Wired has another article on the economics of piracy today, a theme I can't resist. Today's piece by David Axe is on the economics of protecting shipping and notes that mercenaries are more effective - and a lot cheaper - than the U.S. Navy.
The days are probably numbered for 10,000-ton Burke-class destroyers chasing down illiterate Somali thugs sailing in souped-up fishing boats called “skiffs.” The future of the piracy war could belong to Dave and guys like him, standing lonely guard on gigantic, fortified commercial vessels speeding through pirate-infested waters.
Destroyers are expensive and ill-suited to long, tedious piracy patrols. Armed guards are comparatively cheap and, as Dave proved that April morning, highly effective. Sure, guards come with their own limitations and complications. But hiring professional ship-protectors beats the alternative: an endless, pointless military exercise.
The Wired story is lensed around a successful piracy defense on an oil tanker sporting a squad of ex-Royal Marines but includes detailed business and economic analysis.
There is even a section on how reputation risk from hiring Xe (nee Blackwater) slowed the growth of armed ship defense until recently. I blogged Fortune's coverage of Blackwater's rebranding as an extreme version of reputation management last year, marvelling that the playbook for recovering from employees implicated in a multiple homicide were the same as a customer service problem or accident.
What Wired showed today is that it wasn't enough - and that the reputation damage went beyond Blackwater to infect the whole industry. We'll never know how many had to endure being Somali hostages as a result.