Nigerians to Pay More as Shipping Companies Raise Cost of Cargo Insurance

The decision of the Baltic and International Maritime Council (BIMCO) to approve a new standard contract for security escort vessels (SEVs) in volatile sea regions could have a profound impact on the cost of clearing cargoes at seaports Nigerians, investigations have revealed.

BIMCO is a commercial shipping organization headquartered in Copenhagen, with members from over 60 percent of the world’s leading shipping companies under its umbrella.

According to BIMCO Deputy Legal Director Stolt-Nielsen, quoted in a statement released by the group last Thursday, “BIMCO’s documentary committee has approved a new standard contract for security escort vessels (SEVs). The standard is a balanced contractual framework for SEVs accompanying merchant ships in high threat areas such as the Gulf of Guinea (GoG) which has recently seen an increase in piracy activity as the dry season has begun.

“The new contract is called SEV-GUARDCON because it is based on BIMCO’s GUARDCON contract for the employment of security guards on board ships.

“The capabilities of the escort vessel, and what should happen if the vessel does not arrive at the rendezvous point as agreed, are key issues for ship owners and operators operating in high risk areas. SEV-GUARDCON addresses these and other aspects to consider when transit through areas such as the Gulf of Guinea.

In shipping, security escorts are used when merchant ships pass through hazardous areas and call at ports where the use of maritime security personnel on board is undesirable due to local practices or regulations. The Nigerian Tribune’s checks, however, confirmed that Nigeria does not currently allow maritime security on board due to the presence of the Nigerian Navy, a situation that has forced many ships passing through its waters to hire vessels from private security escort.

With the approval of this new standard contract for security escort vessels, ships could be forced to increase insurance freight costs to recoup their security expenses, an exclusive shipping agent said. not that his name is printed in the Nigerian Tribune.

In the words of the shipping agent, “BIMCO’s decision to approve a new standard for security escort vessels means Nigerian cargo owners may have to pay more to secure their cargoes. First, the cost of doing business in Nigerian ports is high due to the insecurity in and around its waters. Shipping companies charge what is known as war risk insurance on cargo arriving at Nigerian ports because they pay so much to private security escort companies to keep them safe while transiting Nigerian waters. .

“The money that the shipping companies pay to the private security escort, which ranges from $ 7,000 to $ 10,000 per trip, is then recovered from the cargo owners in the form of war risk surcharges paid on the ships. cargoes carried by these vessels. The new standard that BIMCO wants to enforce will certainly result in new burdens by these security escort vessels. BIMCO is asking for more in terms of security, and these private security companies aren’t saying they won’t deliver, but it will come at a cost.

“Whatever cost the new BIMCO initiative will attract will be passed on to freight owners by the shipping lines. It’s that simple. Shipping companies will not pay more money to security escort vessels and will not charge more in terms of insurance freight on cargoes. Remember that shipping companies are businessmen who are in business for profit. “

When asked why BIMCO, which boasts around 60% of the world’s leading shipping lines, is currently trying to approve a new standard for security escort vessels, the shipping agent explained that the water insecurity is generally high during the dry season.

“You know that the risks of maritime threats are much higher in the dry season than in the wet season. What BIMCO is doing is based on the next dry season which is already here. There is a feeling that maritime threats in the GoG could become more profound, hence the need to prepare in advance before any of its members get caught up in the confusion of insecurity.

“Whatever BIMCO accepts when it comes to its new standards for security escort vessels, one thing is for sure; there will be an adjustment in the amount paid as freight insurance on cargoes by the owners of the cargo. Whatever the additional cost resulting from the new BIMCO safety device, it will be transferred to the cargoes transported by these ships. People should therefore be prepared to spend more to clear cargoes along the ports located in the GoG. “

Also speaking on the development, an importer, Ms. Bola Banjoko, explained that whatever changes are made that affect the cost of cargo insurance freight and ultimately affect the cost of cargo clearance, it will also affect the costs of cargo clearance. market prices for goods since Nigeria imports virtually everything.

“Our markets are full of imported items. Even some are made here, their raw materials come from abroad and are brought here by ships. So if the shipping companies make any changes that will affect the cost of clearing cargoes in our ports, it is the man in the street who will pay the difference as importers are also in business for profit. If I have to pay more to clear the cargo, then the difference of what I pay will be added to the goods I brought in. So who pays? It is the man in the street who buys these products in the markets. It’s simple logic, ”Ms. Banjoko told the Nigerian Tribune.

Recall that the issue of maritime insecurity has gradually emerged over the past two months along Nigerian waters, the two recent attacks having failed due to the presence of foreign navies around the country’s territorial waters.

On October 27, 2021, a Russian naval destroyer, Vice Admiral Kulakov avoided what would have been a threat to maritime security in Nigerian waters by helping to scare off pirates who had previously boarded a container ship, MSC Lucia 86 nautical miles to the southwest. of the Agbami offshore oil terminal. The pirates fled the ship using a small speedboat when they saw a Kamov Ka-27PS helicopter, which had been dispatched by Vice Admiral Kulakov, approaching with Marines.

Again, on November 25, a Danish warship, the Esbern Snare was conducting an operation to protect sea routes in the Gulf of Guinea when it spotted a fast moving vessel carrying eight suspected pirates near a certain number of commercial vessels.

“After the Danish frigate fired warning shots, the pirates opened fire on Danish Navy Special Forces, who in turn shot down four pirates and wounded one. The remaining four pirates were taken aboard the frigate and no Danish personnel were injured in the incident. This is the first time that the frigate has opened fire during its current mission in the Gulf of Guinea, ”the Danish army said in a statement.


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