The maritime industry is going through a period of unprecedented change and disturbance; with physical events, technology changes and policy shifts acting on shipping and ports in almost equal measure.
The enduring change is that digitalisation and decarbonisation will impact the future of the industry; the pace of these effects will increase in velocity over time, as barriers to entry fall and demands for improvement increase.
To achieve this requires the rethinking of our attitudes to the technology that will drive digitalisation and enable decarbonisation.
The regulatory agenda is another driver of this platform for change. Regulation is about to become much more important for all owners deploying any kind of IT or digital systems. It will demand a far higher level of compliance and disclosure, whether ships have a basic network or complex ship-wide systems.
Just as all shipowners that want to maintain their competitive position and improve efficiency need a plan for digitalisation and sustainability, they will need one for cyber compliance too.
Three Key Challenges
Shipping is experiencing the rapid adoption of digital tools and services for understandable reasons - any technology that promises greater efficiency and reduced costs will gain traction - but challenges must also be faced.
The first is that digitalisation demands full commitment. Rather than treating business units or assets as discrete elements it demands that companies undergo a top to bottom transformation, so that ‘the business’ and its business model is enabled by common digital tools, processes and services.
Research conducted for Marlink found that large parts of the maritime industry consider themselves ‘digital-ready’. More than two-thirds of companies said this included a clear and established strategy for satellite communications and IT solutions.
However, whilst these companies agreed they are ‘digital-ready’ only 30% of them believe they were well-advanced in progress with their digital transformation strategies. In other industry sectors where digitalisation is taking place, the figure is closer to 60%.
The second issue is sustainability. A digital business should be a much more efficient business, but it will also have to meet increasingly stringent regulation and performance improvements to satisfy charterer and consumer demands.
In the short term this has meant increasing efficiency to reduce emissions and save cost; in the long term it will mean adopting new performance technologies and fuels, not all of which are yet available.
The third driver, Cyber security, continues to be an issue of concern within the industry, despite progress in raising awareness of the risks, from the chief executive to the chief mate. It was not long ago that IT departments were lobbying for the resources to build a cyber-secure business infrastructure based on expected threat rather than experience.
A series of cyber-attacks and hacks changed all that, not least that the world’s largest shipping company could have its operations all but halted, as collateral damage to a cyber-attack aimed elsewhere.
The Digital Building Blocks
The relentless need to reduce costs and remain competitive has overturned the recurrent perception that the maritime industry is slow in adopting innovations and new technologies. While this may not always have been the case in the past, it appears digital technology has been adopted by large parts of the industry, but the scope and degree of sophistication vary significantly.
The first building block is connectivity, which has become ubiquitous far beyond the required minimums, with market dynamics increasing choice of services and driving down costs for end users. Options are increasingly wide and blended from VSAT through L-band to 4G, with sophisticated connectivity supporting cloud storage approaching applications like ‘edge computing’ with data processing happening onboard.
Close to half of the shipowners and managers polled by Marlink ranked new and better ship to shore connectivity as the most valuable technology, with the second most valuable identified as standardised networks and IT infrastructure onboard ship. Overall integration of systems and ship-shore equipment was ranked as the third most valuable.
The second is accurate and timely data. A decade ago, owners were scratching their heads at uses for IoT functionality until it became obvious that it could extend beyond high value cargoes to vessel components, even the hull and main propulsion systems, providing data and information on operating status and condition.
Low cost and higher value data has not just increased transparency for all concerned; owners and charterers alike quickly realised that having more data on the voyage itself can drive down voyage costs and incentivise the reduction of pollution and greenhouse gas emissions.
Lastly, the need to improve efficiency – against a still volatile fuel oil price curve – has seen the range and scope of voyage management applications increase exponentially.
From the back of any reasonably modern ship’s bridge it is possible to actively improve vessel routing to avoid weather or risk areas, more accurately schedule passage and arrivals, download navigation chart data as well as receive safety updates; all without touching the regulated front of bridge network.
Digitalisation and Decarbonisation
Digitalisation will ultimately create a two-tier shipping market, divided into those owners and operators who have the best access to the latest information and those who do not.
The difference between this relatively recent position and the days of employing simple but effective means of checking vessel arrivals or departures or bidding for cargoes is that almost anyone who wants to, can pay to access the data on vessel positions, port traffic, weather or other information.
This matters too because in the space of a little over a decade, new targets on environmental efficiency will force the industry to adopt new working practices. Most critically this includes new fuels as the means of complying with IMO targets on the reduction of carbon intensity on a vessel by vessel basis.
Collection, analysis and interpretation of every bit of data from ship systems at that point becomes critical – potentially the difference between success or failure to comply. The data that ships produce on their emissions will be reported automatically and this data will inform not just regulations but market measures, including the cost at which lenders make capital available to shipping companies.
Cyber Critical Systems
New technology and the need for sustainability are two fundamental forces acting on the maritime industry; the other is security of the IT networks on which both rely. The IMO has adopted cyber-security related amendments to the International Safety Management Code (ISM Code) while the tanker sector has already made similar requirements part of Tanker Management Safety Assessment (TMSA) version 3.
While the first represents mandatory regulation, the second is a ‘licence to operate’ for owners carrying hazardous cargoes. The ISM Code will require demonstration that action has been taken to address cyber security, TMSA will require shipowners to demonstrate that they have the latest available IT operating system and other software updates as well as specific security patches either as part of a Port State Control inspection or in pre-qualifying a vessel to carry cargo.
The industry’s largest, long term players are likely to already meet these requirements but for an operator with limited IT outfit, they present an unwelcome burden. For one with a sophisticated network encompassing IT and OT, it presents an additional series of tasks for crew unless it can be managed with a minimum of additional administration.
Compliance with voluntary cyber security guidelines until now have tended to succeed or fail on the basis of the human element, relying on an intention to do the right thing. It is precisely this lack of transparency over how the tasks are performed and the updates recorded that the regulation seeks to change.
Marlink estimates that at least 50% of software updates are still performed by the collection of physical media such as a CD for manual update with the balance performed ‘over the air’ and automatically applied.
Supporting the change
Marlink realised some years ago that as maritime connectivity continued to improve, so shipowner needs would shift towards deeper relationships with partners who could support their digitalisation and decarbonisation strategies and provide them with integrated compliance solutions.
The future is here
Regardless of short term shocks and disruptions, the course ahead for the shipping industry is set.
In the medium term, as owners engage with more complex IT network requirements, they will be able to enjoy expanded access to cloud-based applications and storage, increasing asset connectivity and bringing ‘virtual’ systems and applications onboard.
The ability of shoreside personnel to maintain and troubleshoot IT networks and to provide crew with the tools they need to demonstrate cyber resilience and compliance means that seafarers can concentrate on safe operations rather than be distracted by technology.
As the long term trend sees the cost of IT capex, opex and compliance fall over time, the resulting gains; in terms of improved voyage performance and vessel efficiency, will combine to improve shipping’s environmental profile, moving the industry towards its goal of digitalised, decarbonised and cyber-secure operations.
The views expressed in this article are solely those of the author and do not necessarily represent those of SAFETY4SEA and are for information sharing and discussion purposes only.
About Tore Morten Olsen, President, Marlink Group
Tore Morten Olsen holds a M.Sc in Telecommunications from the Norwegian Technical University from 1993, and has participated in Executive MBA programs at Wharton Business School in the United States, Insead in France and Stockholm School of Economics in Sweden. He has 24 years of experience in the satellite communications sector, starting out as a technical product manager in 1994 and moving on to hold several senior management positions with Telenor, Astrium Services, Airbus Defence and Space, and Marlink.