The Cost of Avoiding Pirates
Nippon Yusen KK and Kawasaki Kisen Kaisha Ltd. have had to change routes between Europe and Asia to evade the bands of pirates
operating off the Somali coast. The pirates have been seizing vessels in a portion off the sea lane connecting the Suez Canal and the Indian Ocean.
Ships traveling between Europe and Asia must navigate around the Cape of Good Hope adding six to 10 days to the voyage and Y40 million ($400k) in costs per vessel.
“The industry will increasingly avoid dangerous waters,” says Japan’s Shipowners’ Association Chairman.
Already several high-risk vessels operated by Kawasaki Kisen have been sent around the Cape of Good Hope.
Nippon Yusen ships are taking the alternate route, with six traveling around the southern tip of Africa so far.
Should a freight owner refuse to sign off on the altered route, the shipping company shoulders the added costs.
“Considering that the pirates are demanding ransoms in the hundreds of millions of yen, we have no choice but to alleviate the risk,” says JSA.
More than 2,000 vessels with Japanese affiliations travel near the Somali coast each year. Of those roughly 500 slower-moving ships are considering the modified routes.
And who pays for this? Um, we do.
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