What was once an ancient risk now has a modern face, and is a growing concern for shipping companies. Following the release of the Maersk Alabama, the media has paid much less attention to the infamous Somali pirates. These pirates are still very much active. The number of piracy incidents has risen drastically since 2008. Back then, most of the acitivity conducted by pirates consisted of simply plundering the ship and fleeing. Now, the pirates are not only plundering the ships, but are also taking the ships and crews hostage for ransom. What changes could the piracy resurgence bring to the shipping industry?
One change could be a greater use of shipping security. Companies that ship near high risk areas may have to hire security as a precaution in order to protect their shipments and crews from possible piracy.
Another is the way in which shipping companies approach insurance for their shipments, and the way in which insurance companies tailor their policies for shipping companies. The new plans of course would cover the loss of the shipment, but with the practices of these contemporary pirates in taking the ship and crew captive there are additions needed. The insurer would also provide for coverage dealing with damage/maintenence to the ship, injury or deaths of crew members, the opportunity cost of having to possibly hire new workers to complete other shipments, as well as the actual ransom payment to release the crew.
Lastly, and most likely, would be changes in routes and delivery times for shipments. Shipping companies will attempt to avoid high-risk areas, which may mean longer shipment times, or even the complete avoidance of some ports.
Overall, each one of these changes means more costs to shipping companies, which in turn means higher prices on goods which are shipped by them. These changes would certainly be good news for those who provide security for other companies, as well as the insurance companies which specialize in shipping security.