TPT May 2024

INDUSTRY 360

Global logistics: piracy on the rise again, unlikely to abate Latest headlines highlight Middle East incidents, but Pacific trends go unreported

By Eric Lundin sales engineer and marketing manager, T&H Lemont Inc

High crimes on the high seas Piracy is nothing new. Taking over a ship and stealing the cargo has probably plagued merchants since the earliest commercial vessels set sail. Written records from 3,500 years ago describe piracy in the Mediterranean Sea and the Aegean Sea, and these days, opportunities are essentially everywhere. According to the United Nations Conference on Trade and Development, exports in 2022 amounted to $24,926,251,000,000, so the potential for piracy is vast. Piracy can take place essentially in any place, at any time, under any circumstances. The only real requirement is a vulnerable ship laden with cargo. That said, piracy usually is driven by poverty; takes place in narrow straits where evasive manoeuvres are unlikely to be successful; and thrives where protection is scant. Like Yemen, Somalia meets all of these guidelines. Somalia’s last fully functioning government was toppled in 1991, and the nation rapidly descended into a state of minimal governance, which persists to this day. The gross domestic product per capita was less than $500 in 2022, a poverty level so extreme that the country consistently ranks among the 20 or so least wealthy nations in the world. In this environment, piracy flourished. Strategically positioned on the Gulf of Aden – opposite Yemen, that is, and not far from the Gate of Tears – Somalia provided just as much opportunity for Somali pirates as Yemen does for the Houthis. Statistically, the seas are actually much safer now than they have been in the last 15 years. The International Maritime Bureau tallied 445 incidents in 2010; by 2022, piracy hit a low point at 115. In 2023 it increased a bit, to 120. According to the Progressive Policy Institute, Somali piracy was the reason for the 2010 peak. An international enforcement effort was the reason for the drop. Somali piracy was not just well organised but industrial in scale, using fishing vessels to carry speedboats to carry out the attacks. Pirates took control of merchant vessels, sold the cargo and kidnapped the crews for ransom. It took a sustained international effort several years to turn the tide, and these days acts of piracy are mainly crimes of opportunity. So, although the total number of piracy incidents is much lower than before, the tally, is still about one incident every three days, which illustrates the persistence of this problem. Because these crimes aren’t concentrated in one area, elimi nating piracy is essentially impossible. In other words, modern piracy is here to stay.

News articles about piracy appeared in the headlines early in 2024 when several attacks on merchant shipping vessels took place off the coast of Yemen. Undertaken by the Houthi regime that forcibly governs Yemen, the attacks reflected the Houthi government’s political alignment. Backed by Iran, the Houthi’s goal is to punish Israel for its incursion into Gaza. The Houthi government claimed that it would keep up the pressure until the hostilities in Palestine ended. Yemen’s location is strategic in that it includes the Gate of Tears, which comprises two straits that separate the Gulf of Aden from the Red Sea. Restricting traffic in these straits means restricting access to Israel (to the northeast) and restricting access to the Suez Canal and the Mediterranean Sea (to the northwest). Rerouting a ship to transit around the southern tip of Africa, the Cape of Good Hope, adds at least 10 days to its journey. The Houthi attacks generally don’t resemble traditional piracy. While Houthis have boarded and seized at least two merchant vessels, Galaxy Leader and Central Park, they commonly interfere with commerce through damage, disruptions and delays. The Houthi government claims that it targets only ships linked to Israel and key allies, the US and Britain, but in reality it has fired on vessels from many other nations, and it has managed to sink several. Regardless of whether these acts constitute piracy by its conventional definition, they are illegal and they have had global repercussions in the shipping and logistics industry. These incidents have the potential to affect nearly all goods producers, including those in the tube and pipe industry.

Figure 1 : Over the last 25 years, the value of all exported goods has essentially doubled, which doubled the opportunities for piracy Source: Statista Inc.

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MAY 2024