This is the second part of a four-part series on the rise of hijack-and-ransom piracy in the shipping lanes off the coast of Somalia, and the costs it poses to the merchant shipping industry and, perhaps, global trade as a whole.
>>The Pirates' Toll, Part 1
>>The Pirates' Toll, Part 3
>>The Pirates' Toll, Part 4
Within the insular maritime-shipping community, disagreement reigns on the question of whether
Somali piracy has levied any real cost on the business of moving goods across the oceans -- or whether it threatens to do so. The answers depend on who you talk to, and the more they talk, the more the notion of risk elides.
"It's no big deal -- insurance covers it," says the shipping investment specialist at a well-known New York fund.
"Put it this way: shipping companies aren't overly concerned about rising costs because of piracy," says the shipping-industry stock analyst at Jeffries & Co.
The maritime lawyer says: "It's putting a lot of pressure on costs at a time when the market is still quite depressed from where it was 18 months ago. Either you pass on those costs or it drops to the bottom line."
Says the stock analyst at Oppenheimer: "The direct costs are fairly minimal. You just hope you don't get hit."
"The insurance industry hasn't completely got its hands around it," says the industry consultant.
"Piracy costs were
thought to be
a 'cost of doing business' that owners, insurers and their customers could absorb. That view appears to have changed," says the insurance-industry trade publication.
"This whole thing is costing the industry billions," says Per Gullestrup, CEO of the Clipper Group, which had a ship captured in 2008.
"The financial impact is not that significant," says Ion Varouxakis, CEO of FreeSeas, a dry-bulk shipping company that has never experienced a hijacking (though one of its carriers managed to evade an approaching boatload of pirates in the Gulf of Aden about a year ago).
The hostage crisis James Christodoulou supervised for 56 days between Thanksgiving 2008 and late January 2009 has transformed him, a year later, into a bankable expert on all things piracy.
In the aftermath of the hijacking of his company's ship
, (a story first told in
The Wall Street Journal
days after the ship's release), his expertise has become almost a second career.
He recently gave a presentation at NASA. Topic: crisis management. His fame arguably reached its height during the Maersk
drama of April 2009; he spent a lot of time in the Manhattan green rooms of cable all-news channels; he was a virtual sidekick of Shepard Smith. Larry King had him on twice. Christodoulou is also a frequent speaker at shipping conferences, where he sits on panels and keynotes seminars, and lectures in front of ballrooms full of maritime executives. He talks about anti-piracy measures, he says, "and about what we did, what our best practices were, and how best to deal with piracy."