Transportation

Piracy in Northern Seas: A New Trend?


These are unpleasant days for the worldwide shipping trade. The global recession and tighter credit markets have sent the Baltic Dry Index, a measure of worldwide shipping prices for dry cargo, plummeting more than 430% from its May 2008 record, to a current level of 2,704. And U.S. ports are expected to see 17% less imported container traffic volume in the second half of 2009 compared with the prior year, according to IHS Global Insight's Port Tracker. Through June, acts of piracy had more than doubled from the same period last year—and pirates may no longer be confining their traditional zones to East Africa and the South China Sea, based on the experience of the Arctic Sea, the Russian freight vessel allegedly hijacked last month en route to Algeria.

There has been no shortage of intrigue surrounding the disappearance and subsequent retaking of the ship, which had a crew of 15 Russians, and was seized, along with eight hijackers, on Aug. 17 by the Russian Navy hundreds of miles off the coast of Senegal, the Associated Press reported. From piracy to a super-secret state cargo, mutinies, and even an Al Qaeda terror plot, theories abounded on the ship's mysterious experience during what was to be a routine journey. The answer appears to be a much more mundane hijacking and ransom demand. On Aug. 3 the hijackers threatened to sink the boat unless they were paid $1.5 million, CNN Europe reported, quoting a security official with the ship's insurer, Renaissance Insurance Group of Moscow.

The Arctic Sea, operated by the Finnish company Oy Solchart Management under a Maltese flag, left port in Finland on July 23 with a load of timber headed for Algeria. The next day the ship reported to Swedish authorities that masked, armed men boarded the vessel from a speedboat, and over the next 12 hours interrogated and beat crew members, smashed communications equipment, then left. Despite the alleged hijacking, Swedish authorities did not send a ship to check on the Arctic Sea, a fact that raises alarms and questions for Andrew Linington, a spokesman and 25-year veteran at Nautilus International, a London-based seafarers' union. "It's going through the world's busiest waterway, and nobody thinks to send out a naval vessel to see if it's O.K.," says Linington.

On July 28 the boat radioed Britain's Maritime & Coastguard Agency—a communication protocol—before heading south down the English Channel. Roughly 400 boats pass through the waterway each day, and there was nothing unusual about the 320-foot vessel's communication, agency spokeswoman Maggie Hill said.

The Arctic Sea was transporting an estimated $1.8 million worth of timber to the Algerian port of Bejaia and had been due to deliver the shipment on Aug. 4. Despite reports that the cargo belonged solely to Stora Enso, the Helsinki-based paper and package maker, company officials say that was not the case. "Out of the 6,700 cubic meters of wood on the ship, only 200 cubic meters are ours," Stora Enso spokesman Lauri Peltola says. The cargo, he says, is a mix of lumber from UPM Timber, a Finnish competitor, and other lumber providers in the area. Ships and cargo are typically paired by brokers, and boats tend to be loaded up as fully as possible to save costs and increase efficiency.

Circumstances Still MurkyAfrica has seen a significant increase in piracy off its eastern coast and in the Gulf of Aden, a high-traffic area that feeds the Red Sea and Suez Canal. In the first six months of 2009, 240 ships worldwide reported being attacked, up from 114 during the same period in 2008, according to the London-based International Maritime Bureau (IMB). The Arctic Sea's alleged hijacking, however, happened a few thousand miles northwest, in the Baltic Sea. "I've certainly never heard of a ship being hijacked before in these waters," says Paul Gunton, managing editor of Fairplay 24, a London-based Web site that covers international shipping news.

At an Aug. 14 press conference, as the hunt for the ship was in full swing, the European Commission said that the Arctic Sea's experience had "nothing in common with traditional acts of piracy or armed robbery at sea," according to Reuters. Still, while the European hijackers may not have fit the mold of the now-common Somalian pirates, they certainly had the skills to commandeer a large vessel, says Nick Davis, chief executive of the Merchant Maritime Warfare Center, a London- and Yemen-based security firm.

Davis is skeptical that all the facts of the case will be uncovered in light of the complex international politics and diplomatic sensitivities already emerging. Despite the arrest of Estonian and Latvian citizens, Russia has not given either country information on the case, Bloomberg reported on Aug. 18. Swedish, Maltese, and Finnish authorities plan a joint formal inquiry to investigate the incident, which they called "aggravated extortion and hijacking," according to a press release on the Finnish National Bureau of Investigation Web site.
Spielberg is a reporter for BusinessWeek.

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