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Pirates Cost Shipping Industry $9 Billion Despite Security Measures

Published Dec 18, 2012 2:03 PM by The Maritime Executive

By MarEx Staff

Piracy is a looming fear haunting the maritime community at large.  With the increasing frequency of attacks, more hot spot locations, bolder tactics, hiking ransom rates, and the end of the typhoon season upon us, it would seem that piracy is as much of an imminent danger as ever.  To make matters worse, the Indian National Shipowners Organization gave a number to the turmoil on global trade, at a cool $9 billion as they out cried to their government to set up a U.N.-sanctioned maritime force against the growing epidemic earlier this week. 

Anil Devli of the Organization explained the threat of piracy leads shipowners having to pursue high insurance costs, longer routes to avoid heated areas, the presence of armed guards aboard ships, as well as ransom payments in the event of an attack.  After all of these precautions are implemented, operating costs for global shipping skyrockets, leaving a considerable dent in operational budgets.  Devli believes that the creation of a maritime force under the U.N. for India would critically ensure the safety and security in the Arabian Sea and Indian Ocean sea lanes that they are currently trying to control using escorting navy service.  He added that an effort under the support of the U.N. would aid in resolving this issue quickly, and at a lower cost than the billions of dollars shipping companies are spending worldwide to combat piracy.

The plan stipulated by the Indian National Shipowners Organization would allow their forces legal mandate to board any suspicious vessels and have armed soldiers and armed naval vessels to possibly attack pirate sea crafts.  If supported by the Indian Government, the Associated Press said they will push the proposal to the U.N. Security Council, in which they will also propose a “no ship zone” off the coast of Somalia, drastically cutting down the amount of pirate-led ships from recklessly entering and leaving Somalian waters.  The odds of the Indian Government supporting the plight are in the maritime community’s favor, since action earlier this year by officials allowing ship owners to deploy armed guards on ships to fight piracy proved effective and prevented many ships from hijacking.

According to the ICC Commercial Crime Services, just in the first 6 months of 2011, there were 266 piracy attacks, trumping the prior year’s number at 196 attacks in the first half of 2010, and 1,181 seized hostages in all of 2010; 60% of these attacks occurred in the Arabian Sea by Somali Pirates.  The Press Association says as of September 29th, 300 ship crew members are being held currently by Somalis, and that an estimated 4,000 seafarers have been robbed or physically attacked by pirates while working abroad over the last eight years. 

Why not take risks when you’re already a pirate?

  • IMB Director Pottengal Mukundan, stated that for the first time pirates didn’t even stay away during the difficult conditions of monsoon season, firing at ships in rough seas of the Indian Ocean when they typically saw retreat.  
  • They are stocking their artilleries.  Five years ago, pirates were not using such a broad scheme of automatic weapons like rocket propelled grenade launchers and combat guns, more likely to be carrying knives and handheld weapons.  This year, guns were used in more than half of attacks.
  • West Africa is fair game to pirates again.  As opposed to 2010 where no incidents off Benin were reported, it is seeing a surge of activity with 12 attacks on tankers in just the first three months of 2011.
  • Amped up security and punishment against piracy has led the pirates to adapt, with attacks this year on innocent tourists on the rise, even on land.  African pirates are snatching up beach goers as well as capturing pleasure boaters and holding them hostage for extremely high ransom rates more than they ever had in the past.  
  • Pirates have upped the ante when it comes to their ransom payments.  R. Adm. Pervaiz Asghar cited that ransom costs have seen a staggering 36-fold increase during a one-year time period from 2010-2011, averaging around $5.4 million payout per vessel.

Every cloud has a silver lining

Piracy is clearly not a new threat, existing in parallel with shipping since the advent of sea trade, and luckily over the years the worldwide shipping population has been taking measures towards controlling and hopefully eradicating the nuisance piracy causes.  

Despite the increase of pirate attacks, in the past year the IMB reported that the amount of actual hijackings had decreased, due to the stealth and steady hand of governments and maritime security forces around the world showing no tolerance towards the pirates.  Perhaps one of the most symbolic ways the world has stood against piracy is the way captured pirate suspects have been punished heavily by multiple governments, and in the utmost level of the law. 

The International Chamber of Commerce (ICC) International Maritime Bureau’s (IMB) Piracy Reporting Centre (PRC) have been tirelessly providing reporting services, support, and advice for seafarers concerning piracy.  Recently launched, The new Maritime Piracy Humanitarian Response Programme (MPHRP) has been instituted to help seafarers with the trauma associated with attacks at the hand of pirates.  MPHRP manager Roy Paul believes part of the problem is that most people simply do not understand the face of piracy today.  He postulates that filmmaking in the past has romanticized piracy and does not give an accurate portrayal of the desperate and violent criminals modern pirates truly are today.  The United States Coast Guard, Maritime Administration, NATO, EUNAVFOR, IMO, Maritime Security Centre - Horn of Africa (MSCHOA), among many others have all actively contributed to the fight against piracy. 

More and more players are joining in this battle on our oceans not only protect the economies of the world, but to also ensure the safety of the seafarers who make the global shipping and trade economy possible.