Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.
TEXT OF STORY
KAI RYSSDAL: The piracy drama that’s playing out off the coast of Somalia gets more complicated by the day. This morning we learned the captain of the container ship that was hijacked earlier this week tried to escape. Only to be recaptured. And there is word a second hijacked ship, still under the control of the pirates, is making its way toward the lifeboat that the captain of the first ship is being held in. So far there are no confirmed reports of a ransom demand.
But piracy is big business in Somalia. Last year Somali pirates collected around $80 million in ransom money from shipping companies or their insurers. And Ashley Milne-Tyte reports they may not be the only ones paying.
ASHLEY MILNE-TYTE: Trawling the high seas these days means paying a high price in insurance. Former counter-terrorism agent Richard Schoerbel says insurance companies have raised their premiums for a single journey through dangerous waters.
Richard Schoerbel: Some of ’em now are charging up to $30,000 to $40,000 U.S., per $3 million worth of coverage, and some people are opting only to pay certain parts of that premium, some shipping companies are, because it’s hard for them to afford it.
Some shippers opt to insure vessel and crew and ignore the costs of the cargo itself. And he says many hire security companies to train their crews to combat pirate attacks. Some ships even carry security teams on board. Bani Ghosh chairs the international maritime business department at the Massachusetts Maritime Academy. She says everything costs more when there’s a risk of piracy.
Bani Ghosh: Crew are demanding double pay. It’s a compensating difference that companies are providing because of the additional security threats these crew members are having to go through.
She says the whole point of moving most goods by sea rather than by air is that it’s cheaper. But she says that cost advantage will evaporate if pirates keep threatening the world’s shipping channels.
Ghosh: And although we feel this is a problem that’s happening hundreds of miles away, eventually that cost burden is going to fall on the person who buys the product at the end of the day. It’s going to fall on you and me.
She says unless the rate of pirate attacks drops, we can expect to pay more for goods that come to the U.S. from overseas — everything from shoes and clothing to computers.
I’m Ashley Milne-Tyte for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.