Protecting your treasure

24 November 2008
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24 November 2008

With cargo ships under siege from hijackers along the coast of Africa, buyers are faced with costly alternative routes. Jake Kanter examines different strategies

Until the events of the past few weeks you could be forgiven for thinking pirates had been consigned to the history books, or were only likely to be seen in the pages of a novel or on the silver screen.

But the hijacking of the Saudi Arabian supertanker Sirius Star pushed piracy into the spotlight, and highlighted the seriousness of the problem that modern-day bandits pose.

According to research published by the International Maritime Bureau (IMB) there has been a "dramatic" increase in pirate raids in 2008. These have centred on the coasts of countries such as Somalia, Nigeria and Indonesia. The IMB believes the gangs are becoming increasingly brazen and are now better equipped to attack cargo vessels with heavy weaponry, including rocket-propelled grenades.

Associations representing shipping companies, including Intertanko and Intercargo, have campaigned against the rise in violence. They argue that pirates pose a significant threat to world trade.

They have urged governments to bolster their military presence by patrolling pirate "hotspots", and to introduce tougher punishments for offenders.

Rob Lomas, secretary general of Intercargo, told SM that purchasers could help by raising awareness of the issue.

"[Buyers] can help by getting their companies engaged in the problem, then the firms can lobby the government for more action to put an end to piracy."

In the absence of any government intervention, what can be done to mitigate risks?

One plan is to redirect ships away from danger zones .

Roger Middleton, consultant researcher at think-tank Chatham House, says shipping companies face a tough choice: send vessels on safer routes, which will incur costly delays; or burn extra fuel going faster through risky regions.

"The danger with making a route change around Africa is that it takes two or three weeks extra, which is inconvenient and expensive. If they choose to go through the Gulf of Aden [the narrow channel between the coasts of Somalia and Yemen] they will have to travel faster to avoid pirates, which will burn more fuel and create higher costs."

He says the coast of Somalia is a particularly hazardous area for cargo vessels and some shipments are being rerouted.

Aleka Sheppard, director of the London Shipping Law Centre, believes buyers need to take tougher action. She says companies using shipping services should spend money to ensure a "mini army" is on board the boat delivering their supplies.

And Vice Admiral Bill Gortney, commander of the Combined Maritime Forces, operating in the area, said in a statement last week: "Companies don't think twice about using security guards to protect their valuable facilities ashore. Protecting ships and their crews at sea is no different."

But, Middleton says, the opportunistic nature of attacks means that, instead of investing in a permanent force, vessel crews could perhaps take evasive action to deter pirates from embarking. He suggests, for example, using fire hoses to repel them.

"Purchasers will need to look at the situation on a general level," adds Alex Hindson, head of enterprise risk management at consultancy Aon.

"It is important to do a risk study and find out which parts of the supply chain are most vulnerable. Pirates usually go for higher-value products."

He explains that once the supplies that are most at risk have been pinpointed, buyers can help change the way the goods are shipped. "I've seen this done in the pharmaceutical industry. They change things such as logistics companies, the day of the week they get deliveries and the route of transport. It's like tactics, you've got to out-manoeuvre them."


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