Somali pirates are back: How will this affect your supply chain?
Friday, March 17, 2017
At the turn of the decade, Somali pirate attacks on shipping vessels were an international epidemic, with 237 attacks occurring in 2011 alone. Such attacks rapidly dropped off, though, and following the release of 2013's Oscar-nominated "Captain Phillips," the sensation all but disappeared from media coverage.
On Monday, pirates off the coast of Somalia hijacked a small oil tanker called the Aris 13, marking the first such attack on a large commercial vessel since 2012.
Are Somali pirates back? If so, will they have an adverse economic effect, including on supply chains? Here's what you need to know:
1. The attack was likely politically motivated
The first Somali pirates emerged in the wake of the Somali government's collapse in 1991. With no government authority available to stop illegal fishing by foreign vessels, angry fishermen boarded these vessels and demanded fees. Some early pirates dubbed themselves "coast guards" and claimed to be defending Somalia's territorial integrity until a stable government re-emerged.
Monday's attack appears to have two things in common with these early attacks: foreign fishermen and problems with the Somali government. With the support of Somalia's Puntland government, foreign fishermen are flooding Somali waters, prompting anger among local fishermen.
2. Counterpiracy policies have been highly effective
International alliances and changes in business practices effectively combated the Somali pirate epidemic. Ships began taking alternative — though less efficient — routes that avoided the Somali shore. NATO launched Operation Ocean Shield, providing naval support to assure the safety of ships in the Somali area.
Aris 13 lacked both of these protections. In what was likely an effort to save time, the already slow and vulnerable Aris 13 sailed too close to the Somali shore. This risk was further compounded by NATO's suspension of Operation Ocean Shield in December.
3. Somali piracy has heavy economic impacts
In 2011, the peak year for attacks, the global cost of Somali piracy approached $7 billion. The sea transportation industry shouldered 80 percent of that burden. An oft-cited "Oceans Beyond Piracy" study lists several factors as costs, including increased speeds for ships, higher insurance premiums and fees related to rerouting.
The cost of piracy, however, dropped considerably in the following years, with "Oceans Beyond Piracy" reporting a $5.7 billion to $6.1 billion cost in 2012 and a $3.2 billion cost in 2013.
4. The situation moving forward is currently unclear
On Thursday, the Aris 13 and its hostages were unconditionally released. The pirates say they forewent a ransom after learning Somali businessmen had hired the ship; Somali pirates are traditionally wary of entanglement with Somalia’s powerful businessmen.
Locals, however, believe the attacks will continue. "Since the fish are drained by foreigners, my colleagues plan to go into the ocean to hijack other ships. We have no government to speak on our behalf," says Somali fisherman Mohamed Ismail.
At this point, it is unclear whether these attacks will actually come into fruition or if Operation Ocean Shield will again be necessary. But one thing seems certain: Shipping routes off the Somali shore are still risky and should be avoided.
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