Somali Pirates Practice Inventory Management

Photo: kenhodge13

Somali pirates are apparently getting more sophisticated in their business practices: “A group of Somali pirates announced Sunday that they’re cutting their asking prices for hostages by 20 percent — to speed up the negotiation process, make room for more hostages and take in more cash,” reports Wired.  “We want to free ships within a short period of time instead of keeping them for a long time and incurring more expenses in guarding them. We have to free them at a lower ransom so that we can hijack more ships,” one pirate spokesperson told Reuters.  The discount, however, won’t apply to “the bulk ships [the pirates] are sure can bring bulk money.”


Chris

I know this is a serious topic but for some reason this article just amuses me

Kevin in McLean, VA

What inventory accounting method are they using? FIFO, LIFO?

Richard B.

Is this inventory management, or value pricing? Sounds more like they are offering lower prices to try to 'lure in' more customers who might be able to pay lower prices for their captive loved ones. Notably the pirates are not lowering prices for their largest-value inventory, the bulk ships, because that market segment will pay higher prices. Given the low cost of operations in Somalia, it would seem that keeping 'inventory' on hand would not be as much of a factor in their business as taking more ships, and chances of getting more ransom money. Besides, they probably need to keep 'inventory' on hand as human shields.

sam

I feel terrible for those being held hostage. Who knows what they go through? Still, I think we are taking the wrong approach. These kinds of actions are an act of war. We need to send the biggest and baddest warships to the area. Indiscriminately start killing anyone that looks like a pirate. Once they are all thoroughly dead; we leave. No rebuilding pirate boats or other feel-good crap. It sounds cavalier and (downright American) mean, but that is how you get people to leave your citizens alone. This is what our military is for! Not doing humanitarian work rebuilding random countries or whatever it is we are doing in countless other countries.

WJ

This is a serious subject, but the fact that the pirates are using such capitalist techniques is kind of funny. I'm just waiting for the Somali Pirate version of Crazy Eddie. "Our prices on hostages are so, they're insane!"

Robert Huffman

We need to make death be the marginal cost of piracy. Then we'll see how that figures into their calculations.

muyuu

They already have this cost when they deal with the Russians.

Bobby G

I'll just wait until my hostages go on clearance.

Joe Momma

"This is what our military is for!"
No it's not you douche, it's for defense. It's certainly not the job of our tax-payer funded military to rescue hostages on the other side of the planet. Indiscriminately kill anyone who looks remotely like a pirate? What's that mean? Black man in a boat? You're a moron.

Caleb B.

Obvious solution: Destroy every ship that the pirates take, killing the pirates and the hostages both. It is a painful sacrifice for current and near-term hostages, but if the practice becomes routine, the pirates will respond to the consequences and stop hijacking ships.

shyniz

"Obvious solution: Destroy every ship that the pirates take, killing the pirates and the hostages both. It is a painful sacrifice for current and near-term hostages, but if the practice becomes routine, the pirates will respond to the consequences and stop hijacking ships."

Are you willing to let a multi-million dollar ship of yours get destroyed and have your company bankrupted? "They" can't just go and destroy the ships or kick ass because no one has responsability over the hostages, the ships are worth millions, and the pirates are armed too.