Somali piracy hits every consumer

Joseph Okanga/Reuters
Kenyan police officers escorted suspected Somali pirates in the Kenyan seaport Mombasa Wednesday after a foiled attack on a US-flagged container ship.

It's one of the world's busiest choke points for ship captains. An average of 50 commercial vessels pass through it every day. So does 12 percent of all the world's oil shipped by sea.

Now, the Gulf of Aden is also the most dangerous place for global shipping. Pirates operating off the coast of Somalia are not only seizing ships – 42 vessels and 815 hostages last year – they're also raising the cost of international trade just as the global recession is slashing the volume of that trade.

A costly choice

Here's the choice a ship captain faces: Take the usual short cut to the Mediterranean Sea by sailing through the gulf, Red Sea, and Suez Canal – or go around South Africa's Cape of Good Hope. An oil tanker from Saudi Arabia going the long route around Africa travels an extra 2,700 miles and takes an extra five days to reach the US, reducing its annual delivery capacity 26 percent and costing an extra $3.5 million a year in fuel, according to US government estimates.

But the usual route through the gulf is becoming more costly, too. Besides the Suez Canal toll ($200,000), war-risk insurance has soared to $20,000 per trip. Crews want double the pay for hazardous duty. A licensed security guard costs an extra $60,000 for the transit through the gulf and a deterrence team and their sound-blasting equipment (to ward off pirates) can run $20,000 to $30,000.

Europe and US affected

The excess costs is hitting Europe hardest, because it's involved in more than 80 percent of the trade that flows through the gulf. But at least one American commercial vessel transits the gulf each day, on average, according to a Transportation Department official.

"Although only one-third of 1 percent of all the vessels transiting the Gulf of Aden are seajacked, the cost and disruption to the flow of commerce overall is significant," James Caponiti, acting deputy administrator of the federal Maritime Administration, told a House panel at a Feb. 4 hearing. "There is also a serious risk of an environmental disaster should a vessel be damaged or sunk during a hostile attack."

The pirates may be far away from the US, but their impact is hurting consumer pocketbooks everywhere.

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