The Price Of Piracy

From Wall Street Journal:

The costs are ultimately passed to consumers.

There is something about the image of a pirate as a lovable rogue, Jack Sparrow style, that probably colors the way modern-day piracy is perceived. When combined with the relatively little public awareness of the shipping industry, there has been scant attention paid to this scourge of the seas. But today, with both of the world's major shipping routes between Europe and Asia under threat, the world is starting to wake up to the problem.

Most consumers don't realize the tremendous price they pay for piracy. The Suez Canal via the Gulf of Aden is the main route for ships plying their trade from Asia to Europe and the East Coast of the United States, laden with goods as varied as Christmas toys, clothing and cars. The increased risk of hijacking in the area, mainly from pirates based in Somalia, has resulted in higher insurance premiums, crew costs and security costs. All of this makes the voyage more expensive, and these costs get passed on directly to consumers. In the first nine months of 2008, there were 199 maritime attacks, according to the Piracy Reporting Centre of the International Maritime Bureau. This includes 31 hijackings, 26 of which occurred off Somalia during the third quarter of this year.

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