Piracy steers shipowners to Good Hope

November 23, 2008 12:00 am

, OSLO, November 23 – Rising piracy in the Gulf of Aden has prompted some ship-owners to change their routes to round the Cape of Good Hope instead, a detour considered somewhat less risky but also longer and more expensive.

Over the past week, two major shipping industry players, Odfjell of Norway and A.P. Moeller-Maersk of Denmark, have announced that part or all of their fleets will from now on sail around South Africa’s southern tip instead of through the pirate-infested Red Sea.

Other shipping companies like Bermuda-registered Frontline, which owns the world’s largest fleet of oil tankers, have said they may soon follow suit if security in the waters off lawless Somalia is not rapidly improved.

According to the International Maritime Bureau, at least 94 vessels have been attacked off Somalia since January, of which 38 were captured.

The stepped-up danger may soon translate into higher insurance payments, some experts say.

"The insurance companies may either refuse to cover the ships altogether or they will increase the additional premium. They will also be on higher alert for vessels carrying goods that are especially attractive for the pirates, such as oil," said a spokeswoman for insurance broker FP Marine Risks in Hong Kong.

Still, the price to pay for a safer voyage is considerable. The Cape of Good Hope detour adds between five and 15 days to a trip, depending on the port of departure, the destination and the ship’s speed, slapping ship owners with massive extra costs.

"Some 6,000 dollars a day would be a typical running cost estimate for a ship of a certain size," Arild Wegener, head of the security division at the Norwegian Shipowners’ Association, told AFP.

"If you add other costs like contractual liabilities and insurance, you easily end up at half a million dollars," he added.

On the positive side, ships circumventing the Gulf of Aden will avoid costs linked to the difficult passage through the Suez Canal, but those savings are only a drop in the bucket compared to the price hike for their delayed deliveries.

"And it’s not a given that the client will be too happy if the delay upsets his logistic chain," Wegener said.

Nonetheless ship owners considering alternative routes stress the importance of their merchandise reaching the designated port late rather than ending up in pirates’ hands.

"We took this decision out of respect for the safety of our crews," Odfjell head Terje Storeng told AFP.

"But it was also to safeguard the cargo onboard. Clients cannot really complain about that," he added.

So far, none of Odfjell’s ships had been forced to make the trip around the Cape of Good Hope, so it was "too early" to calculate the additional costs, Storeng said, adding that he hoped customers would understand the delays and even help cover the extra costs.

Still, a number of shipping companies remain cool towards changing routes arguing the extra time, expense and bureaucracy make such a prospect unattractive. Others say they are used to the risk associated with sailing through the Gulf of Aden.

"There have been no plans to change route as it would call for a change in agreement between ship-owners and ship users," said Shashank Kulkarni, secretary general of the Indian National Shipowners Association (INSA), adding: "It can be done in very, very exceptional cases."

Evidence also suggests the route around the southern tip of Africa may not prove much safer.

The Sirius Star, a Saudi oil super-tanker carrying two million barrels of the black gold, was captured on November 15 in the Indian Ocean some 800 kilometres off the coast of Kenya, as it headed towards the Cape of Good Hope.

Using mother ships, hijacked trawlers or deep-sea dhows to tow speedboats from which they launch their attacks, the pirates have been able to radically expand their areas of operation.

In the case of the Sirius Star, "the geographic location of the attack was a bit of a shock," Wegener said.

For many ship owners, a more heavy-handed military approach is the only way to address the piracy problem.

"It’s the only solution," acting chief executive of Frontline Martin Jensen told AFP.

The European Union and a number of other countries have decided to send war ships into the most dangerous waters to support the fleets already there.

"It’s promising," Storeng said, adding that Odfjell plans to return to its Gulf of Aden route "as soon as the security situation will allow it."


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