A photo taken on January 4, 2010 shows an armed Somali pirate keeping vigil on the coastline near Hobyo, northeastern Somalia, while a Greek cargo ship, MV Filitsa, is anchored just off the shore, held by pirates. Photo/AFP
What you need to know:
Only five piracy attacks were reported off Somalia in the quarter compared to over 40 three years ago.
Players in the logistic business said nearly all international shipping lines have cut or eliminated the piracy-related costs especially on board security costs and insurance charges.
IMB attributed the decline to continued presence of navies in the region, hiring of armed security personnel by international shipping lines as well as the efforts of Amisom which are working alongside the Somalia government.
The cost of importing consumer goods has dropped following the sharp fall in piracy attacks on the East African coastline by Somali gangs which has lowered freight charges.
The International Maritime Bureau (IMB) says the world has recorded the lowest incidences of piracy in five years between January and March.
Only five piracy attacks were reported off Somalia in the quarter compared to over 40 three years ago.
Players in the logistic business said nearly all international shipping lines have cut or eliminated the piracy-related costs especially on board security costs and insurance charges introduced more than two years ago and returned to the shorter Gulf of Aden route.
The vessels have dropped the $15 (Sh1,300) to $30 (Sh2,603) per twenty-foot equivalent units (TEUs) container that they introduced at the peak of piracy attacks in 2010, officials of the Shippers Council of East Africa (SCEA) said.
Containers handling charges and bulk cargo freight rates have also reduced which had risen by between 34 per cent and 150 per cent in 2010, including the war risk surcharge that rose of $250 (Sh21,697) from $100 (Sh8,679).
“Almost all the direct charges that were introduced because of piracy have either been reduced substantially or scrapped altogether,” Gilbert Langat, the chief executive of SCEA told the Business Daily Monday.
“The insurance cost which had gone up by 15 per cent has also been reduced substantially, but the figure vary from one vessel to the other,” he said.
The council say the additional expenses saw the cost of freight rise by Sh2 billion annually for cargo destined to the Mombasa port.
This was passed on to the consumer in form of higher retail prices. Kenya imports large amounts of finished or semi-processed consumer goods including crude oil, maize, wheat, motor vehicle parts, iron and steel.
Although the number of hijackings has fallen since 2011, piracy emanating from Somalia may still cost the world economy about $18 billion a year (Sh1.5 trillion), the World Bank said in 2013.
After years of braving such attacks, Kenya dropped its non-interventionist policy in late 2011 and sent its troops in Somalia to join the UN-backed African Union Mission troop in Somalia (Amisom).
On Friday, the IMB attributed the decline to continued presence of navies in the region, hiring of armed security personnel by international shipping lines as well as the efforts of Amisom which are working alongside the Somalia government.
It, however, warns against complacency in the fight against piracy.
“As of March 31, suspected Somali pirates continue to hold one vessel for ransom with three crew members on board as hostage. In addition, 49 crew members are still held on land and four are missing,” said the IMB Piracy Report.
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