NAIROBI Piracy in the Gulf of Aden has cost shippers between $18-30 million so far this year in ransoms and is threatening global business, British think-tank Chatham House said on Thursday.
Pirates have hijacked more than 30 ships off Somalia this year, making the country's 3,300 km (2,060 mile) coastline one of the most dangerous in the world and threatening an important shipping lane between Europe and Asia.
"Total ransom payments for 2008 probably lie in the range of $18-30 million. Inflation of ransom demands makes this an ever more lucrative business," a Chantam House report said.
The gangs have received ransoms between $500,000 and $2 million for each ship taken this year, according to the report titled: Threatening Global Trade, Feeding Local Wars.
Chatham House says the piracy was likely to divert shipping away from the major global sea artery used by about 20,000 vessels each year, increasing operating costs and end prices.
Risk insurance premiums have risen tenfold this year, the report said.
Shippers are considering avoiding the Gulf of Aden for a longer route to Europe and North America around the Cape of Good Hope, Chatham House said.
"Extra weeks of travel and fuel consumption would add considerably to the cost of transporting goods. At a time when the price of oil is a major concern, anything that could contribute to a further rise in prices must be considered very serious indeed."
The pirates are getting more sophisticated and brazen as little is done to counter their activity, the report said.
In the latest hijacking, Somali pirates captured a Ukrainian ship carrying 33 tanks and have demanded a $20 million ransom.
The pirates are said to be using MANPADS (Man Portable Air Defense Systems) and rocket propelled grenades during their attacks. They also have GPS systems and satellite phones.
Most attacks have been in the Gulf of Aden between Yemen and north Somalia, a major route leading to the Suez canal linking Europe and Asia.
Despite U.S. and French military bases in the area and the U.N. Security Council having promised to take steps against the pirates, the Chatham House report said international action was lacking.
The U.S. Navy said last month allied warships in an international force in the region had stopped 12 attacks since May and were doing all they could and that shipping companies should take measures to protect their vessels and crews.
Russia said last moth it had sent a warship to Somalia's coast to combat pirates and German Defense Minister Franz Josef Jung said on Wednesday European Union states planned to deploy three frigates, a supply ship and three surveillance ships.
(Editing by Philippa Fletcher)