The Somali pirates story is hitting the shipping industry at the worst possible time. Shippers are already taking it on the chin, as pricing power has absolutely evaporated, but now they’re being forced to buy more insurance and staff up their boats, according to WSJ:
The boldness of the attack on the 1,080-foot Sirius Star may prompt insurers to require special “war risk” insurance costing tens of thousands of dollars a day to cover travel across a much greater area of water. It also could spur shippers to hire more onboard security for their vessels, which many have resisted because of costs and the fear of escalating armed conflicts with the pirates.
“This could be a game-changer,” says Peter Hinchliffe, maritime director of the London-based International Chamber of Shipping. “It’s no secret the whole industry is looking into this.”
The shipping companies, whose stocks are already in the toilet, are getting slammed today. DryShips (DRYS) is down about 33%. Eagle Shipping (EGLE) is off 17%, and so on.
Business Insider Emails & Alerts
Site highlights each day to your inbox.