While “International Talk Like a Pirate Day” is a light-hearted poke at the past, pirates are no longer a romantic notion to be celebrated.
Until a few years, most of us thought of piracy as a quaint problem from the distant past – a romantic time for most of us. From a historical perspective, piracy in the USA is most associated with the period when Thomas Jefferson was sending American warships to the Barbary Coast to fight and payoff pirates that were disrupting American trade.
However, in the last ten years piracy – largely centered off the horn of Africa has again risen to the forefront – no longer a romantic notion of times past. Today’s pirates were born of a vicious brew of our contemporary world – rising global trade, technological advancement, post-Cold War politics, poverty, violence and terrorism.
One may not consider it the foremost supply chain risk, but piracy endangers civilians, disrupts economies, encourages corruption, and could trigger an environmental disaster. Acts of piracy — boarding a ship to commit theft or other crimes — totaled 2,463 incidents between 2000 and 2006 according to a report published by the RAND corporation. These trends are the result of a range of phenomena, including a surge in maritime traffic and a decline of coastal security. The overall problem is almost certainly even greater than the figures suggest as researchers suspect nearly half of all piracy attacks are not reported, usually because of fears about subsequent investigation costs and increases to insurance premiums. Pirate attacks have also risen steadily in 2009 and 2010 in spite of international efforts to protect shipping.
From a supply chain point of view, there are two key risks to manage. The most remote but most serious risk is the potential for a port or majoring shipping channel blockage due to the sinking of a ship or open armed conflict. While this type of risk is not high, the consequences for companies that depend on specific suppliers or trade routes is huge. The second type of risk – disruption of a specific shipment – must be considered in light of key resources with long-term lead-times and limited alternatives. For these products, contingency plans must be considered. Weathering supply chain risk – like managing piracy – is about understanding and tracking the fundamentals of your supply and demand chains and developing contingencies in your Sales and Operations (S&OP) plans for managing worst case events.