gE Blog Series: Global Shipping Industry Part 5 - Impact of Piracy on International Shipping

Somali-based piracy cost the international community over $6 billion in 2012, but the decrease over the past few years has been due to increased reliance on maritime security. The decrease in piracy around the Eastern coasts of Africa can be seen as a success; however, piracy is increasing off the coast of Nigeria and the Gulf of Guinea. The piracy in the Gulf of Guinea is likely due to the lack of prevalent law enforcement, the easy access to illegal markets, and a target rich environment.

It has been difficult to say if the cause of the increase in piracy off the coast of Nigeria is due to economic conditions and instability caused by groups like Boko Haram. The increase in pirates may also be due to unemployed maritime cadets who were not given the practical experience to join the Maritime Academy of Nigeria (MAN) program. Piracy off the coast of Nigeria is estimated to cost over $7 billion annually with most of the costs affecting the oil industry. Data suggests that low oil prices have caused a shift in piracy tactics; in Nigeria, oil theft was replaced with kidnap for ransom and anchored tankers in Singapore have increased due to more hijacking risks. There has been an increase in piracy in South East Asia, and Singapore is seen to have a high risk of pirate attacks. There have been 66 successful attacks have been recorded between 2012 and 2016, and pirate groups can earn up to $1 million for successfully hijacking a tanker in Singaporean waters.

Anti-piracy methods have been successful to so far, however these successes are not definitive. To combat piracy, aggressive measures have been seen to be the most effective; including non-lethal weaponry and Long- Range Acoustic Devices (LRADs), which are focused sounds well above the human threshold meant to incapacitate attackers without permanent damage. Other methods that have been used to deter piracy include the employment of armed security and passive measures such as water hoses, foam, and barbed wire.

A less considered impact of low oil prices was the increase in tankers anchoring for long periods due to acting as temporary storage facilities until oil prices stabilize, thus providing easy targets for pirate attacks. In addition, a major risk for the international shipping industry is the reliance on interconnected technology. The reliance on electronic navigation can lead to more than just losing vessels, as pirates have already began to try to find holes in cyber security to target specific cargoes. There have been strong connections between anti-piracy efforts and the strategic interests of the countries in question, and a fractured global community can have negative repercussions in combating piracy in the long-term.