Addressing Piracy in Maritime Shipping

Maritime shipping is a critical component and driver of global economies. Millions of tons of goods are transported via ship each year. The industry experiences a wide array of risk exposures in their operations; one of the significant risks is that of piracy. While the idea of pirates may seem straight out of a swashbuckling movie from the past, it is a very real concern that puts ships, cargo, and lives at risk. Commercial marine insurance stands as the foundation of risk management. To supplement the protections of this insurance, shippers must understand piracy risks as industry groups develop solutions to address the growing problem.

Piracy on Global Shipping Routes

Merchant vessels have experienced a sharp uptick in pirate attacks over the past decade. In 2011 alone, nearly 450 attacks occurred, and 45 merchant vessels were hijacked. According to the World Shipping Council, 12 ships and more than 170 maritime employees are currently being held hostage by pirates.

Piracy hotspots off the western coast of Africa received greater attention in 2021 when a container vessel became grounded in the Suez Canal in Egypt. Facing significant delays and billions of dollars in unexpected expenses due to the inability to transit the Canal, shipping companies rerouted vessels around the Cape of Good Hope on the southern tip of the African continent. This route put vessels at risk from Somalian pirates, who are responsible for hundreds of incidents, including vessel hijackings and crew kidnappings.

The damage or loss of vessels to piracy can mean millions of dollars in losses for global shippers. Add in the lost cargo and the potential for crew injuries and deaths due to pirate attacks and it becomes clear that solutions beyond commercial marine insurance are warranted.

Industry Groups Step in to Find Solutions to Pirate Threats

A loose coalition of shipping industry groups and government agencies have carefully monitored piracy in commercial shipping in an attempt to find solutions. Partners in this group include the World Shipping Council (WSC) as well as:

• International Chamber of Shipping
• International Maritime Organization (IMO)
• North Atlantic Treaty Organization (NATO)
• United States Navy
• International Transport Workers’ Federation (ITWF)

In March 2020, a group of prominent international shipping organizations and the WSC published a guidebook for shipping owners and operators. The guide provides details on assessing piracy threats, planning for ship self-defense and avoidance, reporting incidents, and what ship captains and crew must do if attacked.

The IMO also approved guidelines for ship owners and operators regarding the deployment of armed security personnel aboard ships operating in high-risk maritime environments, particularly near Africa, the Indian coastline, Central and South America, and areas of southern Asia near Singapore and the Philippines.

The ITWF spearheaded a campaign known as Save Our Seafarers, calling upon governments to do more to combat piracy. With government assistance, shipping organizations hope that greater protection against pirate attacks will become available and prosecution of criminals will become more prevalent. To supplement the protections of commercial marine insurance, shippers must implement safety-oriented practices and procedures to minimize piracy risks. These measures include:

• Creating piracy deterrents by using private security teams aboard vessels.
• Avoiding high-risk areas whenever possible.
• Providing piracy response training to ship operators and crews.
• Improving piracy reporting mechanisms.
• Creating registries of regional and international contacts if an attack is experienced.

Commercial marine insurance protects against a broad range of operational and liability risks. Alone, however, this insurance may not be sufficient to provide seamless coverage against pirate activity. Protecting shipping interests against maritime piracy is an important step in maintaining the safety and efficiency of global shipping, allowing this critical economic driver to continue performing their essential role in international transport of goods.

About Merrimac Marine Insurance

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