London - Pirate attacks on vessels sailing off Somalia could get worse, pushing up insurance and shipping costs and possibly forcing companies to use longer sea routes, industry officials say.
Piracy has flourished in recent months off the busy Gulf of Aden and in Indian Ocean shipping lanes, and seaborne gangs have seized several cargo ships and collected tens of millions of dollars in ransom for the safe release of crews and cargoes.
Last week the Group of Eight powers said it was "seriously concerned" about the increasing threat.
A report commissioned by Lloyd's of London, the specialist insurance market, said: "The piracy risk is likely to get worse before it gets better."
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Although foreign navies have been deployed off Somalia since the turn of the year to try to prevent attacks, those forces have found themselves stretched given the vast expanses of water involved, leaving many vessels vulnerable to attack.
Marine insurance brokers said insurers were now charging 0,05 percent to 0,175 percent of the value of a ship per voyage in the Gulf of Aden versus zero to 0,05 percent in May 2008.
Nearly 20 000 ships pass through the Gulf of Aden each year, heading to and from the Suez canal.
Some shipping companies have already started to avoid the Gulf of Aden opting to go around the Cape of Good Hope, which adds as much as three weeks to transit times, raising transport costs. - Reuters
- This article was originally published on page 10 of The Mercury on June 30, 2009
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