Cost of Piracy Escalating Despite Navy Surveillance Efforts

Contributor: IDGA Editorial Staff

A group of eight suspected pirates were apprehended after the US Navy foiled an attack on a vessel in the Gulf of Aden this month. The suspects were taken aboard a destroyer, the USS Farragut, following the successful navy surveillance operation undertaken by a counter-piracy taskforce, which was set up in January 2009.

USS Farragut sent out a helicopter to the aid of the MV Barakaale 1 after the Tanzanian-flagged vessel came under attack in the gulf and alerted others in the region by radio. The taskforce operates in the Gulf of Aden and nearby waters off the eastern coast of Somalia, where piracy has been particularly rife in recent years. Another navy surveillance and counter-piracy operation saw the cargo ship MV Ariella rescued by Danish Warship HDMS Absalon after pirates attacked the vessel on February 5th. HDMS Absalon was working as part of NATO's counter-piracy mission codenamed Operation Ocean Shield. Since the navy surveillance operations began in the area, there has been a 50 percent drop in piracy attacks.

While these navy surveillance operations were a success, there have been many more incidents in recent months where the victims of pirate attacks have not been so lucky. Paul and Rachel Chandler have been held captive by Somali pirates over 120 days after being kidnapped by pirates from their sailboat when heading towards Tanzania on October 23rd. Their captors have demanded a $7 million ransom and threatened to kill the couple if they do not receive the money.

Rise in Piracy Attacks
The number of piracy attacks worldwide rose by nearly 40 percent last year, with a total of 406 incidents reported according to International Maritime Bureau figures. It is the third successive year that the number of reported incidents has increased and the last time figures exceeded 400 was in 2003. Navy surveillance is increasingly important for combating the problem, which is in turn leading to escalating costs for those in the industry.

At a recent meeting of the East African Community Sectoral Council on Transport, Communications and Meteorology in Arusha, Tanzania, ministers noted that piracy off the Somali coast is having a serious impact on the local economy and transportation. They urged partner states to support efforts of the International Maritime Organization, African Union, Intergovernmental Authority on Development and other international initiatives geared towards fighting piracy in the Indian Ocean.

Insurance is also being affected by the issue. Lloyds insurers recently reported that ransoms can be as high as $3 million, with the cost to insurers often doubling that once legal expenses and delivery have been accounted for. On average, ransoms stand at between $2 million and $3 million, and the money earned through piracy has injected an estimated $90 million into the Somali economy up to November last year, when the report was published. The typical cost of a hijack is $1 million per ship, according to the report, with these expenses currently being incurred by the shipping and energy sectors. But if the problem persists then ship owners will eventually pass on these costs, according to the report.

Navy Surveillance Operations
Thomas Countryman, principal deputy assistant secretary of political-military affairs, this month spoke about the anti-piracy efforts being made by the United States in terms of navy surveillance and military operations. He said that both the military and the industry had worked hard over the past year to combat the problem. The number of nations contributing to the maintenance of an international navy surveillance force in the Gulf of Aden has risen to about 20 in the last 12 months.

Countryman added, On any given day there are, on average, 17 ships patrolling in the gulf and conducting navy surveillance operations to provide security to the 30,000 cargo ships passing through the area every year. Countryman also highlighted the escalating cost of battling pirates off the coast of Somalia during his speech in Washington. "The locus of pirate activity has shifted and we are trying to deal with it. It's expensive, and that's why we feel strongly the need to pursue the lowest-cost options to deter piracy," he explained. Defensive measures taken by ship owners and crews are "the lowest-cost and most-effective way to deter pirate attacks."