FROM WIRED SHILLS
Arrr! Pirates Take Up to $12 Billion Worth of Booty
Don’t let the dilapidated fishing boats or the rusting AK-47s fool you. Pirates mean serious business. A maritime industry group crunched the numbers and found that the measures companies and governments take to avoid and combat the piracy threat cost between $7 billion and $12 billion every year.
The One Earth Future Foundation’s Oceans Beyond Piracy project documents exploding costs in piracy-related actions (.pdf). Ransoms paid to Somali pirates totaled $238 million in 2010 — the worst year for piracy on record, according to the International Chamber of Commerce.
The average payout to ransom a hijacked ship was $5.4 million last year, up from just $150,000 in 2005. (Wired magazine analyzed the Somali pirate business model in 2009.)
And ransoms aren’t even the lion’s share of piracy’s costs to global maritime commerce. Insuring ships passing near piracy-prone areas like the Gulf of Aden costs between $460 million and $3.2 billion. Naval presence to protect merchant shipping costs another $2 billion.
Regional economies lose up to $1.25 billion annually. Rerouting ships to less pirate-prone waters costs up to $3 billion. (Hat tip: GCaptain.)
Oceans Beyond Piracy readily admits that its estimate is imprecise. Piracy doesn’t have a clear impact on every economic measurement related to global maritime shipping. The overall economic downturn imposes its own costs on everything from insurance to local business impact.
What’s more, it’s “difficult to quantify the value of … world seaborne trade in monetary terms,” according to the International Maritime Association. But it’s undoubtedly massive: One figure the association provides shows that the operation of maritime ships — and there are 50,000 commercial vessels on the seas — produces $380 billion in freight rates, itself equivalent to 5 percent of global trade.
READ MORE
Arrr! Pirates Take Up to $12 Billion Worth of Booty
Don’t let the dilapidated fishing boats or the rusting AK-47s fool you. Pirates mean serious business. A maritime industry group crunched the numbers and found that the measures companies and governments take to avoid and combat the piracy threat cost between $7 billion and $12 billion every year.
The One Earth Future Foundation’s Oceans Beyond Piracy project documents exploding costs in piracy-related actions (.pdf). Ransoms paid to Somali pirates totaled $238 million in 2010 — the worst year for piracy on record, according to the International Chamber of Commerce.
The average payout to ransom a hijacked ship was $5.4 million last year, up from just $150,000 in 2005. (Wired magazine analyzed the Somali pirate business model in 2009.)
And ransoms aren’t even the lion’s share of piracy’s costs to global maritime commerce. Insuring ships passing near piracy-prone areas like the Gulf of Aden costs between $460 million and $3.2 billion. Naval presence to protect merchant shipping costs another $2 billion.
Regional economies lose up to $1.25 billion annually. Rerouting ships to less pirate-prone waters costs up to $3 billion. (Hat tip: GCaptain.)
Oceans Beyond Piracy readily admits that its estimate is imprecise. Piracy doesn’t have a clear impact on every economic measurement related to global maritime shipping. The overall economic downturn imposes its own costs on everything from insurance to local business impact.
What’s more, it’s “difficult to quantify the value of … world seaborne trade in monetary terms,” according to the International Maritime Association. But it’s undoubtedly massive: One figure the association provides shows that the operation of maritime ships — and there are 50,000 commercial vessels on the seas — produces $380 billion in freight rates, itself equivalent to 5 percent of global trade.
READ MORE
RSS Feed