**3.5. Piracy**

164 Risk Management – Current Issues and Challenges

countries [40].

the authorities.

illegal product is discovered.

the freight routes and port activities in the same way as legal supply chain does. Among the receiver countries, Europe and the US are favorites, just as Africa is the favorite for transit activities. Confiscated products that have not been produced in Africa, like jewelry and CDs, show this, because the African market does not have the ability, in general, to buy that type of product. Countries in Central and South America act like magnets for counterfeited products. Purchases of counterfeited goods to launder money occur in larger numbers there than anywhere else in the world [40]. Large stocks of illegitimate products are easily shipped from parts of South America to Central America, where they are big consumers of that type of product. Organized crime also uses Central America as the base for shipments of illegitimate goods to North America. The situation in Europe makes it the most lucrative market for counterfeited products. The types of confiscated goods at the external borders of the EU are different from other places in the world. This indicates that the dealers of counterfeited products adjust products to each market's special condition. They look at the fashion, culture, and buying habits of individual

Both types of Illegal supply chains use the international flow of containers to transport their products all over the world, regardless if the product is counterfeited or an illegal drug. Criminals try to delude customs' watchfulness by "breaking" their way through from the area of production to the area of supply, and avoiding direct paths that are well known to

A problem linked to smuggling is the manufacturing of products without intellectual rights, or the production of counterfeited goods. Everything that has been produced can be reproduced by someone else. In order to bring counterfeited products from the production site to the end user, they may have to cross several national boundaries as well as intellectual property legislation. The counterfeiting business evolves constantly within current trends and technologies. The production and distribution of illegal products is performed under the risk for detection and this diversity leads to a different design of the supply chain [41]. The location of the production facilities is subject to the risk of discovery. Normally, illegal production units are placed where the risk for detection is low, in line with the normal legal business problem of where to produce according to different types of costs and quality aspects. Then, the illegal products are distributed by trade routes and port activities in the same way as legal products [42]. The pollution of illegal products in the legal transport network is a serious problem. The most common countermeasure against smuggling is the inspection of cargo carriers when they cross a national border. The mere existence of these inspections creates disturbances in the transport network, even if no

The counterfeiting business evolves constantly within current trends and technologies. The illegal products are then distributed by trade routes and port activities in the same way as legal products [42]. According [43], the discourse on the gray market is filled with the idea of a criminal underworld in order to separate it from the legal/normal upper-world. In reality is it very difficult to establish the underworld/upper-world image. The legal The modern types of pirates do not act officially of any specific courtiers' order but research has indicated relationship between piracy and weakness of central governances [44]. In essence is piracy an international crime against all states and the perpetrators can be brought to justice in all everywhere [45]. In recent years has the threat from piracy against sea shipment (direct threat) and also against the different supply chains utilizing sea shipment (indirect threat) received increasing attention [44, 46, 47, 48]. The real increasing threat from pirates, primary at the horn of Africa [45, 47], has resulted into both a changes in shipping routes (Sullivan, 2010) and also a naval response from several countries [46] that are depended on a smooth passage of cargo carrying ships. According [49], was there 489 attacks last year (2010) and over a twelve year period was there about 347 attacks/year globally [43]. Piracy is an increasing problem, especially near Somalia [48]. The pirates are changing their tactics and targets to use more sophisticated weaponry and apply more advanced techniques, all in order to improve their own success ratio. Table 2 presents the current trends and patterns in piracy.


**Table 2.** Trends and numbers in piracy 2006-2010 [48]

As stated in table 2, piracy is an increasing threat and especially alarming is the increasing use of violent and kidnapping of crew members. According to [48], piracy cost the maritime industry between 7 - 12 billion dollars a year. In addition to this shall also the cost for rerouting to avoid pirate infested waters, ransom payments and support from various organizations be added.
