Under Pressure

According to Grant Daly, CEO of shipping line Safmarine, the shipping industry continues to be under strain as piracy increases and the European economic crisis persists

Piracy scourge and rising oil prices hit shipping industry

By, Bekezela Phakathi

CAPE TOWN — The shipping industry continues to be under strain as the European economic crisis persists, says Grant Daly, CEO of shipping line Safmarine.

It has been wrestling with several problems in recent years, including the piracy scourge, which costs the global shipping trade more than $9bn a year.

In an interview last week, Mr Daly, who was recently appointed CEO of the shipping line, told Business Day that the European crisis had a “significant” effect on the shipping industry.

“Shipping is really about transportation of goods and if the economies are under pressure, you are likely to see a lesser amount of goods (being transported),” Mr Daly said.

“Our industry in general is under pressure and has been (for a while), as we went through a tough time in 2009 and again in 2011.

“It is a fragmented industry, the supply and demand is not at a place where we would be comfortable.”

Mr Daly said the costs of shipping continued to decline while oil prices increased, which added strain on the industry.

“In reality, to ship a container now costs you less than it did in 2005. The oil prices — a significant part of our operating costs — have increased … this puts the industry under pressure.”

Mr Daly said modern-day piracy was also a significant problem, with a direct effect on the cost of some of the goods transported, especially to East Africa.

“Obviously our primary concern is our crew, the people on board our vessels.…. There are a number of associated impacts, the main one being cost driven.”

“The other most obvious impact is ships taking longer routes which has direct impact on costs … there is also an impact on aid, and relief cargo not being able to get through,” Mr Daly said.

“As a company, it (piracy) is something we monitor very closely, we engage with authorities to review policies and strategies. (Piracy) is not something we as an industry think we can change. It really requires land-based solutions,” Mr Daly said.

Last month, Defence M inister Lindiwe Sisulu said foreign security services could be allowed into SA to protect merchant vessels against piracy.

She said navy chiefs in the region would have to debate the ethics, viability and desirability of having armed units in local waters to guard against piracy.

According to figures released last week in the International Chamber of Commerce International Maritime Bureau’s global piracy report, 102 incidents of piracy and armed robbery have been reported for the first quarter of this year, with “dangerously” increasing numbers in West African waters.

Ten reports of piracy were received from Nigeria in the first quarter, equalling the same number reported in Nigeria for the whole of last year.

Somalia continued to dominate with 43 attacks, including the hijacking of nine vessels and the taking hostage of 144 crew.

Pottengal Mukundan, director of the International Maritime Bureau’s piracy reporting centre, said last week that Nigerian piracy was “increasing in incidence and extending in range”.

“At least six of the 11 reported incidents in Nigeria occurred at distances greater than 70 nautical miles from the coast, which suggests that fishing vessels are being used as mother ships to attack shipping further afield,” said Mr Mukundan.

Source: Business Day

Previous Article
Next Article

Leave a Reply

Your email address will not be published. Required fields are marked *