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Supramaxes, Panamaxes, Kamsarmaxes, Ultramaxes and now TechnoMaxes!

 

When not writing about the buoyant tanker markets or struggling drybulk market, subjects here have included views about the interface between the maritime industry and the rest of the world. My article that appeared during the Summer on Big Data proved to be surprisingly popular, suggesting readers’ thirst for more views on broader subjects.  After all, shipping exists to serve the cargo interests- who are part of, and respond to, the currents of broader society. Big Data, the subject of my earlier thought piece, is only part of a much larger picture- where technologies might profoundly change the mode of shipping operations. Maybe they will, but maybe some fresh thinking, and some kick-starting is needed.

 

Lloyds Register (LR), the Class Society, has released a new report titled Global Marine Technology Trends- 2030. The report encompasses way more than tankers, bulk carriers and container vessels, but does offer the following regarding our familiar territory:  “In the commercial shipping sector we evaluated robotics, sensors, big data analytics, propulsion and powering, advanced materials, smart ship, shipbuilding, and communication technologies. These technologies are transformational in nature when used individually and when combined. We envisage that these eight technologies will be implemented differently from ship type to ship type. These ships will be called TechnoMax Ships as technology implementation will be at the optimal level in 2030. These ships will be smarter, data driven, greener, with flexible powering options, fully connected wirelessly onboard, digitally connected through global satellites.” Clearly, our insular shipping world cannot hide from technological changes.

 

The authors continue: “TechnoMax Ships will require fundamental changes in terms of design, construction, operation and supply chain management. They will be designed by technologically advanced shipbuilders, ordered and operated by owners to sharpen their competitiveness and boost their corporate social responsibility credentials.” The italicsare mine- not LR’s.

Readers of this report will look at it, and draw inferences, from the lens of their own specializations; engineers looking at propulsion and materials, IT experts looking at onboard networks, bandwidths, etc.  From my vantage point, as a forward looking observer (and sometimes thought-leader, when the stars align), I am trying to see how shipping fits into the industrial tranche of what’s described as “The internet of things”.  The accounting and management consulting group Accenture has weighed in on this subject with a group of reports. These include its Technology Vision 2015 Survey- where 2,000 executives, from across a range of industries, were polled on their views of a likely future and a volume on data analytics called the Industrial Internet Insights Report (produced in conjunction with General Electric). Though the cynic in me (and presumably many of the readers) would scoff at such surveys  and reports, they do matter- because shipping is responsive, maybe not always to the investment community (though LR does provide investment cases), but certainly to the cargo community. Though “the internet of things” is defined variously, purists focus on connected devices embedded into industrial processes. Sounds like a major criterion for TechnoMax to me. But, we need to keep repeating: “Cargo is king”.

 

On a more intellectual level, this could be paraphrased along the lines of ocean shipping being at the mercy (and whims, at times) of broader constituencies.  So, the observations and prognostications of highly knowledgeable insiders (eg Lloyds Register, and also DNV-GL and ABS) are to be taken quite seriously, but broader societal context, where cargo movers play, will dictate their “value”. In the examples of  process-improving technology adaptions that abound in the Accenture materials, oil & gas, as well as mining, figure prominently. Air and rail are mentioned; shipping is not.

Accenture says:  ”In the future, successful companies will use the Industrial Internet of Things to capture new growth through three approaches: boost revenues by increasing production and creating new hybrid business models,  exploit intelligent technologies to fuel innovation, and transform  their workforces.” Again, the italics are mine.  Their survey ( a poll, not a Class survey) found that 81% of respondents “…believe that in the future, industry boundaries will dramatically blur as platforms reshape industries into interconnected ecosystems…” This sounds like a natural for shipping.

 

From the lists of cool things in the LR report, I come back to  the two italicized linkages of shipping to the eco-system of those on that cargo throne- supply chains and corporate social responsibility. So, rather than unleashing a chorus of “wow-s” and “neat-s” at what technology could bring- my thoughts turned to ways to get cargo interests not only onboard, but actually writing checks. There is a big role for industry associations here- it’s unlikely that individual shipowners will be inclined to invest in technologies with uncertain payoffs. 

 

So, how about thinking about business models where the cargo side actually (not theoretically) pays. Corporate Social Responsibility is a two way street, and- with social networking and similar, savvy propagandists now have the weaponry to call out big cargo interests who are not investing in greener ships (or chartering less polluting tonnage).  Except for a few large listed shipowners, some of whom are national icons, there is little notion of such responsibility among the owning community. But the cargo side is much more accountable to the general public. While listed shipping companies sometimes make it into the Wall Street Journal or the FT (when tanker rates are soaring), mining companies and oil giants are in the news on a daily basis. So, the hybrid business models that should be developed should act on this reality, as a few pioneering financiers are already doing.  For example Efficient Ship Finance, a start-up, has its loans repaid from a portion of charterers’ hire payments that would otherwise accrue to owners.

 

Supply chains, mentioned by LR, also comprise a very sensitive nerve for those cargo kings sitting on their big thrones- benefitting from Capesizes at $9,500/day. Yet another Accenture report, Driving Unconventional Growth, highlights a project done jointly with GE which “…deploys analytics to help airlines minimize disruptions from mechanical failures and weather delays.” Again, this one has shipping written all over it. Where I part company with conventional thinkers is on exactly who should be driving the maritime versions of these innovations.  LR’s section on “Commercial Shipping Transformed” can only be described as “enthralling”- with everything connected and monitored. It’s hyper-cool stuff. But the transformation- from whatever-max to TechnoMax, might better be driven by the cargo side of the business- who can pay for it. Where it improves their supply chains (and we may need to stretch this business model to incentivize deep-pocketed charterers to think like ship owners), there is a real ROI. LR gets it partly right, saying: “TechnoMax Ships will be designed by technologically advanced shipbuilders, and will be ordered and operated by owners who are prepared to invest in sharpening their competitiveness and boosting their corporate social responsibility credential.” And where there are “social” consequences (again, “hybridized” business models should re-jigger incentives so that charterers are rewarded or penalized for items presently in the “owner” category), charterers will pay- or be shamed and called out visibly to the general public. This is what social media can do for shipping.