The impact of piracy on maritime trade and fishing industry Research Paper

The impact of piracy on maritime trade and fishing industry - Research Paper Example The researcher states that at the close of the year 2010, there were at least 600 seafarers who were captives of pirates in international waters. Piracy is a crime that without doubt has far reaching effects on one of the largest trade transport network. It is clear that a lot of money is lost as a result of piracy but the question that begs is, exactly how much is lost? According to Bowden, piracy costs at least seven billion dollars a year although the figure could go even up to twelve billion. We are all affected by maritime piracy whether directly or indirectly. In fact, even the countries that contribute to piracy like Somalia still face the negative impacts of piracy. For starters, there is a huge humanitarian crisis in the region as a result of the hijack of ships. Most of the ships that are hijacked are often taking food and medical supplies to hunger stricken people in Somalia and other neighboring countries in the region. Sea transport is the leading in freight and cargo ha uling across nations. In fact It is estimated that maritime trade accounts of at least 80 percent of the world’s trade. This is one of the oldest forms of transport but it has consistency grown over the years. Maritime transport has in fact doubled every decade ever since the Second World War. The onset of a globalised market has been one of the main catapults that has steered maritime transport to the position it enjoys today. In recent yeas however, one of the oldest crimes against this mode of transport has revived and increased steadily. Piracy is now threatening this trade especially in the horn of Africa where pirates operating from Somalia have perfected the art of hijacking ships. Since sea transport is very important for all of us, there is a need to compute just how much piracy costs the trade instead of dealing with mere estimates. Organizations have tried doing some research aimed at getting the most reliable estimates but the hugest challenge has been gathering o f reliable data owing to logistical challenges. There are a variety of scholars that have done an analysis of the costs of the maritime trade. However, they have not looked at both sides of the coin. The most commonly computed cost of piracy in maritime trade is the cost of the cargo that is lost together with the ransom fees that are paid t the captors I order to release the crew and the ships. However, there are many other costs involved that need to be considered as well. This paper will start by looking at the primary effects of maritime piracy but it will also go a step further and discuss the other secondary effects of maritime piracy that have been largely ignored by many people. Past initiatives There have been some initiatives in the recent past that were geared at trying to compute the cost of piracy on maritime trade. The most notable of these are Peter Chalk’s RAND institute in collaboration with the International Maritime Bureau which together put a rough estimat e in the range of one to six billion dollars per annum (Chalk, 12; Rosenberg, 222). However, most of the studies have concentrated on the first order costs of piracy namely, the ransoms that have to be paid to free the captives, security mechanisms that have to be beefed and the increased naval costs. However, there are not many that have considered the secondary costs which could be even higher, Secondary costs of piracy includes the inflation on commodity prices as well as the international investment in regional economies among others. The bottle necks in computing the real cost According to a recent actuarial scientific study on maritime trade and piracy, the challenge to the actuaries involved in pricing maritime insurance products is considerable†¦information about the attacks issued by shipping owners is often vague. Understandably, shipping owners don’