Shipping & Logistics

African ports eye increased trade as piracy threats drop

dock

Norwegian flagged chemical/oil carrier, Bow Optima is guided by the Kenya Ports Authority tugboat as it docks at the Port of Mombasa on January 3, 2021. PHOTO | WACHIRA MWANGI | NMG

Summary

  • A new report, Safety and Shipping Review 2022, says reduced cases of piracy will see sea freight and maritime insurance premium for cargo going down thus reducing the cost of shipment.
  • East African and Horn of Africa maritime waters were designated as High-Risk Area in 2009 by the Best Management Practices to Deter Piracy and Enhance Maritime Security.

African ports are expected to witness an increased number of ships and reduced cost of shipment as a result of a drop in piracy and armed robbery cases.

This means cargo ships destined to the ports of Mombasa, Dar es Salaam, Jeddah, and Djiobuti will no longer have to use long routes in their bid to evade pirates.

A new report, Safety and Shipping Review 2022, says reduced cases of piracy will see sea freight and maritime insurance premium for cargo going down thus reducing the cost of shipment.

Shippers Council of Eastern Africa (SCEA) SCEA chief executive officer Gilbert Lagat said the reduced cost would not only save Kenya and other East African traders millions of dollars in insurance and security expenses, but it will encourage more ships to call at different ports.

“Reduced risks as a result of improved surveillance will lower cost of importation and also encourage those shipping companies which suspended their operations along such route to resume,” said Mr Lagat.

East African and Horn of Africa maritime waters were designated as High-Risk Area in 2009 by the Best Management Practices to Deter Piracy and Enhance Maritime Security (BMP-5) resulting in five largest global shipping industry associations withdrawing their operations.

The groups include International Association of Dry Cargo Ship Owners (INTERCARGO), International Association of Independent Tank Owners (INTERTANKO), International Chamber of Shipping (ICS), Oil Companies International Marine Forum (OCIMF) and Baltic and International Maritime Council (BIMCO).

The Safety and Shipping Review 2022 by marine insurer Allianz Global Corporate and Specialty SE’s (AGCS) notes that the shipping sector continued its long-term positive safety trend over the past year but Russia’s invasion of Ukraine, the growing number of costly issues involving larger vessels, crew and port congestion challenges due to the shipping boom, and managing challenging decarbonisation targets, mean there is no room for complacency.

“The shipping sector has demonstrated tremendous resilience through stormy seas in recent years, as evidenced by the boom we see in several parts of the industry today,” said AGCS global head of marine risk consulting, Captain Rahul Khanna while releasing the report last week.

Mr Khanna said total losses this year are at record lows around 50 to 75 vessels a year over the last four years compared with more than 200 annually in the 1990s.

But the tragic situation in Ukraine has caused widespread disruption in the Black Sea and elsewhere, exacerbating ongoing supply chain, port congestion, and crew crisis issues caused by the Covid-19 pandemic.

The annual AGCS study analyses reported shipping losses and casualties (incidents) of over 100 gross tonnes. In 2021, 54 total losses of vessels were reported globally, compared with 65 a year earlier which represents a 57 percent decline over 10 years (127 in 2012), while during the early 1990s the global fleet was losing 200+ vessels a year on average.

The 2021 loss is made more significant by the fact that there are an estimated 130,000 ships in the global fleet today, compared with some 80,000 in operation 30 years ago.

Such progress reflects the increased focus on safety measures over time through training and programmes, improved ship design, technology and regulation.

According to the report, there have been almost 900 total losses over the past decade.

The report however is warning of a heightened prospect of cyber risks for the shipping sector such as GPS jamming, Automatic Identification System (AIS) spoofing and electronic interference. Prior to the Ukraine invasion, there had already been a number of these incidents reported in the Middle East and China.

The report is published at a time when Kenya maritime waters within the Indian Ocean was re-designated from the High-Risk Area (HRA) by the global shipping industry about three months ago. The designation by International Maritime Organisation (IMO), is a relief for shippers who have been suffering for the past eight years.

IMO is the United Nations (UN) agency responsible for improving the safety and security of global shipping.

Since 2009 during the heightened piracy cases, cargo ships destined for Mombasa had to use the longest routes, beyond 300 nautical miles from the Indian Ocean coastline, to avoid encountering pirates. Other cargo ships hired private security aboard their ships for increased protection.

However, increased surveillance and joint maritime patrols by the Kenya Coast Guard Services and the Kenya Navy within the Kenyan maritime waters have resulted in a significant reduction in piracy, with no incidents recorded since 2017.

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