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08 December 2023

Ransom takes a toll on shipping firms; $80m paid in 2009

A ransom negotiation] takes about six to 12 nerve-wracking weeks. (REUTERS)

By Joseph George

The commercial impact of piracy on the shipping industry has been massive with more than $80 million (Dh293.8m) paid as ransom worldwide in 2009 alone, a senior industry official said.

Farhad Patel, Assistant General Manager at Sharaf Shipping, said that insurance premium for the Gulf of Eden alone has increased 10-fold and continues to increase. He was speaking at the Maritime Piracy and Security Conference organised by ACI in Dubai.

"Every ship operator has to re-route its voyages through the Cape of Good Hope. It eventually increases the cost for the cargo movement. This also affects the delivery of commodities worldwide," said Patel.

According to him, the financial burden of ransom goes into millions of dollars paid to the hijackers, and to the hired security team and to those who ensure that you deliver the ransom safely. "It is a lengthy process of negotiation which takes about six to 12 nerve wracking weeks at an average," said Patel.

In 2008, the industry witnessed about 111 attempted hijackings, of which about 42 were successful. About $35m in ransom was paid during the year. The industry also lost 11 seafarers to pirate attacks, he said.

"In 2009, the industry suffered 217 attempted hijackings, 47 hijackings and an estimated $80m of paid ransom. The number may cross the $100m mark.

"About 867 seafarers have been detained by pirates and we have had four seafarers dead," said Patel.

The shipping industry on the whole has been badly affected and international authorities and governments should take an aggressive approach to end the pirate menace, he said.

"The re-routing of the voyages around the Cape itself is a demanding one. What normally takes 41 days now takes 67 days. It is a dramatic rise in costs and every shipment is delayed because of this," said Patel.


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