Piracy-driven rerouting costs shipowners billions of dollars

Piracy off the east coast
of Africa is having wideranging
repercussions and is
threatening global seaborne
trade, according to the 2009
Unctad Review of Maritime
Transport. (RMT) released
in December 2009.
According to the review,
over 80% of international
seaborne trade that moves
through the Gulf of Aden is
with Europe.
Piracy also “impacts on
energy security and the
environment. By hijacking
large tankers, seizing their
cargoes, and delaying or
preventing their delivery,
and by causing oil spills
or other incidents causing
environmental damage,
piracy poses additional risks
and costs to all,” says the
report.
Carriers can either avoid
the piracy-ridden areas by
rerouting their ships via
the Cape of Good Hope, or
accept additional risks and
costs and continue to sail
along the same lanes.
While this is good
news for South Africa,
it is likely to affect the
viability of the Suez Canal
Authority, as well as
various Mediterranean port
authorities and terminals
as they see their revenues
literally going south.
Based on 2007 data, the
total annual round-trip costs
of routing through the Suez
Canal has
been estimated at
US$25.7-billion.
The equivalent cost
for routing round the
Cape of Good Hope is
US$32.2-billion, according
to the report.
“Taking into account
all cost factors, it was
estimated that re-routing
33% of cargo via the Cape
would cost shipowners an
additional US$7.5-billion
per annum.
“These costs will
ultimately be passed on to
shippers and consumers,”
it says.