April 20, 2024
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Why Somali Pirates Escalated Global Shipping Crisis

In recent months, the maritime industry has been battling with heightened security concerns stemming from attacks by Yemen’s Houthi rebels and resurgent piracy activities along the coast of Somalia.

Since November, several cargo ships have been compelled to take a significant detour of approximately 4,000 miles around the continent of Africa to evade potential assaults by Houthi rebels in the Bab al-Mandab strait.

Regrettably, the escalation of incidents in the Red Sea has inadvertently revitalized piracy hotspots that had been relatively dormant.

Notably, there has been a surge in pirate attacks targeting ships navigating along the Somali coast, with more than 20 attempted hijackings recorded since November.

These incidents have driven up the costs of insurance coverage and armed security services for shipowners.

Last month, Houthi rebels further exacerbated the situation by attacking and setting ablaze a cargo vessel traversing Somalia’s Gulf of Aden.

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Ismail Isse, identified as a pirate financier, disclosed to Reuters that the reduction in international naval operations off the coast of Somalia had emboldened pirate groups, facilitating the hijacking of ships.

Somali President Hassan Sheikh Mohamud expressed concerns over the escalating piracy threat, warning of its potential resurgence if not addressed promptly.

While interventions by the international community have yielded mixed results, recent efforts by the Indian Navy have demonstrated some success.

The interception of the Maltese-flagged bulk carrier MV Ruen Ruen, the capture of 35 pirates, and the rescue of 17 hostages underscore the risks faced by pirates, according to Cyrus Mody, deputy director of the International Chamber of Commerce’s anti-crime arm.

However, not all nations are supportive of military actions to combat piracy. A Bangladeshi foreign ministry official conveyed reluctance towards such measures, following the hijacking of the Bangladeshi-owned bulk carrier Abdullah by Somali pirates.

Arsenio Dominguez, Secretary-General of the International Maritime Organization, has cautioned shipping companies to heighten their vigilance in response to the resurgence of piracy.

He emphasized the importance of adopting stringent security measures akin to those employed during the previous piracy crisis, particularly in the Gulf of Guinea, where increased maritime traffic poses additional risks.

The waterways adjacent to Somalia rank among the busiest shipping lanes globally, serving as the most direct maritime route connecting Europe and Asia. Annually, approximately 20,000 vessels navigate through the Gulf of Aden, linking the Red Sea and Suez Canal.

However, the Gulf of Aden isn’t the sole piracy hotspot in Africa experiencing a resurgence amid the Red Sea crisis. Recently, pirates operating off the coast of Equatorial Guinea seized a ship’s crew. In the previous decade, the Gulf of Aden and the Gulf of Guinea were notorious piracy zones, particularly concerning oil companies and maritime travellers, with piracy incidents peaking in 2018.

These regions face heightened vulnerability to piracy due to inadequate equipment and manpower, along with attacks occurring far offshore, beyond countries’ territorial waters. Additionally, the Gulf of Guinea’s abundant oil and gas reserves and the presence of well-trained militias, influenced by the Delta’s secessionist movement, contribute to the region’s susceptibility.

The Gulf of Mexico also contends with piracy issues, primarily attributed to local criminal groups rather than cartels, owing to its significant oil and gas resources.

Fortunately, several years ago, the African piracy threat was largely mitigated through the implementation of onboard security measures, including the deployment of armed guards. Additionally, coastal states have bolstered anti-piracy measures.

Despite these efforts, surging piracy in African waters is poised to escalate shipping costs, predominantly due to inflated insurance premiums. Underwriters according to OilPrice.com, have increased war risk premiums by up to 50% for vessels traversing the Red Sea, especially those associated with U.S., British, and Israeli companies, reflecting the persistent threat of attacks.

This surge in premiums, now reaching approximately 1% of a ship’s value, translates into substantial additional expenses for voyages lasting seven days.

Marcus Baker, global head of marine and cargo at Marsh, emphasized that vessels encountering piracy issues typically have some level of Israeli, U.S., or U.K. ownership, highlighting the specific targeting of ships associated with these nations.

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