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Pirate Attacks Spur 36-Fold Increase in Ransoms

Somali pirate attacks are increasing, spurred by a 36-fold jump in ransoms in five years, raising costs for shippers and the threat to vessels carrying 20 percent of world trade.  The raids are adding at least $2.4 billion to transport costs because vessels are being diverted onto longer routes to avoid attacks off east Africa, Louisville, Colorado-based One Earth Future Foundation estimates.

Pirate Attacks Spur 36-Fold Increase in Ransoms
27 January 2011 - 09:56

Somali pirate attacks are increasing, spurred by a 36-fold jump in ransoms in five years, raising costs for shippers and the threat to vessels carrying 20 percent of world trade.  The raids are adding at least $2.4 billion to transport costs because vessels are being diverted onto longer routes to avoid attacks off east Africa, Louisville, Colorado-based One Earth Future Foundation estimates.

Average ransom payments rose to $5.4 million last year, compared with $150,000 in 2005, the non-profit group says. Attacks off Somalia were the highest on record last year, with 49 vessels and 1,016 crew members hijacked, according to the International Maritime Bureau.

“It’s likely to continue on its trajectory,” said Roger Middleton, an analyst covering Somalia at the Royal Institute of International Affairs in London. “Every time some of them are arrested, there are plenty of others happy to take their places because it’s so well paid.”

Escalating attacks are driving some tankers to sail around southern Africa rather than through the Suez Canal, adding about 12 days to a journey from Saudi Arabia to Houston, said Luis Mateus, an analyst at Riverlake Shipping SA, a broker in Geneva. Returns for owners on the route averaged $11,743 a day last year, according to data from the Baltic Exchange in London, which publishes assessments for more than 50 maritime routes.
About 30 anti-piracy ships are deployed daily in the region by groups including the European Union and NATO. The European Naval Force patrols about 2 million square nautical miles, or an area 10 times the size of Germany.

Widening Zone

Somali pirates have widened the zone in which they operate over the last three years to find easier targets as the warships escort vessels through the Gulf of Aden to the north, according to Middleton. They ranged as far south as Madagascar last year, and to within about 100 miles north of the Maldives in the east, reports from the IMB show.

As many as 25,000 ships sail through the Gulf of Aden a year, said Giles Noakes, head of security at the Baltic and International Maritime Council. Including a wider stretch of the Indian Ocean where the pirates also operate, as many as 40,000 are at risk, he said. That includes oil tankers, dry bulk carriers and general cargo vessels.

Container ships are less likely to be attacked because they sit higher in the water and sail faster, said Odin Hjellestad, a partner at Bergen Risk Solutions in Norway. The company advises ship owners on security.
Pirates are also seizing bigger vessels to use as so-called mother ships that can operate over larger areas and are harder to recapture because crews are being kept on board, BIMCO’S Noakes said.

Indian Ocean

“They are able to work with an element of impunity in the northwest Indian Ocean,” said Noakes, whose organization has about 2,600 members, including owners, brokers and agents. “There aren’t enough resources to contain the pirates.”

Attacks off Somalia’s coast climbed last year to 139 from 80 and in the Red Sea jumped to 25 from 15, according to data from the London-based International Maritime Bureau, whose Piracy Reporting Centre has monitored incidents since 1991. Attacks in the Gulf of Aden fell to 53, down from 117, a drop the IMB attributes in part to the patrols.
South Korean special forces stormed a hijacked freighter in the Arabian Sea last week, rescuing the crew and killing eight pirates. Similar operations were carried out by Danish and U.S. forces last year.

Naval Force

EU Navfor estimates 20 percent of world trade passes through the Gulf of Aden between Yemen and Somalia. Ships use it to get to Egypt’s Suez Canal, which connects the Red Sea and Mediterranean Sea. The waterway is the fastest crossing from the Atlantic Ocean to the Indian Ocean, according to the Suez Canal Authority. 

 vessel going from Saudi Arabia to Rotterdam can cut the distance traveled by about 42 percent by using the canal rather than sailing around the Cape of Good Hope, data on the canal authority’s website show. To southern France the saving is 57 percent and to New York 30 percent, the data show.

Somali pirates were holding 28 vessels and 638 hostages for ransom as of Dec. 31, according to the IMB, part of the International Chamber of Commerce.

“If there are no fresh initiatives to deal with pirates, then you can expect 2011 to have many more hijacks and much greater violence against crews,” said Captain Pottengal Mukundan, London-based director of the Piracy Reporting Centre.

In areas of Somalia where pirates have bases, hijackings are “woven into the social and economic fabric of everyday life,” United Nations Secretary-General Ban Ki-moon wrote in a report in October. “The root causes of piracy are found on land.”

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