A fifth of German owners are victims of piracy

Friederike Krieger, Cologne - Friday 10 July 2009

ONE in five German shipowners has been the victim of a pirate attack, according to a survey by PricewaterhouseCoopers.

Most of the incidents happened off the Somali coast, with the rest in Nigerian waters and the Malacca Strait. 

Of the companies polled, 52% of said that insurance premiums had risen due to the increased risk of pirate attacks. 

Operational costs had also increased. More than 20% of the owners now use longer and therefore more expensive routes to avoid high-risk areas. 

"The companies suffer from the indirect follow-up costs of piracy, which put additional pressure on them because of their already difficult economic situation," said Claus Brandt, head of the maritime competence centre at PwC. "Only two out of 10 owners believe that they can compensate for the additional costs at least partly with price increases." 

Precautionary measures, such as noise guns and panic rooms, are also expensive. One in eight companies already employs security firms when sailing through pirate-ridden regions. 

However, German shipowner's association VDR advises its members against taking armed guards on board. VDR fears situations may escalate and crew members may be hurt. 

PwC also asked owners about the effect of the financial crisis. Two out of three indicated they were affected by the economic downturn. A third of those surveyed have already laid up ships and 50% are planning to do so in the next 12 months. 

A third have delayed or cancelled orders, and nearly 20% have reduced their staff. 

The owners said banks were excessively cautious regarding the valuation of vessels. 

Nearly half the respondents said they were having to pay higher interest rates than before the crisis and that banks were demanding additional security. The also complained that banks had withdrawn from loan commitments. 

The majority of the companies did not expect any quick recovery in the shipping industry. The employment situation would worsen or remain stable at best, they said. 

"Only when it comes to the freight and charter rates is there some light at the end of the tunnel," Mr Brandt said. "Maybe the industry is past the strongest decline in demand."

Steve Gordon
http://www.offshoreinjuries.com