Fighting Piracy in the Shipping Industry

BradYoung04 By BradYoung04, 29th Sep 2014 | Follow this author | RSS Feed
Posted in Wikinut>Business>Supply Chains, Procurement & Logistics

The dramatic rise of pirate activity since 2008 has had a big impact on our oceans and on big business, particularly the shipping industry. But what is the real cost of this activity and what solutions can the industry find to once again make pirating a thing of the past?

A 21st Century Issue

It’s easy to forget that pirates still exist in the 21st century. Some of us (myself included) may think of pirates as an antiquated stereotype with peg leg, parrot and eye patch. But since 2008 there has been a resurgence in pirate activity. No longer interested in treasure, these pirates have the intention of seizing valuable cargo ships and their crew and wealthy tourists which they hold to ransom.

Although piracy is a global problem, the bulk of pirates operate sometimes thousands of miles off the coast of Somalia on ships sailing in the Gulf of Aden and Indian Ocean, these pirates board ships heavily armed and take their prisoners. These oceans offer many important routes for the shipping industry and act as the doorway to the Suez Canal. This sea level canal, located in Egypt connects the Red Sea with the Mediterranean Sea cutting many miles off of journeys which would otherwise go around the entirety of Africa. This vital lifeline in shipping is not an area of sea that can be avoided even with the serious risk of armed attacks from pirates.

The Impacts of Pirates

The most publicized cases of piracy are those involving glamourous yachts and wealthy tourists, held sometimes for years, sometimes never released at all. The less reported side of piracy is the cost to industry, particularly the shipping industry. In 2012, the cost of Somali piracy was estimated at between $5.7 - $6.1 billion and almost $5 billion of this is the estimated industry cost of suppressing piracy. These figures are the product of expert research by Oceans Beyond Piracy (OBP) and indicate the following factors which are contributing to these costs:
• Insurance
• Re-routing
• Security guards and equipment
• Increased speeds of ships

Potential Solutions to Piracy

An immediate solution to the piracy dilemma, is to beef up security for ships traveling in these areas. Prior to the pirate attacks this is something which was relatively unheard of unless highly valuable goods were being transported. The answer to the relatively new need for maritime security across much of the shipping industry was to hire private security companies.

The solution for many shipping companies was to outsource this task to nearby specialists and hire a private security company in Kenya to fight Somali piracy. These companies specialize in asset protection and have a good knowledge of the ‘problematic’ areas of ocean as well as an understanding of how the pirates operate. In fact this method of dealing with piracy was so popular that in 2011 it was estimated that around 30% of ships employed private armed security. By 2012 the estimated figure of ships which used private armed security had risen to over 50% (OBP, 2013).

Long-Term Solutions

This solution has been effective in the short-term but some shipping companies have begun looking at long-term solutions to the problem on land. In 2013 some of the biggest names in the shipping industry including K Line, Maersk Line, Stena, NYK Line, Mitsui OSK Line, Shell and BP donated $1 million and pledged a further $1.5 million in a project which aims to create jobs through building projects in Somalia, giving people more career options, and so, discouraging piracy.

Thanks For Reading

Thanks for reading. Check out some of my other articles on Wikinut such as 5 Reasons Your Business Isn’t Growing and follow me on Twitter too.

Tags

Pirates, Shipping, Shipping Interantionaly

Meet the author

author avatar BradYoung04
I am a MBA grad who can transform your business. Follow me for straight talking insights into running successful businesses in a fast paced world. I am always working or surfing in the Californian sun

Share this page

moderator Steve Kinsman moderated this page.
If you have any complaints about this content, please let us know

Comments

Add a comment
Username
Can't login?
Password