Originally published in Tradewinds, 2010/09/27
Piracy is “growing faster than China’s iron ore imports” fed by average costs incurred in a single hijacking how hitting $10m, according to shipping analyst Martin Stopford.
With differences of opinion over how to secure ships and crews against seizure, the Clarksons Research chief questioned “who’s got the bottle” to stop what amounts to Somalia’s biggest money-spinner.
Stopford penned his musings on the increasing threat of piracy to shipping in the wake of a petition against the scourge being handed into the International Maritime Organisation (IMO) last week.
“It’s quite an achievement to get 600,000 signatures on any document, but when many of the signatories are seamen, it’s hard to see how they did it,” Stopford wrote in a note on Clarksons’ website.
“For most laymen ‘piracy’ means Johnny Depp prancing around the Caribbean looking cute,” the broker guru wrote in reference to the trilogy of ‘Pirates of the Caribbean’ movies starring the Hollywood actor.
“But piracy is not cute and it’s growing faster than China’s iron ore imports.”
Stopford estimated that the current “all-in” cost of a ship being hijacked is around $10m. “This covers loss of hire for three months, $4m ransom (demands have increased recently), fees for negotiators, air or sea delivery of the ransom, cargo loss or deterioration, post-hijack repairs and crew welfare.
Average ransoms have soared from about $2m two years ago to around $4m currently while it usually costs $250,000 just to have a ransom air-dropped on a hijacked ship.
Although Stopford’s critique related to piracy worldwide, there was understandably a focus on Somalia which has hogged the highlights in terms of hijackings and attacks in the past few years.
Although the international community has taken steps to address the piracy situation off the war-torn country by implementing naval patrols, the situation on the ground continues to deteriorate with little or no governmental intervention at a local level.
“So there you have it,” Stopford mused. “Escalating piracy is a reminder that the trading world does not always get better, and could get worse.
“With lots of cash and not much risk (so far), it’s a business that offers better prospects than most in Somalia. But who’s got the bottle to stop it?”