Shipping Disruption Costs at Red Sea
By Andrew Mwangura
Email, thecoastnewspaper@gmail.com
Suez canal and Bab Al-Mandeb Strait are some of the world’s most important sea lanes of communications(SLOCs).
About 12 per cent of global trade is taken through the Red Sea, which means about US$ 1 trillion worth of goods a year.
Rerouting merchant ships around the southern tip of Africa is expected to cost upto US $1 million in extra of fuel for every round trip between Asia, East Africa and the northern Europe.
Shipping reports indicate that the disruption to Middle Eastern supply after the recent Red Sea attacks to merchant ships drove oil prices higher in the first trading session of this year.
Already, over 100 merchant ships have been redirected to avoid violence in the Red Sea.
Red Sea is one of the important routes for oil, LNG and LPG shipments as well as for commercial goods, which means higher prices for countries most reliant on maritime trade through the Suez Canal.
Container ships and vehicle carriers are diverting, but bulk carriers, LPG, LNG and oil products tanker traffic is uninterrupted; however, some shipowners are said to be avoiding charters and this may pressure rates.
Disruption in the Red Sea and the recent piracy attacks in the Gulf of Aden could trigger global inflation and also affect tourism sector in the western Indian Ocean region.
This region comprises of 10 countries: Comoros, Kenya, Tanzania, Somalia, Seychelles, Mauritius, Mozambique, South Africa, Madagascar and Reunion.
The piracy attack of the Bahamas flagged cruise ship _Seabourn Spirit_ in 2005 forced the number of cruise ships calling Mombasa port to drop by 95 per cent due to the piracy menace off the Somali basin.
There were no cruise ship arrivals for more than 10 ten years due the fear of pirate attacks off the Kenyan coast.
The insecurity in the Indian Ocean saw a fall in the number of cruise ships from 15 vessels carrying 12,096 visitors in 2004 to just four vessels with 508 visitors who arrived in 2010.
Before the pirate attack on Seabourn Spirit on November 5, 2005 the tourists brought in a record of US$ 577 million in 2004 – a 70 per cent jump over 2003.
The Bahamas flagged cruise ship Seabourn Spirit, a luxury cruise ship carrying 161 multi-national crew on board and 151 passengers including 48 Americans and 21 Canadians was attacked by pirates on November 5, 2005 off the Somali coast while underway heading to Mombasa port.
She was heading to Mombasa after a 16- day voyage that departed from Alexandira, Egypt.
This was her last voyage in the region before she sailed on schedule to Singapore.
She sustained only minor damages when gunmen aboard two assault skiffs fired upon the vessel, while heavily armed gunmen attempted to get onboard.
The gunmen never got close enough to board the vessel, but one of the 161 multi-national crew members on the vessel was injured by shrapnel.
Securiry team on board the cruise ship used a Long Range Acousting Device( LRAD) to ward off the pirates.
The LRAD is a non-lethal weapon developed for the US military after the attack on the USS Cole off Yemen in 2000.
The device utilized by naval troops, sends out sonic waves so powerful that it can cause permanent hearing damage from a distance of 300 metres.
The 2013 World Bank report on Somali piracy esitmates that pirates off Somalia could cost the global economic US$ 18 billion a year, as shippers are forced to change trading routes and pay higher insurance premiums and security bills for guards onboard.
The disruption in the Red Sea and the Somali piracy is an economic blow for East African coumtries in the pillars of sector of maritime, tourism and fishing.
The World Bank report say exports of fish products from piracy-hit countries have also suffered declining by 23.8 per cent since 2006.
Andrew Mwangura
Nautical Advisory Services.
