Convoy Costs
By Fester:
Somali piracy is hitting the news hard today.
Pirates prowling the treacherous waters off the Horn of Africa hijacked another merchant ship today, at least the second in four days, amid growing international concern about a 21st century version of an ancient security threat.
The Hong Kong-flagged cargo ship Delight and its 25-person crew were captured late this morning off the coast of Yemen, China's New China News Agency reported, citing the official Maritime Search and Rescue Center. It was hauling 36,000 metric tons of wheat to the Iranian port of Bandar Abbas, the news service reported.....
the 1,000-foot-long Sirius Star, a massive oil tanker hijacked by suspected Somali pirates Saturday, was moored off the central coast of Somalia, the boat's operator said. The ship was anchored today several miles off the coast within sight of a Somali fishing region considered a haven for seafaring bandits, the U.S. military in the Middle East said.
Significant naval forces are either in the region, or are being dispatched to the region. NATO has a task force patrolling the region, significant elements of the US Navy are in the region, the Indian Navy is operating some patrols, the South Koreans are considering sending ships, and the Russians are conducting active out of area deployments with a frigate. However the size and value of pirate seizures is still increasing.
I have seen calls for the formation of merchant convoys to be formed. These calls are mainly on blogs and in comments. The big problem for this strategy is one of cost and benefit. Right now piracy is a front page issue as it is bizarre and unusual. However in the grand scheme of things, it has not been that expensive. The best estimates are under one hundred million dollars in direct costs for this year.
Convoying is expensive for multiple reasons. First, convoys take time to form up. This means ships will be sitting in port, or running lazy circles in a safe zone as the other ducklings line up. Secondly, a convoy is a collection of ships going in the same general direction which means they have to stick together. This means the slowest ship sets the group speed. Given the relatively high fixed costs of a ship plus crew costs, an extra day or two going through the danger zone is very expensive given what is still a low probability event. Finally, convoying clumps ships together and thus clumps shipments together. Just-in time management and most effective utilization of port facilities go out the window when convoys are instituted. Instead facilities are either used at near peak utilization rates or are massively underutilized.
Convoying could make sense, but it is a very expensive solution for what is still a small(ish) problem.
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