GSIS

Pirate's Moving West

The recent attack by Somali-based extremists at a mall in Kenya has renewed discussion about Somali pirate attacks along key shipping routes.

The International Maritime Organization (IMO) initiated a long-term anti-piracy project in 1998, and it continues today. Through regional seminars and workshops for government officials from piracy-riddled areas and using evaluations and assessment missions, IMO has worked toward regional agreements for anti-piracy measures.

Although IMO's work has largely been toward creating a network of consistent and collaborative anti-piracy measures, their emphasis continues to be on self-protection. The best defense is a well-protected merchant ship.

There has been success in recent years, which has largely been attributed to $3 billion in annual spending on shipboard security and navy patrols. Thanks to increased shipboard defense spending, attacks off the Horn of Africa have fallen 70% since 2011. At a time when company and state budgets are seeing massive cuts, there is worry that reduced spending on shipboard defense measures will lead to a rise in Somali hijackings.

The conditions favoring Somali piracy have not changed. Poverty and instability in the region feed extremist movements. Merchant ships passing through the Gulf of Aden between Yemen and Somalia continue to be at risk.

With increased piracy activity, merchants and freight forwarders would likely see steep rises in ocean freight insurance premiums. A 2008 report on Ocean Piracy and Its Impact on Insurance described a dramatic increase in insurance rates after a surge of piracy activity between 2007 and 2008. In 2007, it cost $900 to insure a container. After a rise in pirate hijacking, that cost rose to $9,000 in 2008.

Regardless, all warn against complacency. Declines in pirate attacks have come at a significant financial cost. As conditions in Somalia remain unchanged and as companies examine budgets, defense against piracy remains imperative. A well-protected ship and insured cargo are the best defense against attacks.