippine government has already declared the Gulf of Aden as a hazard zone. There is also a shortage of seafarers. As per recent reports, the current officer shortfall of 34,000 in 2008 is likely to increase to 83,900 in 2012. Increasing threats of piracy attacks are bound to discourage seafarers to continue their profession.
7.Naval forces tied up.
As the Gulf of Aden is patrolled by multi national warships by setting up Maritime Security Patrol Area (MSPA) to check piracy since August 26, the naval assets of the participating countries are tied up in the Gulf of Aden and the operating costs are also borne by the countries participating in the region.
8.Delayed cargo delivery slows down production and progress of the country.
If a vessel is captured by pirates, it takes generally one to six months to negotiate, pay ransom and release the ship. The cargo is held up and the end user of the cargo is deprived of cargo delivery in time.
For example, ships carrying key ingredients for diammonium phosphate (DAP) fertilizer were caught by Somali pirates and piracy have led to a more than ten per cent cut in fertilizer production in India at a time when it is needed most.
9.Somalia continues to be unstable.
The Somali pirates want their country to remain unstable to continue with their lucrative business of piracy. More than $150 million was collected as ransom by pirates around the Horn of Africa over the past 12 months.
10.Cruise ships are also coming under piracy attack.
So far, the pirates were attacking mostly cargo ships. Now Somali pirates are getting attracted towards cruise ships, because of the potential for massive ransom payments from the families of hundreds of rich tourists. Due to this, marine tourism industry is expected to suffer.
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