BYLINE: ROBERT R. FRUMP
Piracy threat likely to keep growing despite greater international response
What's the 2009 outlook for piracy? Good - if you're a pirate. But it's not so hot if you are a shipping line, tanker owner, cargo shipper or the Suez Canal Authority.
The ancient scourge of piracy appears to have driven up the modern costs of shipping by nearly $500 million annually for those transiting the Gulf of Aden sea lanes. The trend most likely won't end soon.
Some carriers are responding by diverting ships to longer routes, cruising "at speed," adding armed guards and increasing crew hazard pay. In addition, insurers are invoking war-zone rate clauses.
And even as world navies and the United Nations prepare for increased patrols and attacks against the pirates, most analysts believe nothing short of a strategic, non-military "land solution" in troubled, war-torn Somalia will ever fix the overall problem.
"It's hard to find a better pirate base than Somalia," said Alex Duperouzel, managing director of Background Asia Risk Solutions, a Singapore-based company that provides armed escorts to merchant vessels. "Anything short of a strategic solution on land is all tactics - and tactics won't stop the pirates because they will adapt."
On the cost side, increased insurance alone could add $20,000 per voyage per ship - 40 times the normal cost - and at least some of those costs inevitably are passed on to shippers.
For example, CMA CGM plans to levy a surcharge of $23 per TEU on containers moving through the Gulf of Aden. The French company announced the action after it was hit with increased insurance premiums and found it had to double the pay of all crews on ships sailing in waters off Somalia.
The surcharge was scheduled to take effect on Jan. 1. It will be tacked on to bills of lading paid by CMA CGM customers.
BGN Risk, a corporate security risk consultancy, said the CMA CGM situation is representative of many other carriers.
"Due to increased danger, the special risks insurance levy for crossing the world's most dangerous piracy hotspot has skyrocketed to an average of $20,000 per vessel per voyage, up from only about $500 last …