Pirates an Expensive Business for Shipowners


The problem of pirate attacks on merchant vessels decreases in the Gulf of Aden and the Indian Ocean, but increases in the Gulf of Guinea off Africa. PHOTO: SCANPIX

The problem of pirate attacks on merchant vessels decreases in the Gulf of Aden and the Indian Ocean, but increases in the Gulf of Guinea off Africa. The statistics, the newspaper SvD News announced last Friday, has not yet had an impact on the high risk premiums that shipowners must pay.

- Risk premiums will remain at the same level, but to my knowledge no ship has been held hostage in the Gulf of Aden since July last year, said Erik Hånell, CEO of Stena Bulk.

The large tanker company with approximately 100 vessels have seen the cost of security become acute a couple of years ago, and has managed to pass on the extra costs on to customers. Each passage of an oil tanker in the Gulf of Aden will cost $150,000 USD extra, simply because of the risk of pirates. Then, however, include the costs of armed guards on board, something Swedish freight shipping introduced two years ago. At Stena Bulk for example, the 30 Suezmax type tankers, ie medium-sized tankers of 150,000 tons that are able to go through the Suez Canal and thus frequently cross the Gulf of Aden (GoA).

- For ten months, the situation became much slower, probably due to both ships are armed, but also due to the actions taken on the country [Somalia], said Erik Hånell.

It is ultimately consumers throughout the world who suffer from the additional cost of sea transport over the Indian Ocean. In particular, more expensive, however, is transport between the Mediterranean, the Middle East and China. According to Erik Hånell it makes all companies now given marginal costs on freight rates.

Stena Bulk has a dedicated maintenance and staffing based in Glasgow. From there, they follow the security of each shipment. It's about potential threats as well as pirate activities and political events.

Right now, the developments off the central part of West Africa, are worrying. The London-based Joint War Committee, that insurance companies list geographic areas with risk premiums, now consider the Gulf of Guinea off Nigeria just a bit worse than the Gulf of Aden. Pirates' violence has also been more instantaneous and rough. The tactics are not quite the same as the GoA. Off West Africa, the cargo itself can be the pirates' goal.

- But the West African pirate attacks are far more coastal-based. The large tankers bunker crude oil pipelines, located at buoys far out at sea and are not threatened in the same manner as smaller freighters that go closer to the coasts, said Erik Hånell.

Thus, it is particularly refined imports to Lagos that is burdened by huge security costs right now. Also, it is the African domestic market that will pay the smaller tank boats risk premiums. According to Stena Bulk, there are concerns that about $75,000 USD in extra costs for a tanker of 50,000 tonnes.

- It is the smaller vessels that go to the quay that are exposed. Our new tactic is for that type of vessel to be so far out to sea as possible and only briefly go to the quay, says Erik Hånell.

Even Wallenius Lines notes that substantial additional costs for security continually affects their freighters.

- We see an improvement in the Indian Ocean, but do not yet know if it is only temporary, says Cecila Kolga, communications manager at Wallenius Lines in Stockholm.

Joint War Committee also rates the waters off Iran as so dangerous that special insurance is required. The risk, however, is more moderate than in the other two areas.

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Pirates an Expensive Business for Shipowners

Pirates an expensive business for shipowners

Actions against pirates give shipping companies exorbitant additional costs. A single pass through the dangerous waters now costs about a million dollars more than a couple of years ago.

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