Decline in Cost of Somali Piracy but Dramatic Rise in Maritime Security Costs

17/05/2013

A fall in the number of incidents of Somali piracy has reduced the cost to the worldwide economy however, whilst the costs of hiring armed security teams has dramatically fallen, there has been an overall increase in the cost of to shipping transiting through this area along.

The number of recorded piracy incidents has decreased from 176 in 2011 to 35 in 2012, and 3 in 2013 (source: www.eunavfor.eu). In monetary terms this translates into a decrease of £580 million in costs to the world economy.

*** Fall in worldwide cost of Somali Piracy ***

The cost to the global economy has fallen by 12.5 percent since 2011 (source: www.reuters.com) which is a welcome bit of news for the international community. They are only too aware of the impact piracy has on commercial trade throughout the world and have implemented a series of counter-piracy strategies as a result.

This is linked to a slight improvement in onshore law and order in Somalia and increased number of prosecutions of PAG’s, all of which has resulted in a fall in recorded piracy incidents. Measures such as EU NAVFOR’s Operation Atalanta and NATO’s Operation Ocean Shield have proven to be successful in deterring pirate attacks but they remain ever vigilant to this continuing threat.

All of these cost time and money particularly the need to maintain permanent naval forces in high risk areas such as these who are re-routed as and when a situation arises.

*** Rising cost of maritime security measures ***

The use of armed security teams, naval task forces and sailing at increased speeds – resulting in increased fuel consumption all adds to these costs. In fact, it accounts for more than half of maritime security costs (source: www.oceansbeyondpiracy.org).

However, the biggest cost is the use of armed security teams which has risen by nearly 80 percent to between 1.15 and 1.5 billion (source: www.reuters.com).

A fall in the number of incidents has resulted in a reduction of naval forces patrolling these waters, leading to a drop in the cost of these operations. Plus fewer ships are transiting at high speeds through these areas in order to evade PAG’s, resulting in less fuel consumption and lower costs.

For the Somali pirates, it appears as if their hostile acts are less profitable than before, although they still operate in these waters. Until the situation improves in Somalia and steps taken to tackle the root cause of piracy, they will continue to pose a threat to commercial shipping.

They may be down but they are not out and security measures must remain in place to prevent a resurgence of pirate attacks.