January 31, 2024

Impact of Piracy on International Trade and Shipping

This article is written by Ms. Tanishka Nigam, a 3rd year student of Narsee Monjee Institute of Management Studies, Bangalore.

 

ABSTRACT

This article explores the many consequences of piracy on a worldwide scale, with a special emphasis on its significant impact on international trade and shipping. The paper investigates the complex relationship between legal frameworks and economic outcomes resulting from piracy episodes, using a comprehensive methodology.  The essay examines the current international marine laws and agreements that aim to address piracy, evaluating their efficacy and finding possible deficiencies in the regulatory framework. This elucidates the difficulties encountered by countries in implementing measures to combat piracy, underscoring the need of cooperative endeavours and global coordination. The research examines the economic consequences of piracy on international trade routes, shipping operations, and the general economic stability of the regions impacted, both directly and indirectly.

 

INTRODUCTION

The persistent threat of piracy to maritime operations has far-reaching consequences on a global scale, outweighing the immediate dangers to seamen and ships. With a focus on the far-reaching effects on international trade and shipping, this article delves deep into the web of problems caused by piracy. Through the integration of legal and economic perspectives, this research seeks to examine the complex character of pirate events and assess their influence on the interconnected realms of shipping and trade. Piracy has always been an issue in the maritime world, interfering with commerce and other maritime activities. Even if contemporary piracy doesn’t quite conjure images of daring buccaneers, the ways it is practiced now pose serious threats to international maritime networks and the security of global trade. Piracy disrupts the established order of maritime trade by seizing ships, demanding ransom, and violently attacking seamen. This creates an unpredictable situation that impacts the global economic system in a significant way.

There is a complex web of international marine treaties and regulations that must be navigated in order to fight piracy legally. These rules, aimed at addressing the evolving character of maritime dangers, often face challenges when put into action and enforced. To combat piracy, this report thoroughly examines existing legal systems and stresses the need for a worldwide plan to increase maritime security. By analysing the pros and cons of the current legal system, we want to provide useful insights into how it may be improved to better address the complexities of modern piracy.

Piracy affects the economy in ways that go beyond the obvious monetary losses sustained by transportation companies. When security measures cause costs to rise and regular trade channels are disrupted, it has a domino effect on the global economy. To quantify the overt and covert monetary effects of piracy, this research makes use of economic analysis and case studies. We want to highlight the necessity for proactive measures to safeguard the economic stability of regions vulnerable to pirate hazards by assessing the economic impact on industries and nations affected by piracy.

 

MARITIME PIRACY AND TRADE

International trade and coastal communities have long been plagued by maritime piracy (e.g., Accetture et al., 2020). Ignoring the pandemic-induced port closures, the Ever Given’s blockage of the Suez Canal, and the conflicts between rival governments in the Strait of Hormuz and Southeast Asia (Cosar and Thomas 2021), it might not be immediately obvious that it poses the greatest threat to global transportation networks that modern-day piracy is still a major threat to international trade lanes. In 2020, there were 229 incidents recorded by the International Maritime Organisation (IMO). As a result of what happened, over a hundred people were kidnapped, and some of them were hurt.  Pirate attacks not only put the crew in risk, but they also cause the ship to be delayed and harm the cargo and vessel itself. The shipping industry responds by rerouting its ships to less expensive routes or by purchasing protective equipment like electric fence, razor wire, water cannons, armed guards, and so on (Bendall 2010). Piracy also has hidden costs for shippers, such as higher insurance premiums and labour costs. All of these costs have an economic component; they raise the price of shipping goods, which in turn affects the prosperity of trading nations.

 

Attacks by pirates are not evenly distributed over the world’s seas; they occur more often in the coastal areas of underdeveloped countries than in those of wealthy nations. The distribution of pirate attacks from 2015 to 2020  With 385 occurrences, Western Africa was the most common location for attacks. The South China Sea and the Malacca Strait each saw 344 and 283 assaults, respectively, after this. In the last ten years, piracy has become an increasingly serious problem, especially in the Indian Ocean and the Arabian Sea.

Based on the findings of professional groups, the increase in marine pirate dangers and stakes may be attributed to a number of different factors, including the following:

Take into account both geographical and cultural factors  The practice of piracy is strongly rooted in the culture of a number of places, particularly those that are located near the China Sea. The coastline, the narrowness of the straits, the existence of hundreds of islands that collectively produce a large number of markers, and the proximity to a number of territorial waters that are next to one another are all factors that contribute to this geographical structure. Concerning matters relating to politics and the law: The geopolitical instability that exists in certain regions may be attributed to a number of factors, including the presence of violent separatist groups, linkages to organised crime, and problems with an inadequate legal framework. Variables pertaining to the economy and society Corruption has increased on a global scale, business has become more globalised, and economic growth, particularly in Southeast Asia, has led to an increase in sea traffic, which gives sufficient material for accessible and profitable isolated targets. Aspects to take into account concerning technology Pirates have gained a considerable edge in terms of movement, weaponry, and the ability to locate their positions as a result of the technological improvements that led to the loss of crew on commercial ships.

Despite the fact that maritime piracy has a comparatively low mortality rate, the stakes are exceedingly high in terms of both strategy and finances. Some of the most serious risks are the interruption of a critical hydrocarbon supply line, the occurrence of environmental disasters that are catastrophic, the use of hijacked ships as weapons by terrorists, the disruption of commercial traffic, and the economic losses that arise from these events. The annual financial losses that are anticipated to be incurred as a result of maritime piracy amount to several billion US dollars. As a consequence of this, marine insurance premiums are projected to increase, which would in turn cause transportation costs to increase

PREVENTIONS OF PIRACY

One of the greatest invention for the prevention of piracy is the Ship Loc system, a vessel monitoring system, was set up by a joint effort between the pirate prevention centre and the operator of satellite tracking. This system keeps track of the ship’s location and gives a general idea of the voyage and the port’s handling of the vessel. There are a lot of ships in our fleet via this system’s use. Providing ship owners and managers with worldwide alert and cruise control, ShipLoc meets all of the requirements set out for Ship Security Alert Systems (SSAS) by the International Maritime Organisation (IMO). As stated in Article XI-2/6, the device will relay warning signals from the ship to land in the case that the vessel is attacked by pirates or terrorists. Two phases of SOLAS’s implementation will start after its adoption in December 2002 by the International Maritime Organisation (IMO). The installation of SSAS is mandatory for all vessels with a gross tonnage over 500, as per the requirements of articles (July 1, 2004, and July 1, 2006).  Who knows? Maybe the ship is hiding a tiny, cheap transmitter. Its location and whether or not the team placed it are mysteries. There are safety-related considerations for this. The owner of the ship knows exactly where his vessels are thanks to ShipLoc and a networked computer. The ShipLoc system is designed to be extremely helpful in the event that a ship is kidnapped or taken over by a criminal. This device can double as a management tool and keep tabs on ships as they sail across the globe. 

The anti-pirate water hoses are controlled by saltwater that is cold and high-pressure, and they continue to function until the ship is out of harm’s way and the pump that controls them is turned off.  The water jets are extremely effective for their purpose since they rotate at a speed ranging from three to six revolutions per minute. By placing a block, the maximum water pressure drop has been decreased to a more manageable level. The top surface should be misted. For the installation of the sprinklers, you won’t require any additional chemicals or steam, and you have the option of installing them either permanently or temporarily. 

The primary objective of the nonlethal electric barriers encircling the ship is to deter pirates. A 9,000 volt fence is used to breach the barrier. Due to the electrification, the thieves will be incapacitated rather than being able to board the ship. The light illuminates and the whistle emits a sound immediately upon entering the barrier. Fences may be rapidly folded up and down in case of an emergency. More precisely, some doors open quite easily when it is necessary to recover navigators, lower the escalator, or deposit lifeboats and lifeboats. The crew member is capable of removing and reassembling the barrier. Within a short span of time, the crew is capable of constructing the barrier while the vessel nears the area infested with active pirates. Once the ship is no longer in danger, the skipper might choose to leave or continue the journey in case of bad weather.

 

CONCLUSION

In conclusion, this essay provides a comprehensive analysis of the numerous consequences that are caused by piracy all over the world, with a particular emphasis on the significant impact that it has on international trade and shipping. The research sheds light on the intricate relationship that exists between legal frameworks and the economic repercussions that are a direct result of acts of piracy. It also sheds light on the challenges that nations have when attempting to implement effective methods. This study examines the existing international maritime rules and agreements, evaluating how successful they are and identifying any potential deficiencies in the regulatory framework that may exist.

The findings highlight the importance of international collaboration and coordinated efforts in order to combat the persistent threat that piracy poses to maritime activities. In order to combat piracy in a legal manner, it is necessary to successfully navigate the complex web of international obligations and regulations. A worldwide plan to boost marine security is proposed in this article, as well as recommendations for modifications to the existing legal framework. These recommendations are made in order to successfully face the shifting problems that are provided by contemporary piracy. The article places a strong emphasis on the considerable influence that piracy has on global trade routes, marine operations, and the overall economic equilibrium of the regions that are affected by it. There are considerable disruptions caused by piracy, which lead to increased costs for transportation companies. This, in turn, has an effect on the pricing of the goods that are delivered, and eventually, on the economic well-being of nations that engage in trade. Both the economic analysis and the case studies highlight the importance of taking preventative measures in order to safeguard areas that are vulnerable to the dangers posed by pirates.

 

In the section that discusses maritime piracy and commerce, the difference in the global prevalence of pirate assaults is brought to light. The programmed reveals that less developed coastal regions see more regular occurrences of pirate attacks. There are a number of elements that contribute to the growth in the threats that are posed by pirates. These include geographical and cultural considerations, geopolitical instability, economic progress, and technological advancements. In this article, the author draws attention to the significant dangers that are now present, including the disruption of important supply channels, ecological disasters, the chance that terrorists would utilise vessels that have been seized, and significant financial damages. In light of this, the significance of putting into effect effective prevention measures is also highlighted.

Examples of imaginative approaches to deter and combat piracy include the ShipLoc system, anti-pirate water hoses, and nonlethal electric barriers. These preventative efforts are examples of inventive methods. The utilisation of these technologies can contribute to the enhancement of maritime security, the protection of vessels, and the guarantee of the well-being of crew members.

Additionally, the report emphasises the interconnectedness that exists between piracy, international trade, and marine security, and it advocates for a policy that is both comprehensive and collaborative in order to address this global problem. The findings of the research provide policymakers, legal authorities, and industry stakeholders with valuable information that can be used to facilitate the development and implementation of effective policies to combat piracy and lessen the enormous impact that it has on the economy of the entire world.

 

REFRENCES

  • The Maritime Dimension of International Security: Terrorism, Piracy, and Challenges for the United States, Peter Chalk, ISBN 9780833042996, 1st ed.,(2008)
  • This article was originally written by Jo Adetunji published on theconversation.com the link for the same is herein. https://theconversation.com/somali-piracy-once-an-unsolvable-security-threat-has-almost-completely-stopped-heres-why-213872
  • This article was originally written by Division for Ocean Affairs and the Law of the Sea, Office of Legal Affairs, United Nations published by un.org the link for the same is herein. https://www.un.org/depts/los/piracy/piracy.htm
  • This article was originally written by Shera Aurora, Krupa Karthikeyan, Fauzia Khan, Florian Soezer, Srisamvruta Sridhar, Daniella Twekise, Eva Wainwright and Alireza Zare published on oxjournal.org the link for the same is herein. 

https://www.oxjournal.org/international-law-of-the-sea-modern-environmental-looting-piracy/

 

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