Maersk Raises Piracy Surcharge

By Flemming Emil Hansen

COPENHAGEN — Reflecting higher costs stemming from a jump in piracy off the Somali coast, A.P. Moller-Maersk AS raised its emergency-risk surcharge.

Maersk’s container-freight division increased the fee on each 40-foot container shipped through risky waters to $200-$500 from $100-$400, to pass on some of the company’s rising costs to customers, said Erik Rabjerg Nielsen, the division’s head of daily operations. Customers typically pay about $3,000 total to ship a container from Asia to the U.S.

He estimated that Maersk’s antipiracy costs will rise to $200 million this year from $100 million last year as ships are forced to sail faster and longer to prevent hijackings and crews receive doubled salaries as compensation for the added work.

“In 2010, one hijacking attempt was registered every six days, and in 2011 there’s been a large increase in the activity. The problem has never been larger than right now,” Mr. Rabjerg Nielsen said.

Copenhagen-based Maersk is the world’s largest shipping company by volume.

There were 142 pirate attacks in the first quarter, a quarterly record, according the International Maritime Bureau, a maritime-crime watchdog.

The rise was driven by a surge in piracy off the coast of Somalia, where 97 attacks were recorded in the first quarter, up from 35 a year earlier.

World-wide, there were 18 vessels hijacked, 344 crew members taken hostage and six crew members kidnapped in the first quarter, the bureau reported. A further 45 vessels were boarded, and another 45 were fired on.

Maersk Line’s approximately 2,000 annual trips through pirate-ridden waters off the Horn of Africa, which cover an area about the size of Europe, now are made with larger ships, which are harder to invade than smaller ones. “We have larger ships with more capacity, which isn’t needed, and that costs money. As a consequence, our capacity utilization on these routes is very low,” Mr. Rabjerg Nielsen said.

Maersk has hired a former army major as antipiracy chief in an effort to develop a stronger strategy and lobby competitors and politicians for a tougher international stance on piracy.

“Piracy is bad for the shipping industry, it’s bad for global trade, and it’s important that politicians and all involved take a larger responsibility now to try to put an end to it,” Mr. Rabjerg Nielsen said.

Maersk hopes to encourage increased patrols by navy vessels near Somalia, political resolve to help stabilize the country and a stronger legal approach toward pirates who are caught, he said. “Our message is that not enough is being done, and now is the time to act,” he said.

The global shipping industry’s total annual piracy costs, including ransoms paid, are between $3.5 billion and $8 billion, Ron Widdows, group president of Neptune Orient Lines Ltd., estimated at an antipiracy conference in Dubai last month.

Copyright (c) 2011, Dow Jones & Company, Inc.

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