Written by Rune Larsen, Service Marketing Manager | 10 January 2020
A brand new decade lies before us, ripe with opportunity. We don’t need a crystal ball to spot the fact that digital technologies and new business models will have a disruptive impact on maritime transport and supply chains.
There is a growing consensus that the shipping industry needs to embrace digitalisation – not just in order to become more efficient, sustainable and greener, but simply to stay afloat in a fiercely competitive marketplace. For maritime companies aiming to grow their business and become more profitable, a digital strategy is not just a ‘nice-to-have’’, but the blueprint for continued success.
The operational value of digitalisation is well understood, and regulatory requirements provide additional incentive for going digital. Still, industry professionals are approaching the topic with caution.
What are the main barriers that hold shipping companies back from embracing the digital future?
Going digital requires investing in new technologies and a clear digital strategy. However, in the shipping industry – as in any industry with low profit margins – every cent is very carefully spent. There is a reluctance to make long-term commitments in a volatile business environment. Few companies want to be ‘the first mover’ at the helm of the transformation, where industry peers have not yet ventured.
Consequently, only investments with a ‘proven’ track record are considered. Moving to the digital ship is perceived as expensive and inherently risky. This ‘investor inertia’ is delaying adoption of technological advancements in the industry.
Bandwidth is still expensive and limited. Even though various industry analysts say that by the end of 2020, the number of ships with VSAT on board will be equal to those without, we don't expect available bandwidth to increase at a rate to match the current growth in demand for ship-shore data traffic.
Shipowners, operators, crew and a range of vendors will need to compete for available bandwidth, which is why Internet services must be prioritised. Having constant streams clogging the connectivity will render other services unusable.
Even with the emergence of miniaturised technology that allows for smaller and cheaper satellites, it will take time before these new offerings will impact the shipping industry.
Shipping is structured in a complex way. Ships are owned, partly owned, in joint ventures, managed and operated by one or more companies, crewing done by another with a multitude of vendors with need for data and digital upgrades for their equipment.
A fleet of ships contains any number of configurations with different ownerships, management and setups. There is a clear need for standardised solutions across fleets to deliver optimised and secure digital services to both owners, operators, vendors and crew.
As bandwidth increases, there is an increasing focus on utilising onboard data for better performance and smarter business decisions. However, the collected data needs to be analysed and put together in a manner that benefits the industry. For this reason, standards need to be created, so that the data can be made available on the shore side in the most value-enhancing way.
So far, there are no clear, established digital standards for collection of data from equipment and software onboard or bringing it ashore in a standardised format.
Read more: ICT solutions bring ship and shore closer
The industry value of real-time operational data collected onboard digitally integrated ships increases enormously if it is shared and used strategically for big data analysis, benchmarking and performance optimisation across companies and authorities.
Unfortunately, many companies are focused on protecting their data instead of sharing it widely in the maritime sector. This poses a barrier to the collaboration and sharing community that enables a smooth transition to digitalisation and ultimately delivers industry-wide advantages.
In today’s maritime environment, ship owners and operators must continuously improve the efficiency and environmental performance of their ships to comply with the latest regional, domestic and international environmental regulations and requirements.
This raises some typical questions and concerns, such as: Will a rollout of this specific technology or business model be in accordance with existing or new regulations? What changes to business models or technologies may be required to become compliant? And what new regulations are on the horizon that could potentially present a whole new set of business challenges?
A case in point: As of January 2020, the IMO’s new regulations require the sulphur content of ships’ fuel to be cut dramatically, from 3.5% to 0.5%. The shift to low sulphur emissions is costly, as low sulphur fuel costs around €250 more per tonne than standard heavy fuel oil.
These added operational costs may, in turn, make many shipping companies become even more cost-savings driven in their approach to industry digitalisation.
Among ship owners and operators, there are concerns that greater connectivity could bring about greater cybersecurity risks. They know that customers expect both ships and their cargos to be protected and safe throughout the journey.
These concerns are understandable. With more bandwidth and digitalisation comes the need for greater cybersecurity. More onboard digital equipment connected to the Internet poses a broader attack surface for targeted or accidental cyberattacks.
To tackle this complex new risk reality, ship owners and managers need to have a comprehensive cybersecurity management plan in place on their ships and within their organisation.
The future of shipping is digital, and embracing it will open up new business opportunities and help shipping become more competitive, sustainable and profitable.
The digital shift is taking place at an increasing pace, faster and faster as attitudes are changing and the skepticism surrounding maritime tech recedes.
On the other hand, while there is strong willingness among owners and C-level managers to seek digital advantages, the nature of ship management is very cost savings driven. There is still quite a gap between the ambitions and the money made available for implementation of new digital solutions. Strong integration requires common standards, clarity of ownerships to data and a willingness to share.
At the end of the day, the maritime industry is facing the same barriers to digital adoption as other industries. We need to encourage leaders and owners to realise this and spend time implementing the right solutions in the right order, supported by tried-and-trusted technology partners and solutions.
After all, going digital is a necessity – and the the number one contributor to a successful industry in the coming decades.
Rune Larsen is Service Marketing Manager in Dualog, with responsibilities for user experience design, visual design and marketing of existing and new services. Educated in business strategy and marketing from the Arctic University of Norway, he has more than 25 years of experience from the creative industry, where he worked as a consultant, designer and creative director in various advertising agencies and design studios. He's been orchestrating brand identity projects, design work and brand building campaigns for a wide range of organisations. He brings a passion for great design to the team, never compromising on the importance of the 'experience' part of UX. When not at the office, he enjoys hiking with his wife or is busy being a football coach for his youngest daughter. His fitness regime involves either running or cross-country skiing. Rune is an avid reader of business-related books, and he loves the occasional bottle of Barolo.