[230112.EN.SEA] Understanding The True Cost Of Piracy At Sea

THE cost of piracy at sea is not only rising, it threatens the recent historic advances in bringing rising levels of prosperity for rich and poor countries alike.

Today, piracy off the African coast puts these gains at grave risk by undermining the very improvements in global shipping that have been largely responsible for bringing about these positive economic changes.

One problem is that doing things properly, according to the rules laid down in the best of times, are ill suited to dealing with problems in the worst of times. Cheap solutions have become illegal and legal solutions, prohibitively expensive.

Cost is the be-all and end-all in shipping. What’s more, bringing costs down is precisely what has brought about our better world, and increasing them will plunge us back into global poverty from whence we came.

But the affluent of the world do not see the positive developments as readily as the negative. Thus, they see little need to take harsh measures to defeat an enemy that threatens precious opportunities because they cannot see the advances that have been made.

Nonetheless, the world's poor are emerging from the grinding poverty of yesteryear, largely because shipping technology allows them to sell goods they produce in volumes that make a difference. But the media, bathed in conspicuous compassion, still stress the poverty that remains without acknowledging gains made.

What is important to understand is the delicate economic balance achieved by global shipping and how easily it is to upset it. But let’s go back. In the early 1970s, freighters were mostly leftover World War II Liberty Ships. At the time, 50 per cent of the price of imported goods was taken up in shipping costs. A Liberty ship with its crew of 40 carried some 250 TEU of cargo in today’s terms.

The first containership sailing to North America from England arrived 1969 and carried 500 TEU. Today, Denmark's Maersk Line, the world's biggest, has 18,000-TEU ships on order and 13,000-TEUers are becoming commonplace, each with crews of 25. Thus, the cargo held in 52 Liberty Ships could fit into a single big containership today.

Put another way, a crew of 2,080 would be needed to move the cargo held by a single 13,000-TEU ship if it were loaded into what would be a fleet of Liberty Ships – about the size of an entire wartime North Atlantic convoy, typically 30 to 70 cargo ships.

It was this larger scale that brought down costs, and lowered prices of retail goods worldwide. Technological change also played a part. No longer did gangs of longshoremen work an old Liberty Ship with bailing hooks, cargo nets hoisted by dinky derricks. No longer did they move cargo at 20 tons an hour.

With containerships, and accompanying gantry cranes, they moved cargo at 20 tons every three minutes. Pilferage virtually disappeared because the cargo was in sealed containers, and costs came down again. Ships no longer spent two to three weeks in port; they were in and out in half a day.

Source : CSM, 21.11.11.