Piracy – Part 2

In Piracy – Part one we discussed what was meant by maritime piracy. In this part, the discussion focuses on its financial impact, a more efficient way to define it and what methods are used to counter its harmful effects.

How modern piracy is is committed

Modern piracy, in some respects, has not changed much regarding age-old tactics. Such acts still occur at night, use low-tech equipment to minimize alarming ship crews such as ropes or grappling hooks. However, modern pirates don’t focus primarily on stealing cargo as it is more difficult today to have access to black markets to handle stolen goods.

Modern targets include valuables owned by a ship’s crew, especially personal electronics. Other targets are ship supplies and valuables kept in ship safes.

Pirate attacks typically are near shore events involving small speedboats. Pirates continue to be heavily armed with guns, knives, grenades and even rocket launchers.

Besides theft, attacks can be violent and traumatic involving the following:

  • Threats of bodily harm
  • Assault
  • Taking of Hostages
  • Marooning crew and/or passengers
  • Theft of entire vessels
  • Murder

Modern pirates also make thorough use of technology to pick targets and to facilitate attacks.

Financial Impact

While international figures concerning the impact of piracy and related activity are difficult to determine, one study estimated that annual global costs may be as high as $7 to $16 billion (in U.S. dollars). That same study identified the following primary and secondary levels of impact due to modern pirate activity:

Primary (Direct) Piracy Costs

  • Deterrent Security Equipment Costs
  • Insurance Costs
  • Naval Forces Costs
  • Piracy Prosecution Costs
  • Piracy-Deterrence Organization Costs
  • Ransom Costs
  • Re-Routing Costs

Secondary (Macroeconomic) Costs

  • Food Price Inflation
  • Impact on Regional Trade
  • Reduction of Foreign Revenues

Please see parts one and three of this article.

Norris Insurance logo