This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Pirates' Toll: High Stakes on the High Seas


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."
Pirate Interactive Map

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, the MV Biscaglia [pictured above], (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 Alabama 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 to 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."
6 of 21

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
EXM $0.00 0.00%
DRYS $4.01 0.00%
FRO $8.24 0.00%
EGLE $0.82 0.00%
DSX $3.46 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs