Hollywood pirates such as Jack Sparrow and Blackbeard are
glorified characters among uncivilized peers, stealing from the
rich and acquiring bounties of gold. While the adventures of
these 19th century caricatures are entertaining, their 21st
century descendants are a growing threat to a shipping industry
responsible for nearly 80 percent of the world's trade.
Pirate attacks are on pace to set a nine-year record in 2011,
according to data from the International Chamber of Commerce,
which tracks global pirate attacks.
Over the past five years, the number of attempted pirate
attacks around the world has nearly doubled to 445 in 2010.
Pirates successfully boarded the attacked vessels in 50 percent
of these attempts. It's estimated that only 30-40 percent of
attacks are reported to international agencies so these are
pretty conservative figures. Currently, 750 seafarers on over 30
vessels are held hostage by pirates demanding enormous
During that same time period, the average ransom paid to
release hostages and vessels has increased dramatically. In 2010,
the average ransom for hijacked ships was $5.4 million, including
a record $9.5 million paid in November for a South Korean oil
tanker. This is up substantially from 2005 when the average
ransom paid was about $150,000, according to oil industry analyst
PIRA Energy Group.
The largest problem area has been off the coast of Somalia.
The country's history of piracy extends over 20 years since the
fall of its government. In an attempt to protect their waters
from being overfished, Somali vigilantes began forcing fisherman
in the area to pay a tax.
The area Somali pirates controlled was once only along the
coast of Somalia to the Gulf of Aden. Now, following a
concentrated effort by naval vessels to eradicate piracy in the
area, these pirates are extending their destructive efforts to
one of the most important shipping areas in the world: the
Arabian Sea, Red Sea and Indian Ocean.
Their tactics have become more sophisticated. The revised
scheme is to use previously hijacked vessels, called
"motherships," to transport people and supplies as far as 1,500
nautical miles from land, making it much more difficult for naval
warships to patrol.
With Somali pirates covering a larger area, there's an
increased risk to energy tankers entering the Indian Ocean headed
for key ports in Indonesia, India and China. In 2010, one-third
of all pirate attacks were targeting ships carrying chemicals,
crude oil and natural gas. This has increased from just 20
percent five years ago.
One country bearing the brunt of Somali piracy is neighboring
Kenya. The Kenyan Shippers Council (KSC) estimates that piracy
increases the cost of imports by $23.8 million per month, and
exports by $9.8 million per month, according to One Earth Future,
a global think tank on trade.
Across the continent, Nigeria's oil industry has been a direct
target of pirates. One Earth Future calculated that Nigeria's oil
production has dropped by 20 percent since 2006 as a result of
piracy and other attacks. Royal Dutch Shell estimates that
approximately 100,000 barrels a day (roughly 10 percent) of
Nigeria's oil production is stolen every day.
To avoid the high-risk areas and protect the workers on the
ships and supplies from a pirate attack, these tankers have
changed their routes. They now travel farther east toward the
coast of India before heading south, adding six days of travel
time for a Western destination and increasing travel expenses for
the shipper. Energy tankers are also employing armed security
guards, paying increased insurance rates and retrofitting their
vessels to lessen the chance of a pirate attack.
One Earth Future estimates the global cost of piracy on the
economy has grown to approximately $7 to $12 billion a year.
Oil transport is specifically susceptible to piracy because
about one-half of total production is moved by tankers on fixed
maritime routes, according to the U.S. Energy Information
). This oil flows through chokepoints such as the Strait of
Hormuz between Oman and Iran and the Strait of Malacca between
Indonesia, Malaysia and Singapore.
PIRA calculated the increased costs related to oil tankers in
the table. Considering all factors-vessel diversion costs,
additional bunkers, armed guards, hull insurance-the total cost
is approximately 40 cents per barrel when transporting oil in and
around this area.
When you consider a supertanker can transport up to 2 million
barrels a day, it adds up. Under PIRA's calculations, the piracy
surcharge tacks on another $800,000 to the total shipping
Over the past 30 years, the International Maritime
) has successfully lowered the risk of pirate attacks in other
regions around the world. With the recent escalation of piracy
around Somalia, governments and worldwide organizations including
the United Nations are now working in concert with the IMO to
curb these attacks. Their theme for 2011, "Piracy: Orchestrating
the Response," represents an increased awareness of the
world-wide political changes required to reverse this trend.
All opinions expressed and data provided are subject to change
without notice. Some of these opinions may not be appropriate to