Shipping remains a crucial cog in the global economy, facilitating trade between expanding and new markets, and the cruise industry continues an impressive growth trajectory. 90% of global trade is transported by the shipping industry yet the last significant innovation in the maritime sector was the introduction of the ISO container in the 1950s. As a veteran of the sector myself, I know we might sometimes be accused of being overly inward-looking and the mantra of “it has always worked” too often overrides the desire to innovate. For justifiable reasons, it means shipping is often slow to explore the opportunities offered by new technologies. However, the time is now ripe for a radical transformation of the industry, seizing on the technological advances of recent years.
While the sector is invaluable to world trade, the shipping industry is tough. There are many threats to financial health for ship owners, managers, brokers and charterers, and continual challenges to their ongoing viability. As Amazon, Walmart and Alibaba begin chartering their own ships and leasing their own terminals, the traditional ship owner needs to prepare for radical structural change. Carbon and sulphur reduction targets are looming over shipping, how can operators adapt to meet these goals? It’s uncomfortable to face these challenges, but they are inevitable.
In many parts of the economy, the power of data is being leveraged to optimise working practices and deliver new services, many of which we could not possibly have conceived just a few years ago. The predictive analytics revolution is continually accelerating, thanks to increasingly easy access to vast quantities of computing power at affordable cost, allowing companies to crunch massive datasets using complex algorithms. Companies are increasingly competitive through uncovering a level of insight far beyond what was previously on offer, driving innovation and optimisation.
At one time or another we’ve all found ourselves on a plane being told we can’t take off because we’ve lost our landing slot at Heathrow. It’s frustrating, but certainly preferable to being stuck in the air circling the destination airport because of a delay that would have been easily anticipated. The elimination of such inefficiencies has been central to the rapid expansion of low cost airlines – they could not offer attractive prices if they routinely wasted fuel while giving passengers an aerial tour of the M25.
Eliminating inefficiencies in shipping
Can we not do more to eliminate similar inefficiencies in shipping? Despite huge advances in voyage management, some ships are still sent at full steam, only to find themselves held at anchor for days, or having to suddenly reduce speed, due to port congestion. While better use of data has already started to change how shipping operates, there is a need for more granular information – for more data points – but coupled with the ‘know-how’ that comes with having stood directly at the quayside.
Early in my career working as a cargo superintendent, I would explore the port, making my way up and down the quayside, gathering information to feed back to head office. Like many others doing this role, I was reporting which other ships were in port, the nature of cargo being handled. I would also routinely speak with locals to uncover issues with customs, the pilot, transport, labour and crew which might be of interest. This snapshot of information would overlay the data held at head office and inform important decisions about competition and future trade opportunities.
Some technology has already found its way into the process, with port agents now required to tap data into a tablet device, albeit while juggling a million other tasks, and being expected to continue these duties, regardless of the weather. You don’t need to have spent as much time around ports, as I have, to realise this isn’t the most effective way of working and understand that the human element introduces a risk to the quality of the information fed into the system. The development of methods to automatically collect port information will drastically improve the quality of data, while freeing valuable human resources for tasks better suited to their skills. Port agents should be supplying the context for the data that has been gathered, adding value to it, rather than spending time on data entry.
Embracing predictive data analytics would allow operators to make strategic decisions that maximise the value of their assets, instead of continued reliance on expensive last minute ‘adjustments’ which could have been avoided. The current business model of massive running costs and hugely expensive assets generating modest returns for owners and operators is inefficient. Is this truly sustainable? It is not healthy for an industry to rely solely on continual global growth for its continued survival.
In addition, the industry has a social responsibility to the environment. The International Maritime Organisation has brokered an agreement that will halve greenhouse gas emissions from the sector by 2050. Improving efficiency of fleets will be a crucial step toward achieving this objective; it would be foolhardy to expect these goals to be met solely through unspecified advances in ship technology and the adoption of alternative fuel sources.
The maritime sector already has access to the granularity of data needed for advanced analytics that can deliver wholescale reform. The technology to harness that data is available, and it will allow shipping to reap similar rewards to other industries. Full steam ahead!
Claus Hyldager, chief executive officer, Nisomar