Hiiraan Online

The annual report by the Oceans Beyond Piracy advocacy group estimated the cost of piracy at $5.7-6.1 billion in 2012.

For much of the last decade, young Somalis in sometimes tiny boats have wreaked havoc among Indian Ocean shipping, seizing vessels and sailing them to pirate havens where they remain until millions are paid in ransoms.

The cost of private security and greater fuel costs from sailing at higher speeds made up more than half the overall cost, the report said. Other expenditures entailed maintaining permanent naval forces to combat piracy in the Indian Ocean as well as re-routing such forces.

Greater use of armed guards, marginally improved law and order in onshore Somalia, more prosecutions of pirates and increasingly aggressive naval action are all credited with bringing about a drastic reduction in attacks.

According to EU NAVFOR, the European Union naval task force that is one of several military forces patrolling the Indian Ocean, there were only 36 confirmed pirate attacks in 2012 compared to 176 the previous year. Only five ships were captured, down from 25 in 2011 and 27 in 2010.

Overall, the report said the cost to the global economy fell by some $580 million or 12.5 percent, from 2011.

Amid the ongoing chaos in Somalia, however, some worry the pirates could yet stage a dramatic comeback.

"The money spent fighting pirates at sea is starting to pay off," said EU NAVFOR chief researcher John Bellish.

"Activity is down, but even with the lower number of attacks reported in 2012 there was very little movement of resources towards investing in a long-term solution ashore."

The starkest rise in costs came from the greater number of armed guards being carried, the report said, estimating this rose by almost 80 percent and was now between 1.15 and $1.53 billion.

As more vessels carry armed guards, naval officers in the region say fewer vessels are now passing through the high risk area off Somalia at maximum speed, significantly cutting fuel costs from 2011.

In 2011, an estimated $2.7 billion was spent on what the report calls "above economically optimal speeds", falling to $1.17 billion in 2012.

As some nations reduced naval forces in the region as attacks subsided, the cost of international military operations fell some 14 percent to an estimated $1.09 billion.

For the pirates themselves, taking to the Indian Ocean has clearly become considerably less profitable.

Ransom payments nosedived some 80 percent in 2012, with Somali pirates only receiving an estimated $31.75 million compared to $159.62 million in 2011.

The report was produced by the U.S.-based One Earth Future Foundation and audited by the Baltic and International Maritime Council (BIMCO).