Somali Pirates Still Going Strong

Twenty-five vessels and 560 people are currently being held for ransom by pirates. Continuing to expand their geographical reach, pirates are the maritime industry. Mixed opinions about how best to moderate the effects of piracy were revealed during a Wednesday session at the 2011 Breakbulk Europe Transportation Conference and Exhibition.

Dirk Steffen, Director of Consultancy for Risk Intelligence, outlined the extent of the problem, saying that one out of every five pirate attacks is successful.

Pirate tactics continue to evolve. For example, many have managed to extend the period of time during which they can attack, Steffen said. Until late last year most piracy attacks were linked directly to the monsoon season, but now there is a new tactic in that the Somali pirates are capturing large fishing vessels and using them as mother ships, which enables them to continue operating in monsoon-hit areas.

In another twist, the main “commodity” captured is now considered to be the crew rather than the vessel, Steffen said. In several cases vessels have been captured and later set adrift once the pirates had taken the crew prisoner.

Steffen said that with very few exceptions, Somali pirates are not violent because they want to keep the crew safe to demand ransoms. There is no evidence that they are becoming increasingly violent, he added.

Other changes are occurring as well. Piracy is becoming more organised. In some cases syndicated groups back the pirates, and there is some evidence of funding from external shareholders, Steffens said.

Capt. Sunil Chaudhary, a member of the Indian Merchant Navy and an advocate for Indian hostages, said that many Indian seafarers are being held hostage in harrowing conditions. “We feel that no one cares about these people and there is no collective world approach about what to do with these people,” he told the Breakbulk audience.

While responsible ship owners do take measures to minimise risks, many vessels operate under flags of convenience, Chaudhary said, and the question of who should pay the ransom can be very opaque. Often, owners won’t have taken out kidnap and ransom insurance.

A member of the Breakbulk audience representing seafarers from India strongly disagreed with the claim that the pirates tend to be non-violent and floated the idea that India’s roughly 200,000 seafarers could boycott piracy-prone regions, a move that might have a severe impact on trade.

Sofie Cappaert, Senior Client Executive, Marsh Marine, outlined the increasing risk level that owners face and the reasons why they should consider Kidnap & Ransom insurance. “A few years ago a ransom demand was $150,000 and now it is $5 million on average and $9 million to $11 million if it is a tanker,” she said. This type of insurance covers the costs of the ransom as well as the costs of delivering the ransom, delivering bunkers to a hijacked ship, care for the crew once they are released and other expenses.

One delegate posed a question about the transparency of piracy surcharges – are these actually being used to make ships and their crews safer? he asked.

Lars Juhl, Managing Director of Scan-Trans Holding, which has had a hijacking experience, pointed out that the costs of making proper risk assessments should not be down to the shipper but that direct costs such as hardening a ship or paying for armed guards to the tune of $6,000 a day, are different. Here shippers couldn’t expect that surcharges would not be passed on, he said.

And certainly even from a year ago the carrier industry’s response is changing, Juhl said. Now it is possible to have armed guards aboard – some owners insist on it — but that “comes at a price-tag for the owners and the end-users.”

via Breakbulk Europe: Piracy’s latest twists | Break Bulk.