Somali pirates are increasing prices for releasing hijacked vessels to several million dollars, Danish Clipper Group CEO Per Gullestrup tells Politiken.dk.

“Ransoms have now reached some USD 6 million,” says Gullestrup adding that the increase in prices may make the situation worse.

“It may mean that even more Somalis try their hand at piracy,” says Gullestrup.

The Clipper Group had its own run-in with pirates in January 2009 when it had to pay USD 1.7 million for the release of its crew and CEC Future vessel.

With some few exceptions, the price of a hijacked ship off Somalia in 2008 and 2009 has been between one and two million dollars. At the end of 2009 and beginning of 2010 ransom figures began to escalate to a level of between 2.5 to 3 million dollars – a major increase since the first Danish ship was bought free in 2007 for USD 732,000.

“Everyone in the shipping industry is very concerned that the high ransom figures will mean that more people try their hand at piracy,” Gullestrup says.

“That means that we will no longer see clan-based attacks. Disorganised soldiers of fortune will also have a go, and that means that we risk at some point ending up with the murder of a crew member,” Gullestrup says.

The Danish Shipowners Association confirms that ransom sums are increasing.

“Over the past two or three years we have seen a major increase in amounts demanded,” says Association Spokesman René Piil Pedersen.

Shipping companies are traditionally very secretive about the size of ransoms, but Gullestrup has closely followed developments through an international network of consultants.

He says that every time pirates manage to negotiate a higher ransom, the word spreads quickly, putting pressure on the next case of piracy.

“Companies have not been aggressive enough in keeping prices down,” Gullestrup says.

Cooperation needed
Gullestrup says that it requires cooperation if prices are to be stemmed.

“The increase could be slowed if there was coordination so that if a vessel is hijacked there is a central register of what happens, and an exchange of information between companies in which there is agreement to go so far and no further,” Gullestrup says.

“If everyone stands firm, I am naïve enough to believe that we can stop the development,” he adds.

The Shipowners Association agrees that international cooperation is the way forward if a solution is to be found to the Somali piracy problem.

“There is no doubt that the handling of the problem could be solved through international cooperation – both in relation to actual hijackings, but also in long-term capacity-building and fleet cooperation. No-one can manage this alone,” says Piil Pedersen.

Although the monsoon season has reduced piracy in the region, the shipping industry fears a resurgence when the monsoon season ends in September-October.

“This is the quiet before the storm. I fear it will all start again,” Gullestrup says.

Clipper Group sends one ship per week through the Gulf of Aden off Somalia, but fears of piracy have meant it does not send ships in to Kenya or Tanzania.