Maersk Line, one of the biggest global shipping lines, expects its piracy-related costs to double in 2011 to $200 million (Dh735.6 million) covering insurance premiums, hardship llowances and re-routing vessels away from high-risk zones in the region, its chief operating officer told Gulf News.
Piracy in the Gulf of Aden cost the company $100 million in 2010, said Morten Engelstoft. This includes rising global fuel costs, insurance premiums to cover the vessels sailing in the area and increasing the hardship allowance to its seafarers to compensate the time and extra work they do in high-risk zones.
"We expanded the number of days whereby we pay hardship allowance to five days when you transit through the piracy zone because that is the amount of time where there is additional work in terms of outlook and security measures aboard the ship," Engelstoft said.
Bracing itself against piracy threats in the region, Maersk line has taken some security measures to protect its crew and vessels.
"We have exchanged some of the vessels that were sailing in the area here to make certain that they are big enough and fast enough to avoid being hijacked. Beyond the vessels, we follow the best management guidelines in terms of how we best protect the vessel. We follow guidelines in terms of sailing outside the worst areas to avoid piracy if we can," he added.
Significant concern
Engelstoft said piracy is a" significant concern" but said the company will continue its business in the region this year.
"We have a lot of business in the area and therefore certainly have a very significant challenge for piracy as it is now," he noted. The company has been subjected to seven to ten attacks on its vessels since the beginning of 2010, he added.
"Our seafarers are being attacked, kidnapped, some of them tortured, some of them murdered and therefore we really need urgent and immediate steps to address the situation. We have been subjected to a number of attacks. Fortunately based on our vessels in the area being bigger and faster, they have been able to sustain the attacks and were able to escape."
Following best management practices and alerting the navies is one area of action that shipping companies need to improve, he said.
Piracy has "seriously affected" international trade as 22,000 ships and 30 per cent of the world's oil supplies go through the Gulf of Aden and the Indian Ocean, said the Somali Foreign Minister during a keynote speech at the counter-piracy conference in Dubai last week. "The victims in Somalia however suffer a double tragedy the rest of the world does not, namely their food, medicines and fuel have to be delivered with armed naval escort, and they pay much higher prices for these basic necessities than the rest of the world when small ships and dhows can get through," he said.
Issues
Food shortages, higher commodity prices, lack of supplies and loss of revenue to traders, employees and the state are major problems for Somalia, he added.
Piracy has contributed to a 25 per cent increase in inflation in the country over the last three years as shipping and transport costs skyrocketed, Muhyadin Ali Yousuf, Chairman of the Somali Committee to Combat Piracy, told Gulf News.
Piracy in the Gulf of Aden cost the company $100 million in 2010, said Morten Engelstoft. This includes rising global fuel costs, insurance premiums to cover the vessels sailing in the area and increasing the hardship allowance to its seafarers to compensate the time and extra work they do in high-risk zones.
"We expanded the number of days whereby we pay hardship allowance to five days when you transit through the piracy zone because that is the amount of time where there is additional work in terms of outlook and security measures aboard the ship," Engelstoft said.
Bracing itself against piracy threats in the region, Maersk line has taken some security measures to protect its crew and vessels.
"We have exchanged some of the vessels that were sailing in the area here to make certain that they are big enough and fast enough to avoid being hijacked. Beyond the vessels, we follow the best management guidelines in terms of how we best protect the vessel. We follow guidelines in terms of sailing outside the worst areas to avoid piracy if we can," he added.
Significant concern
Engelstoft said piracy is a" significant concern" but said the company will continue its business in the region this year.
"We have a lot of business in the area and therefore certainly have a very significant challenge for piracy as it is now," he noted. The company has been subjected to seven to ten attacks on its vessels since the beginning of 2010, he added.
"Our seafarers are being attacked, kidnapped, some of them tortured, some of them murdered and therefore we really need urgent and immediate steps to address the situation. We have been subjected to a number of attacks. Fortunately based on our vessels in the area being bigger and faster, they have been able to sustain the attacks and were able to escape."
Following best management practices and alerting the navies is one area of action that shipping companies need to improve, he said.
Piracy has "seriously affected" international trade as 22,000 ships and 30 per cent of the world's oil supplies go through the Gulf of Aden and the Indian Ocean, said the Somali Foreign Minister during a keynote speech at the counter-piracy conference in Dubai last week. "The victims in Somalia however suffer a double tragedy the rest of the world does not, namely their food, medicines and fuel have to be delivered with armed naval escort, and they pay much higher prices for these basic necessities than the rest of the world when small ships and dhows can get through," he said.
Issues
Food shortages, higher commodity prices, lack of supplies and loss of revenue to traders, employees and the state are major problems for Somalia, he added.
Piracy has contributed to a 25 per cent increase in inflation in the country over the last three years as shipping and transport costs skyrocketed, Muhyadin Ali Yousuf, Chairman of the Somali Committee to Combat Piracy, told Gulf News.