From BUSINESS DAILY
The piracy menace in the Indian Ocean region continues unabated and it seems international efforts to tame it have failed. The global naval force patrolling the waters and protecting the vessels has its hands full as the pirates have become bold and extended their scope of attacks.
The costs of imported goods has also increased risen in tandem with the attacks as shipping lines opt to take longer routes to avoid the sea pirates. This has resulted in the added costs being passed on to the buyers of the goods.
Now there are added fears that the United Nations could declare the Western Indian Ocean region a war-risk zone as a result of the increased pirate attacks, which have hit 40 in the last two months alone. The region’s shipping sector is estimated to be spending an extra $200 million in extra costs due to the piracy.
If the alert level is raised, shipping lines would be required to take a war-risk insurance cover for goods and the vessels, which means the extra costs would automatically be passed on to the end consumers. According to AON Risk Services, ransom insurance is higher than it was two years ago, which is as a result of the high ransoms being demanded by the Somali pirates. The current average being paid out now to the pirates has increased and sums hitting $50 million are quite common.
If the UN increases the alert level, it would affect vessels serving Kenya, Tanzania, Mozambique. According to the Kenya Ship Agents Association, once an area has been declared a war-risk zone, many shipping lines opt to withdraw.
The Seafarers Assistance Programme also estimates that shippers are paying an additional $95 for every 20-foot container and an extra $15 for every tonne of oil and bulk grain cargo.
Shipping lines are also forced to spend more on fuel when they take longer routes to avoid the pirates. We believe that the piracy menace should be eradicated once and for all as its effects have now trickled down to the common consumer with devastating consequences on household budgets.