The Economist reported this week on the rise of pirates in Southeast Asian waters. With one third of the world’s freight traveling through these waters, the region would naturally be a hotspot for pirate activity. And while Malaysia managed to rein in the issue over a decade ago, hijackings and thefts have been cropping up further east, in Indonesian waters. In 2014, there were 15 hijackings. There have been 9 in the past six months alone. With Somali pirate activity curtailed due to international efforts, Southeast Asia is now the world’s worst place for piracy.
What does this mean for manufacturers? There is chance of a rise in insurer premiums for ships that travel that area, which could lead to increased shipping costs. However, when it comes to fears of lost inventory, product manufacturers need not fret. Pirates are targeting chemicals and fuel from slow moving tankers, hoping to siphon off materials to sell on black markets. The scalawags have shown little interest in taking crew members hostage – they spook easily when confronted by authorities, and generally do not board ships in search of cash or products.
The problem lies with chemical and fuel shippers. Many speculate that the pirates are coming from small Indonesian fishing villages, where overfishing has left honest employment hard to come by. In addition, Indonesia has a poor reputation in terms of policing their own waters, meaning that Indonesian pirates have an easier time getting to and from tankers. According to the Malaysian Insider, piracy in the area is up 700 percent from five years ago.
Deaths and violent attacks are far rarer in the recent pirate attacks than in Somali waters. Add the speedy arrests of pirates (such as the ones involved in the botched hijacking of the Orkim Harmony) and the situation is hardly as dire as it was near Somalia. However, shipping companies should be aware of the risk, and manufacturers should keep an eye out for increased shipping rates. If you’re a chemical company or if you rely on chemicals shipped from Asia, make sure you have a contingency plan. Hijacked ships can face weeks of delays and cost millions of dollars. According to the Economist, the pirate activity is rooted in Indonesia’s dwindling maritime economy. Things might get worse before they get better, but a Captain Philips remake still looks unlikely.
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