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Africa Horn
India Fights Lloyd's Expanding Piracy Zone
2011-06-04
India is lobbying Lloyd's of London to reverse its expansion of the area judged prone to pirate attacks to cover almost all of the nation's west coast after insurance costs surged as much as 300-fold this year.
And you were wondering why the Indians were getting aggressive with the Somali pirates...
It certainly is an attention-getting figure. Not exactly easy on the eyes when coupled with the rising price of oil.
"There is no longer any threat along the Indian coast," Shipping Secretary K. Mohandas said in a May 23 interview, adding there had been no attacks within 800 kilometers (500 miles) of the coast due to stepped-up naval patrols. The Joint War Committee, which assesses insurance risks, extended the zone in December about 900 miles east as the hijacking range grew.

A reversal by Lloyd's would reduce insurance costs after some premiums skyrocketed to as much as $150,000 per voyage from $500, the Indian National Shipowners' Association said, hurting shippers' earnings. Essar Shipping Ltd. and Varun Shipping Co. are among companies that say the move is eroding margins as they struggle with overcapacity and rising costs.

"Typically ships bought insurance for the three days they were moving through the Gulf of Aden -- now they have to pay for the additional 10 days" through the Indian Ocean, said Sean Woollerson, an insurance broker at London-based Jardine Lloyd Thompson Group Plc (JLT), which specializes in shipping. The larger zone means about 28,000 more journeys a year are liable to higher premiums than the 22,000 made in the old zone, he said.
The shippers will pay to protect their ships and crews when it gets expensive enough to make it worth doing that versus paying ransoms. We're getting to that point.
Shares of Mumbai-based Essar and Varun have underperformed this year as an oversupply of ships knocked 16 percent from the Baltic Dry Index, a gauge of raw-material transportation costs. Essar slid 13 percent to May 17, when its shares were suspended pending a spinoff, and Varun is down 19 percent this year, while India's benchmark index has fallen 10 percent.

India's government and shipping companies gave evidence last month to the Joint War Committee that shows increased Indian naval patrols have driven the pirate threat away. The government will continue to press for the decision to be overturned, Mohandas said in his New Delhi office.

Varun Shipping is paying an extra $70,000 per voyage to cover the risk of piracy on about 16 ships that travel between India and the Middle East, Managing Director Yudhishthir D. Khatau said. "The extra cost is harming us very seriously," he said.

The decision to expand the zone was driven by increasing attacks and the sophistication shown by pirates able to strike further out at sea, according to Neil Roberts, a senior executive of the Joint War Committee.

The Indian navy currently has four ships patrolling the area at all times and has formed an inter-ministerial committee to negotiate with hijackers and advise vessel owners. There are about three dozen military ships altogether now engaged in anti- piracy operations, according to an April report by the U.S. Congressional Research Service.

The Indian government's response to piracy has been inadequate and won't bring down premiums, said P.K. Ghosh, who writes about piracy for the New Delhi-based Observer Research Foundation.
"This problem needs to be tackled at its root, which is in Somalia," said Ghosh. "So far there is a lack of will in the international community to do this."

About 52 percent of the 530 million tons handled by India's 13 major ports in 2008-2009 went through the west coast, according to government data. Indian trade grew from 14 percent of gross domestic product in 1988 to about 51 percent in 2009, according to the World Bank and World Trade Organization.

The efforts of more than 20 navies, including the U.S., U.K. and China, failed to prevent a record surge in pirate attacks last year.
That's because they've given up on drumhead trials followed by dancing from the yardarm. The research shows it's the surety of punishment that deters criminals.
Pirates cost shipping companies as much as $12 billion in 2010, according to the London-based International Chamber of Shipping.

Hamilton, Bermuda-based Frontline Ltd., the world's biggest supertanker operator, last week said diverting to avoid pirates in the area costs about $100,000 per trip in extra fuel.

War-risk insurance premiums typically cost 0.1 percent of the value of a ship, according to Jardine Lloyd Thompson's Woollerson. While some insurance charges may have risen as much as the Indian National Shipowners' Association estimates, for most vessel operators the additional charges are "much more modest," he said.

There were 17 hijackings and 29 cases of vessels being fired at in the new zone last year, according to the Joint War Committee. This year, that has dropped to one successful hijacking and 12 attacks, according to the London-based International Maritime Bureau.

"These waters are far, far safer than many places across the globe," said Essar's Ramakrishnan.
Posted by:Steve White

#6  they use a phone link so it seems to come from NY.
Posted by: Redneck Jim   2011-06-04 23:34  

#5  There's a scam, going on right now where the Paki/Islamics/Indian call America and threatn YOU... So be warned America, they're out there, RIGHT NOW.

Ah, the joys of the Old Folks' Circulatory Email System. I much prefer the cute puppies and "find G-d's face in nature" ones.

Telephone pirates. Perhaps we could get Lloyds to raise their rates as well .
Posted by: Pappy   2011-06-04 17:04  

#4  I've been saying all along that all it would take to end this piracy was one 12-ship ARCLIGHT strike over Haradhare or Eyl, one time. There probably wouldn't be any survivors, but if there were, they'd be so shell-shocked they'd never even CONSIDER doing anything to have that experience again. You've GOT to make the punishment worse than the crime to get their attention. That's why necktie parties were so effective.
Posted by: Old Patriot   2011-06-04 15:18  

#3  Well the pressure is getting strong enough that recently a Chinese official commented that it will be necessary to conduct military action against the ports that the pirates operate from. Oh, Joy, Chinese naval bases on the Somali coast, all due too the West being all PC with their thumbs up over this issue.
Posted by: Tyranysaurus Thrigum9014   2011-06-04 11:49  

#2  There's a scam, going on right now where the Paki/Islamics/Indian call America and threatn YOU.

You've not paid back a payday loan if we don't get $1.500 TODAY we'll turn it over to the Police, they'll be at your door tomorrow and arrest you, You'll go to jail, lose your job and have to pay your Lawyer $5.000 or more to get out, and we'll get our money anyway.

Remember that's 5 Pm today.(usualy on a Friday so you can't check)

Now us reading this seems plain, but hearing it over the telephone, WITH your Bank account number, Credet card serial and related things, like your Social Security, Drivers License and whatever they have FROM AN OFFICER(Fake) scares most Elderly.

And so they PAY,THEN check it out and discover they've been screwed, and NO you can't get your money back.

It's far worse than what the Nigerian scammers Pulled.

So be warned America, they're out there, RIGHT NOW.
Posted by: Redneck Jim   2011-06-04 11:24  

#1  It took three years, but Lloyd's is finally doing what it did with the Straits of Malacca. With any luck, it'll force the sort of international anti-pirate coordination that's in place in the Straits region.
Posted by: Pappy   2011-06-04 00:27  

00:00