January 16, 2018
Whenever you find yourself on the side of the majority, the great Mark Twain remarked, it is time to pause and reflect. The New Year seems the perfect time to do just that and given the issues that have occupied the industry in 2017, it seems only right to take a gently sideways look at what might happen in the year to come.
1.) More, not less emphasis on humans
The first few weeks of the year have already seen one news story after another pointing out the number of incidents and accidents that are caused by human factors. As has been observed many times, this is a little like saying that taking risks can be dangerous.
Any time spent onboard ship or even in port will quickly demonstrate that shipping is in many ways one of the least digital industries around. What it needn’t be is dangerous and this is where technology comes in.
One of the arguments made for autonomous shipping is that removing crew will make it safer. In addition to there being no evidence for this assertion, what it hides is the fact that people are going to be more not less important to the digital future of shipping.
Shipping has until recently been a low cost, margin-focussed business that arguably doesn’t value the skills of sailors highly enough. Given its challenges it is hard to argue that the current model needs to change and shipping should be well positioned to take advantage of automation.
But the fact is that when talking to those who will make it happen, the industry must learn to be patient. What it will need in the meantime is to understand that it needs to better train, equip and nurture its talent, something it talks about a lot, but doesn’t always practise.
2.) The Autonomous Frenzy Cools
For related reasons we may well see a change in the conversation around autonomy in shipping. That doesn’t mean that we won’t still hear too many people who know too little about it exercising their ignorance in public, but behind the scenes the emphasis will shift.
This began towards the end of last year when IACS chairman Knut Orbeck-Nilsen told London Shipping Week ‘the goal is not autonomous ships, it’s safer shipping’. It was a welcome development – though it should be stressed that the guest speaker preceding the panel debate had also laid out a legal landscape of risk and liability that swept away any of the simplistic predictions made to date.
This is a market that so far has been vendor-driven and it is worth remembering that actual projects numbers two at the time of writing. The development of the technology will continue – and continue to improve – that much is unstoppable.
What needs to happen next is less about the industry being sold a glossy digital version of the future and more about where the need really lies, how it is best fulfilled and whether an industry that employs 1.5m seafarers is ready for a change of this magnitude.
The commonly-heard refrain that ‘it won’t happen until after I’ve retired’ is fine for those who made their living in the old economy. For the reasons noted above, we need more brainpower on this problem and less marketing.
3.) More data, not all of it big
Shipping might like to think itself as advancing at speed into a data-driven digital future but the fact is that for many shipowners, the priority remains simply assembling some kind of strategy that can enable them to make some basic improvements to their fleet performance.
Again, this is not the case across the board, but for every data management centre and operations hub there are dozens of owners who appear to believe that shipping is still a gut feel, rule of thumb market.
This is less true than it was – a generation of shipping scions with MBAs has seen to that – but it is equally true that digital transformation requires a new skillset that even MBA students won’t necessarily have acquired.
Not for the first time, there is need to separate the consumer technology experience from the business-to-business environment. Some of the most powerful solutions in shipping do not necessarily mean big data – tracking thousands of containers still yields a relatively small data stream and demonstrating similar value that can be monetised can still be a challenge.
As anyone who has spent time in a corporate environment will know, large projects tend to sap time and resources and can be seen as a distraction from core business. As Martin Stopford noted in a recent conversation “shipping companies are not good at writing big programmes that are also user-friendly”.
4.) Fintech yes, Bitcoin no
Anyone looking for a bubble this year is as likely to find it among the start-ups and software companies as in the offices of shipowners. Yes, there will be plenty of owners who will see the uptick in demand and the declining orderbook as an excuse to go long on the markets, but the really hot money is going to be digital.
Whether one views crypto-currencies like Bitcoin as a potentially systemic risk to financial markets or simply another speculative investment tool, it has been impossible to ignore the market’s inherent volatility.
What is less well understood is that Bitcoin is just one of many examples and it is the underlying Blockchain technology that really provides the opportunity.
Despite decades of work by a handful of pioneers, shipping remains a paper and cash-intensive business. The distributed ledger technology of Blockchain is a foundation that could be used to underpin smarter contracts for bills of lading and waybills, charter parties, regulatory compliance and more besides.
Its fiendish complexity and the weight of computing power required to power it means we are unlikely to see it used onboard ship anytime soon, but that won’t stop more and more companies announcing partnerships to study its suitability for a whole range of applications.
5.) More hacks and attacks
One thing we can predict with certainty is that 2018 will be a year of more hacks, cyber-attacks and bitcoin ransoms. If the Maersk hack of 2017 was a wake-up call for the industry, then shipping is still only rubbing its eyes.
Barely a day goes by without another cyber product being rolled out to great fanfare and it wouldn’t be surprising to find that owners are somewhat confused about what they should do and how.
There is confusion too, between the seriousness of the potential risk to shipping operations and the apparent lack of basic level training for those at the sharp end. That could be seafarers charging phones on the ECDIS, or bored superintendents too tired to tell a phishing email from a genuine one.
The best practice guidelines are out there (for free) and there is no shortage of advice and products from flags, insurers, class and other service and communications providers, some of which must be paid for, much of which come as part of already contracted services.
It would be foolish to speculate on what might happen but there is a growing feeling among regulators that this is not an issue that shipping can tackle by itself. The concept of shared risk – the network effect that could spread infection from ship to shore, to port, to local authority is a very real one.