Going Global

Piracy is one of the most resilient business models ever, a fact which has prompted fears that it may be set to go global once again.

As the latest IMB reports state that attacks worldwide have hit 266 in the first half of 2011, (up from 196 in the previous-year period), the only good news is that the pirates’ success rate was down in the first half, with 21 hijackings in the period, versus 27 in the first half of 2010.

Pirates have proven to be shrewd operators, they move to strike in the best places, they target what they perceive to be the weakest vessels and they negotiate hard.

As ships are beginning to harden themselves, and as the naval forces appear to be striking harder and faster against them (if indeed the MV Montecristo is a portent of a new approach), Lloyd’s List has been considering what next for the pirates. Given the unique advantages the pirates have:
They can operate at low cost
They can extend their range without a very large increase in overheads
They have little care for human life is expendable – including the lives of their operatives
They are extremely flexible in their response to opposition,
They seem to have a strong sense of ‘mission’

It seems their main constraint is striking the right balance between launching successful operations and being so successful that global efforts to eradicate them will be significantly intensified. The need to juggle this carefully – the attacks on tourists off Kenya, for many pirate masters would be cause for concern. Don’t mess with the model, would perhaps be the message to new pirate gangs looking to diversify.

When asked about future developments Michael Frodl, the principal of C-Level Maritime Risks, a Washington research firm, believes that the Somali pirates have a strong interest and the ability to make local alliances for attacks south of India. Mr Frodl says that pirates have already established contact with locals and forward bases in the Maldives, which has facilitated their attacks in the western Indian Ocean.

He cautions that a logical next step would be to form a tie-up with remnants of the Tamil Tigers, this would give the capability of co-ordinated attacks against shipping in the shipping lanes south of India. Given the recent news that more large tankers are heading to the Cape of Good Hope to travel “the long way round” this enhanced capability would present more opportunities to capture large tankers, which in turn would mean higher ransoms. This would compensate the pirates for the higher cost of operating at such a distance from Somalia.

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