Report: Somalia piracy inflicts high costs on shipping industry

Feb 8, 2012, 20:02 GMT

New York - The global shipping industry suffered up to 80 per cent of the nearly 7 billion dollars in economic costs due to Somali piracy last year, a report said Wednesday.

Government expenses countering piracy in the high seas accounted for the other 20 per cent of the costs, the Oceans Beyond Piracy Report said in an update of the economic impact of piracy worldwide.

The report, sponsored by the Colorado-based One Earth Future Foundation, estimated economic costs of piracy between 6.6 billion and 6.9 billion dollars in 2011.

'The report assesses nine different direct cost factors specifically focused on the economic impact of Somali piracy,' said Anna Bowden, the report's author. 'Over the past year we have had substantial cooperation from maritime stakeholders, which has helped to ensure the figures are as reliable as possible.'

It said the shipping industry paid 2.7 billion dollars in fuel costs when vessels had to speed up transiting through seas with known pirate risks. Naval military operations cost 1.3 billion dollars, plus 1.1 billion dollars in security equipment and armed guards.

Shipping companies had to pay 635 million dollars in insurance and between 486 million and 680 million dollars to re-route vessels along the western coast of India to avoid pirate-infested regions.

In addition to anti-piracy cost, governments paid 38 million dollars last year to imprison and prosecute pirates.

The report said ransoms paid to pirates last year were estimated at 160 million dollars.