Pirate Captain: Argh, let’s wreak some havoc on global oil markets.
Pirate: Aye, ’tis time to hijack a supertanker.
Pirate: Argh, let’s see what those scurvy commodities traders think of this one.
Pirate Captain: Aye, then we can leverage the booty using long-options trades on the price of oil.
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Ok, maybe that’s not how it happened. But the capture at the weekend of supertanker Sirius Star certainly marks a shift in pirate sophistication.
For a start, the number of Somali pirate attacks has jumped from about 25 in 2007 to more than 60 so far this year, according to the ICC’s Maritime Bureau. At the same time, the motivations for piracy are also increasing. This from a Chatham House paper on the subject:
A few years ago ransoms were in the tens to hundreds of thousands of dollars range. So far in 2008 they have hovered between half-a-million and two million dollars, although recent reports indicate that demands have again shot up; $3.5 million has been demanded for the release of the MV Stella Maris which has been held since 20 July.15 Total ransom payments for 2008 probably lie in the range of US$18-30 million.
The targets and methods of attacks are also getting more sophisticated.
The FT’s Lex notes there’s been a steady shift of piractical activity away from Southern Somalia towards the Gulf of Aden. That would make sense, as the area is a major shipping route (about 16,000 vessels passing through each year) and its geographic funnel-like formation makes it an easier target than the wider waters off the coast of Somalia.
Furthermore, the pirates are also using GPS and satellite phones to coordinate, and may well be plugged into a Bloomberg-type feed displaying ships’ locations across the world (as below), according to Chatham House.
The options for threatened vessels, meanwhile, remain limited. Commercial ships can’t carry firearms on board, and, loaded with heavy cargo, they often find they cannot outrun their smaller, more maneuverable attackers. This means they must get creative:
In one instance a tugboat put itself into a high-speed spin and continued until the attackers gave up and left. Other less nauseous ways of preventing boarding include sonic cannon and water guns. Sonic cannon can only point in one direction, however, so an attack by more than one skiff renders them ineffective. The other serious complaint about using non-lethal weapons to deter pirates is the lack of protection they offer to crew members, who become sitting targets for pirates with automatic weapons and rocket launchers while operating the device.
What to do then? Lex hints at the need for some sort of UN-mandated naval police force.
A more final, if more difficult to achieve, solution would be to somehow encourage Somalia to crack down on piracy itself. Interestingly, the only time in recent years piracy virtually dissappeared from the country was during the six months of rule by the Islamic Courts Union in the second-half of 2006. Without a government-sanctioned safehaven to station stolen ships, the pirates were left, err, high and dry.
Arggh.
Related links:
Shiver me freight rates - FT Alphaville
Piracy - FT Lex
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