Following the War in Somalia in the early 2000s, the Horn of Africa saw a surge in piracy, as Somali pirates took advantage of the unstable climate and began hijacking shipping vessels for ransom.
At the height of these attacks in 2011, there were 237 hijacks, costing the global economy roughly $7 billion. In response to the crisis, more than 20 countries formed counter-piracy operations to help prevent these attacks, which have been successful until recently.
However, now with those security measures redirecting their efforts toward the Houthi attacks in the Red Sea, Somali piracy is having a resurgence.
Understanding the Red Sea Crisis
In retaliation against the Israel–Hamas war, the Iran-backed Houthis began attacking Israel in October 2023. While the Houthis have said their attacks are directed toward merchant and naval ships associated with Israel and its allies, such as the U.S. and Britain, in reality, many of the targeted vessels have had no political link to the conflict.
Since November, the Houthis have launched more than 40 attacks on commercial ships in the region, making the Red Sea an increasingly hostile environment in need of more substantial military involvement and security measures.
A Resurgence in Somali Piracy
With military efforts overwhelmingly preoccupied by the disruptions in the Red Sea, Somali pirates are seeing it as an opportunity to resume their illegal activities.
Within the past few months, there have been more Somali attacks in waters off the Somali Peninsula than at any other time in the last six years. In fact, there have been at least 20 attempted hijacks in the region since November 2023 alone.
The most recent attack took place on March 12, when a group of heavily armed Somali pirates hijacked the Bangladeshi-owned bulk carrier, Abdullah, holding 23 crew members captive for ransom.
The Impact
Due to the threat of both the Houthis and Somali pirates, the Horn of Africa is becoming increasingly dangerous for shipping containers. The crew members’ lives are at risk, and the cargo is at risk, too, which spells out disaster for the global supply chain.
Roughly 12% of global trade passes through these waters, but because of the current dangers, many shipping containers have stopped using this passageway while others are rerouting further south away from the conflict. As a result, container shipping through these hazardous waters has decreased by 30%, causing significant delays and increased shipping costs. These disruptions may also limit the availability of goods and cause gas prices to surge.
Insights from Falvey Insurance Group
When it comes to piracy prevention, shippers often lack direct influence over vessel operators and crew. However, staying informed about piracy incident rates along different shipping routes empowers shippers to choose safer options when contracting with steamship lines. Assessing the risk associated with shipping lanes should be a key aspect of any company’s supply chain risk management strategy, which includes thorough vetting of logistics and transportation service providers.
As part of this vetting process, asking the right questions is essential for effective vendor management. A comprehensive risk management program should identify potential threats within the supply chain and implement appropriate mitigation measures and countermeasures.
Piracy Protections
Pirates pose a real threat to the shipping industry, and Falvey Insurance Group is here to help protect cargo against piracy and other exposures. We’ll go the extra mile to ensure you have the coverage you need to protect your cargo, anywhere in the world, in any situation. Contact us today to find out more.
