From: Leo Odera Omolo
Date: Thu, Oct 29, 2009 at 10:49 PM
Business Feature By Leo Odera Omolo In Kisumu City
REPORTS appearing in various newspaper columns have indicated that a sudden surge in piracy off the Somali coast in recent days, have prompted maritime industry organizations to issue best practice guidelines for ships operating off the eastern coast and in the Gulf of Aden.
Same information emerging from the maritime and shipping lines says an increase in operational costs, due to global economic downturn and piracy in the Gulf of Aden, have forced some of the carriers to suspend their operations to East Africa ports.
A source at the Kenya Shipping Agencies Association has revealed that two other liners are also contemplating similar action after recording huge financial loses in the past financial years, which is running into billions of dollars..
Industry organizations, including the International Maritime Bureau{IMB}, said best management practice guidelines apply to all ships transiting East and South of Somalia, off Kenya, Tanzania , Madagascar and Seychelles.
The Bureau stated that with the end of Southwest summit monsoons, and with favorable weather conditions, Somali pirates are actively attacking vessels at great distances from the Somali coast, by using mother vessels.
Seven vessels have been attacked, and two vessels successfully hijacked I n the area, it added.
“Ships transiting south and east of the coast of Somalia to ports outside East Africa should now consider navigating to the east of Madagascar, cost of 60 east and south cost of 10 south, said a stamen from IMB specialized division of the International Chamber of Commerce {ICC},adding that intelligence sources have revealed there are a number of suspicious vessels in the Gulf of Aden believed to be pirate mother vessels looking to attack and hijack ships.
The description of some of the suspected pirate mother ships include long white, Russian made stern trawlers with names like ”BORUM OCEAN or ARENA or ATHENA”. The latest quarterly piracy report released by the International Maritime Bureau, said Somali pirates have extended their reach, threatening not only the Gulf of Aden and East Coast of Somalia, but also southern region of the Red Sea, the Bab el Mandab Straits and the East Coast of Oman.
IMB director Capt ottengal Mundani, however, observed that naval vessels operating off the Coast of Somalia continue to play a critical role in containing the piracy threat.
The situation has recently forced two container ocean carriers to suspend their operations in East African ports and according to the executive officer of the Kenya Shipping Agents Association Capt Frederick Wahutu was recently quoted by the press as saying, two other shipping liners, while weighing out their options to give the region a wide berth, had each incurred USD one billion and USD 500 million losses respectively.
“The trend is so bad that we fear that other liners could also follow suit. If this happened “, Capt Wahutu said, “ocean freight costs in the region will go through the roof”.
This development also comes at a time when the Kenya government has slapped value added tax on marine services, ostensibly increasing the cost of calling at its port of Mombasa by 18 per cent, with effect from September 12.
The move has already been opposed by cruise ship liners, which have threatened to call off their planned visits to Mombasa next year.
The liners have already written to the Kenya ports Authority, warning that they will give Mombasa a wide berth if the government does not rescind its taxation decision. It is, however, not clear whether the threat by the liners will also affect their container carriers.
“When the reorganization of the global shipping industry continue like this, it is very difficult to predict what liners might decide on particular routes, but if the cost of operations is going to increase, then be assured that more vessels will quit,” said Capt Wahutu.
He went on.” Even with the present pressure for liners to lower their freight rates, it would seem logical that Kenya should start to look for ways of encouraging the entry of ships owners rather than discouraging them further”.
‘Container ocean transport to and from the port of Mombasa is split over approximately 12 carriers, ranging in size from global to niche, and no carrier has a greater than 40 per cent market share in any lane, and if we view Maersk, has more than 26per cent, and if some lines suspend their operations then the demand for their service will increase”.
Capt Wahutu said the competition among the carriers was healthy in keeping the freight rates down, adding that between March 2008 and 2009, the rates had dropped by 30 per cent, though signs are that the trend could start to change.
This is the balancing act that Capt Wahutu fears could tilt towards the advantage of the liners that will remain in the route, hence increase the cost of freight.
Piracy, according to shipping experts, has forced most shipping lines to opt for the longer Cape of Good Hope route to avoid the pirate infested Gulf of Aden.
According to recent statistics released by London-based shipping consultants, approximately 30,000 vessels that use the Suez Canal annually have opted for the longer Cape of Good Hope route, which means that they are spending more on fuel at a time when bunker oil prices are not stable.
Ends
leooderaomolo@yahoo.com
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Subject: MARITIME GROUPS HAVE ISSUED GUIDELINES TO SHIPPING COMPANIES OPERATING IN THE EAST AFRICAN COASTLINE AND GULF OF GARDEN TO CURB INCREASED PIRACY ACTIVITIES.