Sea route, which was earlier seen as the safest and cheapest mode of cargo transportation, is fast losing out on its popularity due to the recent spurt in piracy and terrorist activity, particularly along the Somali coast. With reported attacks against commercial ships growing by nearly three-fold in the last 10 years, increasing last year alone by 40%, the terror at sea is on the verge of bringing the maritime sector to its knees. The scenario is worsening by the day and consequently aggravating the woes of shipping companies who have been hit hard by the global slowdown in commodity trading.
The use of sea route by the perpetrators of the November 2008 Mumbai terror attacks has highlighted the gaping holes in our sea route protection. Although shipping companies in India were not directly affected by the terrorist attacks, these companies are still suffering from the aftermath of the incident. Shipping companies - including both large and mid-sized players - can do very little when it comes to dealing with such circumstances and have no alternative other than depending upon the national security organisations for the safety of their crew and cargo.
Interestingly, following the Mumbai incident, security and surveillance procedures in the country’s major ports have been made so cumbersome that the shipping companies are facing problems in conducting their daily operations smoothly. Customs authorities in several ports have implemented new rules for customs clearing, which are delaying the cargo unloading process to a large extent. According to the new cargo inspection rules, it is mandatory to place all the containers of a particular consignment that have been specified in the ‘bill of entry’ for inspection at the wharf.
As a result of this stringency, the number of cargo demurrage has increased considerably. Moreover, the delay in cargo unloading process is creating massive congestion at the quay entry point, resultantly compelling shipping companies to pay extra cost for the delay in clearance and for parking.
The recent steep rise in piracy in the Asia Pacific region is also eroding the capital base of the Indian shipping companies, particularly the mid-sized vessel operators. A number of these players use Indian Ocean for transporting various expensive commodities such as petroleum and steel. This is because it is the shortest route between the Atlantic and Pacific oceans and is used by nearly 200 ships to carry over 15.5 million barrels of oil per year.
However, repeated incidents of pirate attacks taking place along the sea routes of Indian Ocean, Malacca Straits and South China Sea has triggered the panic button among these companies. Each time a ship is attacked, it ultimately results in huge cargo loss and hefty ransom payments. To add to the woes of these shipping companies, marine insurance companies have hiked the premiums for offering a cover to ships travelling through the pirate infested waters of Asia.
Looking at the current challenges facing the maritime sector, there is an urgent need for the government to take multi-pronged proactive steps to combat piracy.
Dinesh Singh, Director, Shivam Shipping Services, a mid-sized shipping company in Navi Mumbai |
