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Maritime can't resist digital disruption for much longer

Participant list:

  • Nick Brown, Marine & Offshore Director, Lloyd’s Register
  • Robert Carington, Policy Advisor, UK Chamber of Shipping
  • Frank Coles, Transas leader at Wärtsilä Voyage Solutions
  • Bill Dobie, Founder and CEO, Sedna
  • Matthew Dow, Associate, HFW
  • Nial McCollam, Chief Technology Officer, Lloyd’s Register
  • Steve Price, Lloyd’s Register Safety Accelerator
  • Elaine Roberts, Chief Marketing Officer, Lloyd’s Register
  • Philip Roche, Partner, Norton Rose Fulbright
  • Will Robinson, Managing Director, The Strike Club
  • Adrian Scales, Chartered Master Mariner and Partner, Brookes Bell
  • Alok Sharma, Head of Commercial, Inatech
  • Peregrine Storrs-Fox, Risk Management Director, TT Club

Moderated by:

  • Richard Clayton, Chief correspondent, Lloyd’s List

 

What’s keeping shipping and the broader maritime sector from enjoying the potential benefits of digitalisation? If a panel of experts brought together recently by Lloyd’s List is right, there’s no single obstacle preventing the shift towards a digital future, rather there are several concerns that describe a “healthy scepticism”.

Among these is the low level of data-led interaction between shore staff and their equipment, and the ship with its crew. Bridge equipment often fails to connect with anything at all: on an 18-year-old ship there might be more than a dozen stand-alone pieces of bridge equipment. Although AIS (Automatic Identification System) has revolutionised the tracking of a ship and enabled much information to be gained about the voyage this ship is making, the master is still required to fill in huge quantities of paper or electronic reports manually. And of course, three copies of a paper bill of lading are still required for most voyages, risking loss, fraud and delay.

Over the past decade, many smaller and medium-sized shipping companies have slipped into survival mode, the panellists agreed. Innovation is now judged by its capacity to cut costs and not by its potential to transform a business model. To become the driver of a revolution, data must be shared across the industry, however so far there is little evidence of sharing beyond commercial partnerships.

The result is that fragmentation within the maritime sector severely limits its ability to gain advantage from digitalisation. In comparison with sector-agnostic giants such as Amazon and Alibaba –  for which transaction data, cargo tracking data, and customer data have become their commercial lifeblood – shipping companies remain fiercely protective of their data. Further, there’s a perception that where a certain level of standardised data is required by, for example, insurers, competitors who sidestep that requirement will have an unfair commercial advantage.

“The only way to run a business better is to have access to as much data as possible, and then just being good at your business.”

A determination to avoid sharing data is exacerbated by a maritime business structure that avoids any form of connection between disparate elements of the system. The company that builds a ship has little to do with the company that runs that ship, which is divorced from the end customer of the cargo the ship carries. The experience of many businesses outside shipping is that real assets are no longer measured in physical items such as fleets of vessels; their assets are the data itself. “The only way to run a business better is to have access to as much data as possible, and then just being good at your business,” one panellist offered.

“There is nothing special about your business – whatever you do – and there’s certainly nothing special about data. The data itself doesn’t give you competitive advantage, it’s what you do with it that matters,” he said.

“The lightbulb moment came when I realised I didn’t have to understand how Blockchain worked to see its advantages.”

Despite these obstacles, the panel remained optimistic that the industry’s leaders were beginning to understand what is required. For one, “the lightbulb moment came when I realised I didn’t have to understand how Blockchain worked to see its advantages.” For another, digitalisation has the potential to handle the more routine tasks, leaving junior colleagues to tackle more difficult work. And for another, it is now clear that the future lies in understanding the needs of the charterers and shippers: “We should go to Cargill and Amazon, and ask ‘What kind of ship would you like?’”

Already there have been examples of shippers driving change. Vale, the Brazilian mining businesses, needed to ship huge volumes of ore to China. Vale saw Capesize ships as a limitation to their model, and ship owners didn’t want to be tied to one route over 25 years. This prompted Vale to order ore carriers twice the size of Capes. More than 70 have been ordered, however today Vale owns none of them. The company has driven a change in attitude. Similarly, Walmart now has more cargo on the seas than all its retail competitors have on their shelves. Amazon has signalled its intention to operate its own ships because what they need is unavailable.

Slowly it is becoming clear that sharing data goes further than cutting cost. Safety can be enhanced through the analysis of vessel operations data; the root causes of accidents and incidents will be better understood, and more swiftly addressed, through the use of data. Best practice from the cruise and offshore sectors, where returns on investment in data analytics are justified at a granular level, is finding its way into mainstream sectors. 

Digitalisation will transform the shape of maritime businesses, the panel predicted, especially if the jargon can be ditched and restrictive traditions terminated. The attitude that long-established businesses have a right to a long future is no longer acceptable; indeed, some of the game-changers outside maritime do not expect to be in business in five years’ time, and shipping should take on this culture of nimbleness. 

Digitalisation will drive predictability, which will stimulate some providers of professional services and terrify others. Uncompetitive shipping companies that continue to see digitalisation as an unnecessary expense will struggle, while shippers with an understanding of the benefits of data from every stage of the movement of their cargo will become the new drivers of the maritime industry.

The maritime sector has spent the past few years worrying about the technology of digitalisation, whereas the real focus should be on people, one panellist summarised. There will need to be retraining, reskilling, re-imagining the connections between ship, shore, service providers, customers, terminal operators, manufacturers and end-users. The ship owner will be very different in 10 years, another suggested: they will be far less focused on the ship.

“The next generation is coming through… There is a stark difference between those who are convinced and those holding back.”

As an illustration of the transformation already underway, one panellist observed that there had been “remarkable change” at Posidonia this year compared with 2016. “The next generation is coming through. There is now a stark difference between those who have been convinced and those holding back.” This has been partly encouraged by a significant push for consolidation and partly by the environmental regulation cascading into the industry. 

“The challenge is getting over the hesitancy, inertia, and reluctance to share data coming from sensors that are now built into ships and all over the supply chain,” another panellist said. “If we can get over that challenge, we will see significant environmental, safety, and efficiency benefits.” 

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