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E.U. Reduces High Risk Areas off Somalia

Somalia
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By MarEx 2015-10-09 17:02:54

The E.U. Chair for the Contact Group of Piracy off the Coast of Somalia (CGPCS) has revised and reduced territories it deemed to be High Risk Areas (HRA) for piracy in the Indian Ocean. The revision will take effect on December 1 and reflects a decline of piracy in the region.

The revision might also reduce operating and insurance costs for vessel operators transiting the region. The HRA has previously covered most of India’s western coast and triggered increases in insurance rates that have led to a rise costs.

About 70 percent of India’s international trade is by sea and about 40 percent of India’s $7 trillion GDP is generated through international trade.

The HRA was extended to India’s west coast in 2010, which brought the entire Indian Ocean into an exclusion zone. The HRA extension of the Indian Ocean meant the exclusion from annual war risk cover increased premiums for ship operators. The standard war risk insurance charge covered normal operations.

In response to rising surge of piracy in the region, the EU, China, Russia and the U.S. amongst other nations sent warships to protect the commercial shipping lanes. The increased military presence led to a steep drop in piracy. In January 2014, the International Chamber of Commerce (ICC) and International Maritime Bureau (IMB) reported that piracy in the Indian Ocean 40 percent since 2011.

While the HRA has been reduced, BIMCO warns operators not to become complacent transporting cargoes through the region.

BIMCO stated: “While the revision re-designates the area considered to be at a high risk of Somalia-based pirate groups, it is stressed that these groups retain the ability to attack at historical limits of their activity… Any lowering of guard in the region is likely to present an opportunity for a resurgence of pirate activities.”