Consistently High Piracy Levels off Nigeria likely to lead to increased shipping costs

Economic cost of Piracy to West Africa estimated at $820m

PDF Download

After another vessel hijacking off the Niger Delta on 17 May 2018, concerns were raised in early June that foreign shipping companies operating in the Gulf of Guinea (GoG) may introduce a minimum insurance premium of USD200,000 before calling at Nigerian ports. Local Nigerian importers are anxious, as the additional shipping costs are likely to have a knock-on effect on the price of commodities.

A recent report by Oceans Beyond Piracy estimated that in 2017 the economic cost of piracy to West Africa came to USD820 million. The Nigerian Maritime Administration and Safety Agency (NIMASA) was also purported to have spent USD217 million on countering piracy, giving an indication of the resources GoG countries struggling with limited budgets need to devote to maritime security. As well as insurance and security costs, shipping companies must factor in war risk insurance premiums and special risk insurance as additional protection measures against the threat of kidnap for ransom to seafarers.

GoG the most dangerous region in the world for seafarers in the first half of 2018

NYA MarTrack™ data shows that in the first half of 2018 the GoG experienced the highest levels of pirate violence in the world by a significant margin. Since 1 January MarTrack has recorded 16 attacks, 15 hijackings, seven Pirate Action Group (PAG) sightings and five boardings of vessels underway in the region (totalling 43 ‘serious’ incidents). This contrasts with Southeast Asia which only recorded three attacks, two PAG sightings, and one hijacking in the first half of 2018 (totalling six ‘serious’ incidents), and the East African High Risk Area which experienced seven attacks and three PAG sightings (totalling 10 ‘serious’ incidents).

MarTrack data shows that piracy levels in the GoG increased in the first half of 2018 compared with the same period in 2017. Between January and June 2017 MarTrack recorded 16 attacks, 12 hijackings, seven PAG sightings and four boardings, totalling 39 ‘serious’ incidents. Amongst several causal factors for the increase in piracy in 2018 is the gradual rise in oil prices over the past 12 months – oil tankers especially becoming more lucrative targets for PAGs.

A Limited Regional Response to the Piracy Threat

Despite repeated calls over the past 12 months for more effective action in combatting piracy, west African governments’ responses remain fragmented and inadequate. Maritime security is just one of many security concerns for the Nigerian government, for example, which must also contend with the Boko Haram insurgency, independence movements in the Niger Delta and increasing violence between nomadic herdsmen from northern Nigeria and sedentary agrarian communities in the centre and south of the country.

In May 2018, the Nigerian Federal Government reiterated its ban on armed private guards on board merchant vessels in the Nigerian Exclusive Economic Zone (EEZ), a policy which may change in the medium to long term as armed security teams have proved effective in deterring pirate attacks in the East African HRA. At the third edition of the Lagos International Maritime Week in late May, Attorney General of the Federation and Minister of Justice Abubakar Malami hinted that in the long term there may be a change in the laws. As it stands, however, the Nigerian government’s recent spending increase of USD186 million to combat piracy will likely have little effect in disrupting pirate activity, particularly in the Niger Delta due to continued deficiencies in security forces’ training, equipment and manpower.

Outlook

Despite the high level of pirate activity in the GoG during the first half of 2018, the coming months are typically the worst time of the year for Nigerian PAGs due to prevailing weather conditions, particularly in the heartlands of the Niger Delta. June to September experience the highest annual rainfall, and June to October are typically the months of the year with the highest cloud cover. The period from June to September also tends to be the windiest time of the year.

Therefore, it is likely there will be a relative decline in the level of piracy in the GoG over the next three months before activity picks up again around October. MarTrack shows that in 2017 the months July – September witnessed 16 ‘serious’ incidents. However, 10 of these took place in the waterways and creeks of the Delta, indicating PAGs struggled to approach and attack shipping offshore.

How NYA can help

NYA offers sophisticated vessel tracking software and a 24/7 incident alert service to inform our clients if one of their vessels is in close proximity to a significant piracy incident such as a hijacking, an attack or a sighting of a pirate action group in the GoG. NYA provides analytical reports combining qualitative analysis and MarTrack incident data to inform and advise clients on regional threats and current security trends.

PDF Download

The post Consistently High Piracy Levels off Nigeria likely to lead to increased shipping costs appeared first on NYA.



*** This is a Security Bloggers Network syndicated blog from NYA authored by Octavia Chivers. Read the original post at: https://www.nyarisk.com/2018/06/27/consistently-high-piracy-levels-off-nigeria-likely-lead-increased-shipping-costs/