Piracy at sea cost world $7b in 2011

Piracy at sea cost world $7b in 2011

Somali Piracy CostsDUBAI: The steep cost of maritime piracy is adding to the woes of the world economy weighed down by the Eurozone crisis, according to a new report.

The economic burden of fighting and evading pirates has been pegged at around $7 billion last year, said Oceans Beyond Piracy, a think-tank based in the US.Approximately 80 per cent of all costs are borne by the shipping industry, while governments account for 20 per cent to counter pirate attacks in high seas, said the report.The report, authored by Anna Bowden, breaks down the growing expenditure to governments and shipping companies.

This includes $2.7 billion in fuel costs because vessels have to increase speed while tnasiting through pirate infested areas, $1.3 billion for military operations, and $1.1 billion for security equipment and armed guards on vessels.

The new figure, however, marks a dip from the $7-12 billion spent in 2010 to combat the scourge. “The report assesses nine different direct cost factors specifically focused on the economic impact of Somali piracy,” said Bowden, who worked in coorperation with shipping companies, governments and security agencies over the past year to ensure the figures remain close to the facts. There is an additional $635 million for insurance, $486 to $680 million on re-routing vessels along the western coast of India, and $195 million for increased labour costs and ‘‘danger pay’’ for seafarers.

Speaking to Khaleej Times, Bowden said, ‘‘The human cost of piracy cannot be defined in economic terms. We do note with great concern that there were a significant number of piracy-related deaths, hostages taken, and seafarers subject to traumatic armed attacks in 2011. This happened in spite of the success of armed guards and military action in the later part of the year.”

Average ransoms increased 25 per cent from approximately $4 million in 2010 to $5 million in 2011.Although the total cost for ransoms was $160 million for 2011, money collected by pirates represents a mere two per cent of the total economic cost.This sharply contrasts the $38 million spent for prosecution, imprisonment, and building regional and Somali capacity to fight piracy.However, the success rate of piracy attacks fell, but ransons increased in 2011 as did the duration of ships held by the pirates. The report said pirates expanded their reach eastwards towards India, and northeast towards the Gulf of Oman and Strait of Hormuz.

An International Maritime Bureau report in January had put the number of reported attacks at 439 attacks last year. Of these, 275 took place off Somalia on the east coast and in the Gulf of Guinea on the west coast of Africa.The IMB said 802 crew members were taken hostage in 2011, which marks a decrease from the four-year high of 1,181 in 2010. ‘‘Overall in 2011, there were 45 vessels hijacked, 176 vessels boarded, 113 vessels fired upon and 105 reported attempted attacks. A total of eight crew members were killed throughout the year, the same number as 2010,’’ it said. – Khaleejnews