The green transition in shipping will demand new digitalized ways of working to generate the operational efficiencies necessary to reach decarbonization goals. But experience from other industries has shown effective digital transformation can only be achieved through transparency, trust and collaboration – and this requires a radical shift in the maritime mindset, argues Youn Lee, CFO of NYC-based maritime software-as-a-service company OrbitMI.
Digital transformation entails transforming organizational culture by rethinking how technology, people and processes work together to enhance efficiency and thereby create value to improve business performance.
Land-based sectors such as financial services and life sciences that have undergone transformation, triggered by pressure from government, regulators, financial institutions and the public, all have had to grapple with the issue of transparency in terms of sharing and safeguarding sensitive data.
Now a similar scenario is being played out in shipping, driven by environmental pressures and new regulations, but the big difference is the inherent fragmentation of the industry with a commercial fleet of around 100,000 vessels controlled by thousands of companies spread across the globe.
Changing ‘black box’ culture
This has inevitably led to a multiplicity of different ‘black box’ systems onboard ships for vessel performance monitoring, voyage optimization, cargo tracking and other tasks that process masses of data but mostly function independently of each other. The result is siloed systems with a lack of data-sharing, reinforced by the traditionally secretive and protectionist mindset of shipping due to competitive concerns.
But, in today’s green regime, a black box is a red flag. Shipowners and operators must now work together to leverage their most valuable untapped commodity: data.
To meet the urgent need for decarbonization, the maritime industry must transition to a connected digital ecosystem. This ecosystem should allow operational data to be shared among stakeholders securely and confidentially, enabling greater fleet efficiency, reduced emissions, and compliance with regulatory reporting requirements.
In the data-driven future, new technological solutions can be leveraged to streamline business processes, improve efficiency, enhance decision-making and automate tedious manual tasks such as reporting, thereby boosting productivity and profitability.
Need for strategic roadmap
Streamlining and simplification of operational processes through digital automation is seen as essential for effective monitoring and supervision to enhance environmental performance, ensure compliance and maintain competitiveness in a market increasingly focused on sustainability.
Consequently, shipping companies are looking to implement intelligent process automation leveraging data analytics to achieve operational efficiency gains and meet GHG emission reduction targets in line with regulations such as CII and the EU ETS, as well as the upcoming FuelEU Maritime.
However, it is important to understand that effective transformation requires a structured approach to technology adoption based on a strategic roadmap of what the company aims to achieve. The emphasis should be not just on the adoption of new technologies but on their strategic integration to drive tangible business outcomes.
This demands a thorough internal assessment process to determine the business benefits of automation as well as proper criteria to understand and evaluate the myriad solutions available in a crowded digital marketplace to ensure due diligence with technology adoption.
Technologies need to be integrable and interoperable with existing systems, thereby avoiding disruption to the business, as well as scalable and adaptable in line with the changing needs of the business and evolving regulation to make them future-proof.
Integrated, holistic solutions
A further requirement is that technology is easy to learn and intuitive for the end-user, which will result in more rapid adoption and faster return on investment as users seek to get more out of the software. This means that solutions need to be developed in accordance with the needs of users to solve daily work challenges and make their lives easier.
The focus must be on adoption of integrated, holistic software solutions that are aligned with both user needs and business goals, and have data-sharing and collaboration at their core to deliver maximum value creation for the end-user.
Having data stored in siloed systems hinders productivity due to the need to use multiple log-ins and manual inputting from one system to another. It also results in data latency – or delays in accessing relevant data – that slows down decision-making.
Data management becomes complicated when data is locked up in multiple systems as this makes it time-consuming to aggregate and analyze this data, and make decisions based on this data, which means shipping companies lose out on potential revenue gains.
Real-time decision-making
Conversely, automated aggregation and analysis of high-frequency and high-quantity data fed from mulitple systems enable the end-user to make decisions based on the very latest information available.
Solutions with open APIs from different vendors, employing AI and machine learning to analyze multiple data streams in real time, can facilitate intelligent connected workflows that generate actionable insights for effective decision-making to realize efficiencies.
Furthermore, integrated systems can provide a single source of truth on a unified user interface with real-time data readily accessible across a company organization, both at sea and onshore, to remove barriers to data-sharing.
An earlier analysis by Critical Future estimated that around $237bn in economic value could be unlocked in the shipping industry this decade through productivity gains generated by sharing non-confidential data, such as fleet management information. Through boosting voyage efficiency, data-sharing would benefit shipping companies’ revenue as well as enhance sustainability.
Value creation potential of collaboration
Data-sharing therefore has the potential to yield transformative returns on the investment in time, technology and capital resources. But to achieve this, there needs to be a willingness among competing parties in the industry to collaborate to extract the value creation potential from sharing data, as well as meet emissions reduction targets, based on a common interest.
This cultural shift towards greater collaboration will though not happen without a clear understanding of the benefits and tackling issues around intellectual property, fair competition and data misuse to facilitate sharing of large volumes of potentially valuable data.
Given the new green operating regime, digitalization to achieve operational efficiencies is no longer an option but essential both for compliance and competitive advantage as environmental performance is now a key differentiating factor in commercial contracts.
And making progress on the industry’s path of transformation towards decarbonization will mean breaking down barriers to collaboration.
The views presented are only those of the author and do not necessarily reflect those of SAFETY4SEA and are for information sharing and discussion purposes only.
