Piracy Surcharges

I don't find it illogical that ocean carriers sailing in the Gulf of Aden are charging a piracy surcharge. Some of the crews sailing in this area were demanding additional wages, and the carriers must also pay higher insurance premiums.

However, the surcharges vary quite a lot by carrier, with MSC not charging at all.

This from Lloyd's List.

CMA CGM has confirmed it is one of the container lines levying a piracy surcharge to cover the risk of operating in waters where attacks are commonplace.

The French line said it applies a piracy risk surcharge of $20 per teu on its Swahili Express service that links Kenya, Tanzania and Mozambique and on its on Asia-East Africa rotation between Singapore, Port Kelang, Kenya and Tanzania. Both call at Mombasa where cargo interests have vented their anger about the additional costs of shipping cargo.

But in some cases, a far higher piracy fee is in place, with Zim said to be charging $100 per teu as the Israeli line calls at the port of Djibouti.

Some lines such as Maersk and sister company Safmarine have a war risk surcharge of $25 per teu, but they usually do not charge their regular customers, according to agents.

Not every line is charging extra. Mediterranean Shipping Co said: “We have not so far introduced any piracy surcharge for vessels calling at Mombasa.”

click here for complete article

Piracy Surcharge to be put in place

Back on Sept. 22, 2008 in my blog, Pirates! No Kidding! I said we could expect to see a piracy surchage.

Shipping companies have a couple of options if their ships normally go through the Gulf of Aden.

1) They can go another route, which will add to the voyage time.

2) They can buy additional insurance coverage.


Either one will cost the carriers more money. If you ship to or from this part of the world, expect a new "pirate avoidance" surcharge. I suspect the official name will be security surcharge.

This is the first one I have seen, to be effective Jan. 1, 2009.

French carrier CMA CGM announced it will levy a $23 per-TEU surcharge on all containers shipped through the pirate-infested Gulf of Aden as of Jan. 1.

The company said the surcharge is “in addition to any rate agreement, short- or long-term, already concluded with customers or to be concluded.”

The levy will be implemented on bills of lading dated from Jan. 1 on all boxes transiting the Gulf “at any point in the voyage”.

The announcement comes a week after CMA CGM bowed to demands from its crews for double pay, as a risk bonus, for sailing through the waterway, where dozens of ships have been attacked by Somali-based pirates.

The carrier said transit of container ships through the Gulf in both directions is subject to additional high costs due to increased insurance premiums and other expenses because of the prevailing risks of piracy.

The bit about "in addition to any rate agreement, short- or long-term, already concluded with customers or to be concluded.” is, because many contracts are all-in, or what the customer believed to be all-inclusive.

This new charge will apply anyway.

Unless, you were really able to negotiate a contract which specifically said no new charges would be charged during the lifetime of the contract.

Probably, when the big boom hit a couple of years ago, carriers wouldn't give that wording, so CMA-CGM will probably be able to charge this new surcharge to all of their clients.

I don't think the customers should complain. Unless, of course one of the ships does get hijacked.

Pirates! No Kidding!

The swords have been replaced by automatic weapons and rocket-propelled grenades.

From an article in The American Shipper (click here for complete article)

"While the word "pirate" may still conjure up romantic images among the general public, he said Somali pirates plying the Gulf of Aden are dangerous criminals who are heavily armed with everything from automatic weapons to rocket-propelled grenades.
The International Maritime Bureau, the lead recording body for piracy, estimates that more than 1,200 Somalis and at least six major groups are involved.
Ten ships are currently being held and the industry fears for the seafarers on board. Hinchliffe said that as pirates have apparently met success in extorting ransom for vessels and seafarers, their numbers seem to be growing and they are investing in better weapons."

Apparently the Danes sent in a warship which captured some of the pirates. Of course, there is a pretty big Danish Shipping Company, Maersk Sea-Land (although I suspect they will be dropping the Sea-Land part very soon). Oopppss...my bad.
They already changed their name back to just Maersk.

I just hope no one expects the Americans to try and retake ships from pirates.
We tried that in 1975 just at the end of the Vietnam war. The Mayaguez incident. We didn't do a very good job, and lots of people were killed and injured. By the way, the Mayaguez was a Sea-Land vessel.


Shipping companies have a couple of options if their ships normally go through the Gulf of Aden.

1) They can go another route, which will add to the voyage time.

2) They can buy additional insurance coverage.


Either one will cost the carriers more money. If you ship to or from this part of the world, expect a new "pirate avoidance" surcharge. I suspect the official name will be security surcharge.

Update, Tuesday, 9/23

Todays Journal of Commerce reports the U.S. Navy confirms they cannot fight this piracy.