Piracy
November 25, 2008 2 Comments
Lots of news lately about piracy on the horn of africa. But boaters know that this area has been plagued by piracy for nearly two decades, and it was given little media space until the past two months. In fact, very little piracy has made the news before September when a ship carrying 33 tanks was hijacked, attracting the ire of several Navies, including the Russian and US. More recently, Somali pirate attacks on a new oil tanker made the news. Somali pirates are currently holding 17 ships hostage [link].
Ransom paid seems to settle at about 2 million per ship, a small percentage of the total cargo worth, let alone ship costs. The shipping companies can afford to pay it, although they can’t be happy with the months of negotiations it takes to get to that number. But unless the ransom increases to the level where it becomes more than a mere thorn on the side of shipping magnates, there is little will to hire armed ships or take other precautions. Simply said, if it’s a market-driven system (and it is), piracy will not end until the piracy costs a lot more than it now does. The one oil tanker that made the news carries a cargo estimated at $100 million, and the ship is worth well over $150 m. Piracy cost $150 million last year. A large number, of course. But consider that 11% of the world’s oil travels through the pirate-infested waters of the Gulf of Aden. Even at today’s relatively low $60 barrels, that’s roughly a half a Billion dollars per day. Here’s the data, you do the math. Can we say drop in the bucket?
The solution? I’m glad to see that the UN finally acted, and governments including India are starting to take action to stop piracy off the Somali coast. This is driven no doubt by the recent increase in visibility. But with the world in its current condition, it remains to be seen how much momentum this carries after the sensationalistic media move onto a new story.
