Tuesday 5 January 2010

Maersk Navy

Maersk has hired a warship and some soldiers to help protect its shipping assets from Somali pirates; other shippers shipping lines may soon do the same.

I had expected that the insurance companies (shipping insurance is a rather concentrated industry) would eventually start doing this; big shippers shipping lines doing it instead isn't particularly surprising though. I'm not surprised that it took a while since piracy initiation for private solutions to start coming through: there was always a decent chance that the shippers shipping lines could offload the costs on taxpayers by convincing governments to send more naval vessels there.

If piracy gets bad enough, I'd still expect the solution to wind up being protected convoys, with protection covered by insurance companies charging a premium to client ships travelling outside of convoys (or refusing them coverage altogether). Unless organizing convoys is more logistically costly than I'm guessing, of course.

HT: Jeet Sheth

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