On 12 October 2000 in Aden, Yemen, a small motorboat full of explosives rammed the USS Cole while it was in port for a refueling stop. Seventeen sailors died and another thirty-nine were injured by the explosion, which ripped a forty-foot by forty-foot hole in the ship's side. The USS Cole returned to the United States carried aboard a transport ship on 13 December 2000 for repairs that lasted fourteen months. Two years later (6 October 2002), Yemeni terrorists attacked the French tanker Limburg while it was readying to receive its cargo of crude oil from an offshore terminal. Although Yemen is ideally located as a major Middle Eastern port because it borders the Red Sea and the Arabian Sea, the combined attacks on the USS Cole and the Limburg crushed Yemen's shipping industry. A US Department of State Fact Sheet (2002) indicates that a 300% increase in insurance premiums has led to ships routinely bypassing Yemen for competitive facilities in Djibouti and Oman. As a result of a 50% decrease in port activity, Yemen expects to lose $3.8 million per month because of the attacks.

The incidents in Yemen illustrate the direct and indirect costs of terrorism. The direct costs can be calculated by summing the replacement costs of damaged goods, equipment, structures, and inventories. Despite the difficulty of measuring the cost of a human life or the cost of pain and suffering, such calculations are now routine, using either lost earnings or the value of a statistical life.