HK shippers` Sunny Ho says US$500/FEU anti-piracy surcharge too high

ANTI-PIRACY surcharges imposed by carriers for armed guards and anti-piracy gear are too high, says the Hong Kong Shippers` Council (HKSC).

"Shipping lines have to justify the charge before the market will accept it," said HKSC executive director Sunny Ho, reported the South China Morning Post. "US$500 is not a small sum. Indeed, it is a very, very significant sum."


Current China-Europe freight rates are around US$1,300 per FEU though Europe-Asia eastbound rates are less than $700. Based on these rates, Mr Ho said a $500 security surcharge already accounted for an 80 per cent premium on top of the existing eastbound freight rates, which is "far too high".


Moreover, big Asia-Europe containerships are the least vulnerable of pirate prey as they have high freeboard, high speed and throw up a wash that makes it hard for attacking skiff crews to board, unlike their usual targets, the low and slow bulkers and tankers.


Mr Ho said exporters and importers understand carriers need to hire armed guards to protect their ships, but navies, including the PLA Navy, "offered escort services without charge".


"If shipping lines are relying on the navies` free-of-charge service, it is really hard to justify the extra security charge."


Surcharges levied by Maersk Line, the world`s largest carrier, could almost double the freight rate for Asia-Europe trade though the surcharges are also applied to Middle East and Africa routes.


A senior Maersk executive recently confirmed the charge had increased 20 to 50 per cent $200-$500 per FEU for services passing through the Indian Ocean, Arabian Sea and Gulf of Aden, said the report.


Maersk director and head of operations and deployment Erik Rabjerg Nielsen said the calculation of the surcharges were predicated on the risk involved so that they could offset the higher cost of armed guards and other measures for ship protection.


Mr Nielsen said Maersk offers about 2,000 transits a year through the high-risk area, but such surcharges were insufficient to cover all the security costs.


He said Maersk Line would spend about $200 million this year on anti-piracy security measures, doubling last year`s spending.


Maersk has been employing armed guards on 20 US-flagged box ships carrying military equipment and foreign aid after the hijacking and rescue of Maersk Alabama in 2009. Armed guards have also been employed on a number of Maersk containerships serving ports in East Africa.


The cost of employing a team of four experienced ex-marines or special forces guards for a five- or six-day transit from Sri Lanka to the Gulf of Aden is $200,000 to $250,000, said the report.


Hong Kong`s Orient Overseas Container Line (OOCL) has reportedly considered deploying armed guards, said the report, particularly on the Sri Lanka-Red Sea route, but no OOCL executive has confirmed the story.