Maritime Piracy: reliable sources

One of the most authoritative and up-to-date piracy sources we know of is the American National Geospatial-Intelligence Agency (NGA). E.g., their Daily Memorandum/Pacific Edition, such as today’s sample of piracy-related reports:

HYDROPAC 404/2011(61).

WESTERN INDIAN OCEAN.

PIRACY.

POSSIBLE MOTHERSHIP ACTIVITY IN 01-42S 055-02E AT 030739Z FEB. VESSELS ARE ADVISED TO KEEP 100 MILES CLEAR OF THIS POSITION AND TO EXERCISE EXTREME CAUTION. REPORTS TO UKMTO DUBAI, PHONE: 97 150 552 3215, E-MAIL: UKMTO@EIM.AE.

(031432Z FEB 2011)

HYDROPAC 405/2011(63).

ARABIAN SEA.

PIRACY.

M/V ATTACKED IN 16-29N 065-57E AT 031431Z FEB. VESSELS PASSING WITHIN 100 MILES ARE ADVISED TO EXERCISE EXTREME CAUTION. REPORTS TO UKMTO DUBAI, PHONE: 9 715 0552 3215, E-MAIL: UKMTO@EIM.AE.

and their weekly Worldwide Threats to Shipping Reports.

The Chamber of Commerce operates Commercial Crime Services, which is a bit more Internet-aware. CCS offers a Live Piracy Map and a Live Piracy Report. Here’s a sample report from 2 February:

02.02.2011: 0830 UTC: Posn: 20:16N – 063:36E, 225nm ESE of Ras al Hadd, Oman, (Off Somalia).

About eight pirates in two skiffs armed with RPG and automatic weapons chased and fired upon a tanker underway. The tanker raised alarm, increased speed, contacted warship for assistance. The two skiffs kept firing with automatic weapons. Warship arrived at location and the skiffs stopped chasing and moved away. A helicopter from a warship arrived at location and circled the tanker. The helicopter contacted the pirates by VHF radio and ordered them to surrender their weapons. Pirates replied that they would kill the Iraqi and Pakistani hostages held onboard the mother ship if the warships attacked the skiffs.

Wired.com follows piracy, and sometimes produces excellent graphics, like this one on Somalian Piracy (which Wired borrowed from Wikipedia):

While not a reliable source, here is some anecdotal background. In 2009 Wired examined the Somali pirate business model. For interviews with both the Danish shipping CEO and the pirate negotiator, see our earlier dispatch Pirates Have Timesheets on a four-part NPR series. Also Somali pirates launch stock market.

Somali pirates launch stock market

Now that Tyler Cowen has linked the story it seems obvious this would happen:

Somali pirates are raising money through a local equity offering:

In Somalia’s main pirate lair of Haradheere, the sea gangs have set up a cooperative to fund their hijackings offshore, a sort of stock exchange meets criminal syndicate.

Here is one internal account:

“Four months ago, during the monsoon rains, we decided to set up this stock exchange. We started with 15 ‘maritime companies’ and now we are hosting 72. Ten of them have so far been successful at hijacking,” Mohammed said.

“The shares are open to all and everybody can take part, whether personally at sea or on land by providing cash, weapons or useful materials … we’ve made piracy a community activity.”

For the pointers I thank Pin-Quan Ng and Eric Crampton.

Pirates Have Timesheets

Planet Money podcast #33 included an interesting segment on the economics of modern piracy. The investors typically put up $150 to 250 thousand, earning a 30% or more return in less than a year. Beats the average performance of the best venture capital pools. The operation is similar to running a cruise liner, but without the entertainment:

– Even pirates need a business plan. J. Peter Pham, an analyst of African affairs at the James Madison University, looks at the economics of guns, captains, and $2 million dropped into the sea in waterproof containers. Plus, Per Gullestrup, CEO of Danish shipping company Clipper Group, has dealt with pirates first-hand — he says they’re tough negotiators.

Download the podcast; or subscribe.

Read more about the economics of piracy from Peter Leeson, an economist at George Mason University on npr.org

[From Hear: Pirates Have Timesheets]

The next day, NPR had this followup story:

Yesterday we heard from Per Gullestrup, a shipowner, who had a ship hijacked last November. When he ironed out the ransom details with the pirates, he had 3 demands:

1. The pirates showed “proof of life” (that the crew was still alive)
2. That they could drop the money from the air (faster than getting it there in a tug)
3. That the pirates fill up the ship with fuel.

Looks like the Stolt Strength, a Philippine tanker that was just released 5 months after pirates seized the ship, is probably wishing it demanded number 3 too. Dr. J Peter Pham just sent me a note saying it is dead in the water.

He writes:

It’s turning into a tragic comedy…I received word a couple of hours ago that the Stolt Strength, the phosphoric acid-carrying tanker that was let go two days ago was dead in the water 60 nautical miles off Somalia. They had consumed all their fuel during the five months in captivity. A German naval vessel checked in on it shortly after its release, but did nothing other than give the poor Filipinos enough food for three days. The owners are scrambling to get fuel up on a tug boat from Mombasa, but the crew is in a panic (I spoke with the master via satellite phone), fearing another pirate attack (except for the lack of fuel, the boat is an inviting target since its owners were willing to pay $2 million for its release). The problem with getting a tug boat up there is that the tug itself would be a target since the minimum distance from shore in international advisories is 200 nm. On the other hand, if someone doesn’t get the Stolt Strength out of there and its drifts so far as to run aground, it will be an environmental disaster.

[From Stranded Near Somalia]