By Ben Sanga (email the author)
Posted Wednesday, December 2 2009 at 00:00
Global shippers have raised the piracy levy due to an increase in pirate attacks off the Coast of Somali.
The move is aimed at offsetting potential losses, however it is expected to push up the cost of shipping into the East African region.
This means that shippers in the region, already overburdened by the piracy menace, will have to dig dipper into their pockets to offset transport cost, a trend that will be reflected on the retail prices of imported goods.
In a recent development, French shipping company CMA CGM announced that it would increase its piracy surcharge up to $41 per twenty-foot equivalent unit (TEU).
“The transit of container ships through the Gulf of Aden in both directions is subject to high costs caused by the prevailing risks of piracy in the area. CMA CGM continues to ensure the safety and security of cargo carried by its vessels through the Gulf of Aden,” the company said in a statement.
The new charge, which will come into effect from December 15, will represent a 44 per cent increase in the levy — up from $23 per TEU.
United Arab Shipping Company had taken a similar step in February, increasing the charge to $22 per TEU for containers moving through the same route.
Though other shipping lines have not openly admitted that they have introduced a surcharge, shippers complain that some of them have increased the levy to $100 per TEU.
Piracy incidents along Indian Ocean routes have led to an increase in cargo handling charges, a load that has been passed on to the shippers even as the Kenya Maritime Authority (KMA) pushed on with its plans to bring down the cost of shipping through the Port of Mombasa.
“Even as maritime regulatory bodies continue to push for a reduction in shipping costs, some of these factors would still continue to push the cost higher than expected,” said Capt Fredrick Wahutu of the Kenya Ships Agents Association (KSAA), adding that he would not be surprised if other liners increased the levy too.
Experts said the ending of the Monsoon season would lead to an increase in piracy incidents.
According to Seafarers assistant programme officer Andrew Mwangura, the attacks have begun to stray further into international waters.
He said that pirates now operate in an area estimated to be 1.4 million square miles of open waters off the Somali coast.
In the past, some shipping lines have tried to dodge the menace by navigating through the southern tip of Africa.
An analysis by Baltic and International Maritime Council (BIMC) last month indicated that it was very expensive for vessels to pass through the Suez Canal.
BIMC said an owner of a container ship loses up to $2.4 million while an owner of a large crude carrier loses up to $7million by sailing round South Africa’s Cape of Good Hope to avoid pirates in the Gulf of Aden.
Experts said that avoiding attacks in the Suez Canal could add $1.5 million to $2 million to the cost of a shipment in terms of extra fuel, time and labour.
They said that insurance premiums protecting vessel against damage and delays due to piracy had increased five to tenfold, while the cost of hiring a security escort to pass through the Suez Canal was as much as $100,000 per journey, depending on a ship’s size and the value of its cargo.
“The piracy issue is very costly to the shipping industry... That is why we are calling for concerted efforts from all stakeholders,” said Mr Mwangura.
He blamed ship owners and states in which the ships are registered of not supporting the fight against piracy in the Indian Ocean.
He said that majority of “flag states” whose vessels ply the piracy-infested areas of the Indian Ocean had abandoned the fight to cargo and ship owners.
Too dangerous
“We have already written to the International Transport Workers Federation (ITF) to complain over this trend where by flag states are shying away from this responsibility. They are supposed to be actively involved, even more than cargo owners as the vessels belong to them,” said Mr Mwangura.
Flag states refers to the authority under which a country exercises regulatory control over a commercial vessel which is registered under its flag.
This includes inspection, certification, and issuance of safety and pollution prevention documents.
Mr Mwangura said ITF had issued a warning to the liners that the life of seafarers working on vessels transiting through piracy infested waters must be safeguarded.
ITF states: “Save in exceptional circumstances, ships should not transit the (affected) area.
The risk of attack is now so great that putting seafarers in harm’s way amounts to a breach of the ship owner’s duty of care.
“There are others who are shirking responsibility and as good as accepting the steadily growing menace, which has brought us to the point where one of the world’s great trading routes is now almost too dangerous to pass through.”
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