Shippers pay higher prices due to piracy threat

Kenyans will soon start paying more for imported goods after shipping companies slapped additional charges on cargo transportation, reported Daily Nation.

The companies attributed the move to increased insurance charges and additional expenses arising from increased piracy activities in the Indian Ocean. Shippers are already spending more on fuel as their vessels take longer routes to avoid attacks by Somali pirates.

Insurance companies, on the other hand, have also increased premiums to the shipping lines due to the high risk of using the Gulf of Aden.

Things are not expected to get any better in the coming months, according to maritime experts, as the attack peak season sets in.
African Shipping Lines chief executive Ibrahim Ahmed Abdinoor said some shipping lines have introduced a piracy surcharge of up to US$200 per container.

"Ships from Dubai to Mombasa used to take six to seven days but the voyage now takes 12 days since shipping lines take a longer route to avoid the Somali coastline," Abdinoor said.

A ship from Mumbai in India, which previously took 12 days today spends 18 days at sea since the voyage has to move further down south near Madagascar, Abdinoor added.

The additional cost of fuel per ship is $3.5 million, said Jim Jorrie, chief executive officer of Espada, a private security agency in US that is working with local players to establish private escort to the ships said.

"Pirates have carried out 16 attacks that resulted in five successful hijacks of ships in the east Africa waters in less than a month," Seafarers Assistance Programme co-ordinator Andrew Mwangura says.

Due to the high risk of using Somali waters, shipping lines have to charge an additional fee of $120 per TEU on imports and $95 per TEU on exports, the Kenya Ships Agents Association chairman David Mackay said recently.

Source: Cargonews Asia