Carriers Pay Lion's Share of Piracy Costs

The fight against piracy is costing the shipping industry a great deal more than governments, a new report from One Earth Future foundation revealed.

The study showed world governments spending at least US$1.3 billion trying to control the problem, while the shipping industry spends up to US$5.5 billion. Vessels are forced to travel at higher speeds through dangerous waters, take longer routes to avoid pirate-infested areas, install special equipment and, in some cases, employ armed guards.

"The question for the shipping industry is how long this is sustainable," Anna Bowden, program manager for the research, said.

Carriers spent more than US$1 billion on private security guards, often armed, a figure that rose sharply in the second half of 2011. Half of all ships were carrying guards by the end of last year, compared with an average of 25 percent for the entire year.

The report estimated the total paid in ransoms at US$160 million. The average ransom for a ship paid in 2011 rose from US$4 million to US$5 million. While slightly fewer ships were taken in 2011, the amount of time vessels and crews were held hostage increased, as did the level of violence used in attacks and against hostages.

Nonetheless, protective measures have proved relatively effective, the study showed. So far, pirates have never seized a ship travelling faster than 18 knots. Armed private security guards also had a 100 percent success rate in protecting ships.

Re-routing ships to hug the Indian coast to avoid the mostly unpatrolled Indian Ocean cost between US$486 million and US$680 million. Crews demanded some US$195 million in higher wages to transit risky waters.

"A major risk for 2012 is that complacency sets in if we think piracy is now under control," Jens Vestergaard Madsen, a senior researcher on the project, said. "Pirates were less successful in 2011, but the piracy problem is still not resolved. Ninety nine percent of these costs are spent mitigating the problem, not resolving it."

Photo courtesy of Canadian Sea Marshals.