Piracy costs shipping firms over $100m annually, says report

Piracy off the coast of Somalia is costing the international shipping industry at least $100 million a year, a new report states.

Aside from payments in ransom — estimated at about $110 million over the past two years — there have also been increased transportation and insurance costs, as well as costs related to protecting ships.

The report from the World Peace Foundation noted that piracy was now “big business” with an estimated 1,500 buccaneers off the coast of Somalia involved in seven syndicates.

The business is co-ordinated by a few bosses operating mainly from Kenya, Dubai and Lebanon.

The report predicts that acts of piracy will escalate unless urgent action is taken.

It proposes, for instance, providing pirates with economic incentives.

Shipping union officials in the West have also urged ship owners to ensure their vessels travel in convoys under naval protection — particularly in the Gulf of Aden — where the vast majority of attacks occur on solitary vessels.

A senior Nautilus official said merchant ships that abided by the naval task force recommendations to travel as group transits, remained safe.

“The problem is, some ship owners aren’t prepared to wait for the task force. They are running behind schedule and are prepared to take the risk,” he said.

But as evidence given to an inquiry in the UK House of Lords recently showed, that risk is big.

Read Admiral Peter Hudson said one third of the 25,000 vessels navigating through piracy prone areas over the past year had failed to report to the task force.

“If we could ensure that 100 per cent of ships follow this to the letter, the number of attacks would reduce significantly. If they are prepared to cut corners and take risks, occasionally they will pay the consequences for it,” said Mr Hudson.

Piracy attacks increased by around 40 per cent last year with over 1,050 members of crew held hostage, eight killed and 68 injured.