Piracy, the Shared Risk

Maritime transportation has steadily evolved in sophistication, with state-of-the-art equipment, global weather information gathering, GPS tracking and once-inconceivable capacity for container transport on the water. However, all these technological advances shouldn’t obscure our understanding that ocean shipping remains a risky business.

The perils of the seas are the source of many legendary tales that have both thrilled and terrified us over years gone by. Although we no longer fear dragons over the horizon, and the phrase “uncharted waters” has been relegated to a mere rhetorical expression, we still face the threat of attacks by modern day pirates in certain corners of the world.

The greatest risks lie off the east African coast, where Somalia-based pirates have expanded their zone of operations across the Arabian Sea deep into the Indian Ocean, nearly to the coastal waters of India itself. While increasing in scope, these attacks have become ever more violent, with assailants demanding greater sums as ransom for the hijacked vessels and kidnapped crews.

The number of attacks surged during 2011. According to the International Chamber of Commerce International Maritime Bureau, there were 409 attacks worldwide and 41 incidents of armed hijackings in which 15 mariners, including merchant seamen and civilians, were killed in 2011 through the first 11 months of the year. As of Dec. 1, there were 10 vessels reportedly being held for ransom with 172 seafarers held as hostages. Once captured, seafarers are subject to beatings, torture and even murder.

Besides the human toll of this crisis, the global economic impact is huge. Recent estimates of the worldwide costs range from $7 billion to $12 billion and are rising, with up to $3 billion for increased insurance costs alone.

Clearly, the bulk of the financial risk is borne by shipowners and their insurers.

Although the impact on shippers of commercial products is far less dramatic, companies shipping goods through these high-risk areas are exposed to potential damage to their goods and face delays in delivery, straining cash flow and adding cost to their supply chains.

Several organizations, including the ICC, the International Maritime Organization and the World Shipping Council, have been trying to raise awareness of this crisis and foster greater action by the international community to deal immediately and forcefully with these pirates on the seas and by confronting their financial support network.

This is one area where the interests of the world’s ocean carriers and the interests of shippers are fully in alignment, and where we can and should work together to garner support for international efforts and intervention to eradicate this threat on today’s open seas.
It is time cargo owners add their voice and support to these efforts to eradicate this menace to our world’s shipowners, seafarers and commercial interests. Companies and trade associations representing the interests of cargo owners should clearly state their full support of the efforts to confront piracy.

For instance, we all should support the ICC’s recent “Call for Action on Piracy” and implore our own governments to immediately act within the international community to improve the rules of engagement to allow naval vessels to locate, shadow and disrupt the operation of motherships in order to reduce the operating scope of the pirates; shift the efforts of the United Nations and other international bodies to ensure infrastructure is built in south-central Somalia to prevent that part of the country from being exploited by criminals and pirates; and ensure that piracy suspects are swiftly brought to justice and not sent back to Somalia without being held accountable for their crimes.

We can also educate ourselves by visiting reading and understanding the issues and the stances of major organizations focused on piracy: the International Chamber of Commerce, www.iccwbo.org; the Global Shippers Forum, www.globalshipperforum.org; the World Shipping Council, www.worldshipping.org; and Save Our Seafarers, www.saveourseafarers.org.

As shippers actively engaged in this region of the world, we must be very concerned about these dangers and the risks posed to our shipments, our carriers and the crews who are our partners in the supply chain. We may not be able to directly affect the security situation ourselves, but we have a duty to make sure political and business leaders understand this very real threat to our supply chain and to contribute toward a solution to this intractable problem.

Don Pisano is a vice president at American Coffee in Jersey City, N.J. Contact him at donp@amcof.com.

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