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Somali piracy returns costing shipping US$1.7 billion

THE resumption of piracy attacks against merchant vessels off the coast of Somalia is hitting the pockets of vessel owners and operators hard, particularly, as these clandestine activities mark a return of kidnapping for ransom, according to The State of Maritime Piracy 2016 report published by NGO group Oceans Beyond Piracy (OBP).

The new report claims the economic cost of piracy caused by groups in Somalia increased to US$1.7 billion in 2016, from $1.3 billion in 2015.

This total includes costs paid by shipping operators for increased insurance, labour, armed guards and other protection measures, as well as ransoms paid by insurers and the costs of naval deployments, reported CNBC.

The cost had been trending downwards from $7 billion since 2010 due to counter-piracy measures. However, the report now claims that lower vigilance by the shipping community, such as hiring smaller private security teams, may have encouraged pirate groups.

While zero vessels were hijacked in 2016, there were 27 reported incidents of pirate activity, according to the report. In 2017, there have been two high-profile hijackings by Somali pirates, including the Aris-13 tanker in mid-March and a commercial Indian ship in April.

Senior Africa analyst at global risk consultancy Verisk Maplecroft, Emma Gordon, slammed shipping operators for being complacent, after only 31.5 per cent of operators employed armed guards by the end of 2016.

"Somali piracy is still a long way off 2012 levels. However, the recent attacks highlight that the pirate groups remain operational, and will be quick to capitalise on vessels that do not strictly adhere to advanced security measures," she told CNBC via email.

"The importance of having armed guards is evident when looking at the two recent tanker incidents. In October 2016, a UK-flagged chemical tanker warded off an attempted hijack when the armed guards engaged pirates in a firefight.

By contrast, the Aris-13 - the first commercial vessel hijacked since2012-had no armed guards, and was ignoring best practice guidance on route and speed."