Where has the rum gone? The impact of maritime piracy on trade and transport

Despite a general agreement that piracy poses a significant threat to maritime ship -
ping, empirical evidence regarding its economic consequences remains scarce. This
paper combines firm-level Chinese customs data and ship position data with infor-
mation on pirate attacks to investigate how exporting firms and cargo ships respond
to maritime piracy. It finds that overall exports along affected shipping routes fall
following an increase in pirate activity. In addition, piracy induces firms to switch
from  ocean  to  air  shipping,  while  remaining  ocean  shipments  become  larger.  At
the ship-level, the paper provides evidence for re-routing, as container ships avoid
regions prone to pirate attacks.

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