Somali piracy has had a substantial influence on international commerce, notably in the marine industry and associated sectors. The following are some ways that Somali piracy has impacted global trade:
1. Shipping expenses: The requirement for extra security measures as a result of Somali piracy has raised shipping expenses. To reduce the possibility of pirate assaults, shipping corporations have had to make investments in security people, tools, and insurance. Prices for items sent by water eventually increase as a consequence of these expenses being passed along to consumers.
2. Disruption of Trade Routes: The Indian Ocean and the Gulf of Aden have been affected by piracy in the seas off the coast of Somalia. These routes, which link Asia, Europe, and the Middle East, are essential for international commerce. Because of diversions and lengthier routes brought on by the fear of piracy, travel times and fuel consumption have increased.
3. Rising Insurance Premiums: Because there is a greater chance of pirate assaults in the area, marine insurance rates for ships transiting through the impacted regions have increased dramatically. Higher insurance prices have a negative financial effect on shipping firms and may even make them stop doing business in the area.
4. Loss of Port Revenue: Because of the risk of piracy, several shipping firms have stopped utilising the ports in the area, which has lowered the amount of money that the local port authorities get. In coastal areas, this loss of commerce may have a detrimental effect on employment and economic growth.
5. Negative Effect on Fishing business: Somali piracy has also had a negative impact on the local fishing business. Piracy discourages local and foreign fishing boats, which reduces fishing activity and disturbs the way of life for coastal populations who rely on fishing. Food security issues and economic instability may result from this.
6. Security Expenditures: To fight piracy in the area, governments and international organisations have been forced to spend a significant amount of money. The budget needed for naval patrols, information collection, and coordinating operations takes money away from other crucial projects.
7. Reputational harm: Somali piracy has drawn unfavourable media attention and painted the impacted areas as dangerous and high-risk places to do business. This reputation may discourage prospective firms and investors from making trade or investment decisions in the area.
Some of the steps done to prevent piracy include increased ship security protocols, international naval patrols, and the prosecution of captured pirates. Piracy occurrences off the coast of Somalia have recently decreased, yet this ongoing menace still has some effect on global commerce.