The towage sector is changing. As the custodians of the first and last mile of vessel voyages, acting as an important intermediary to ensure that cargo operations can be conducted efficiently and effectively, we are often at the sharp end of market forces and shifts within the wider shipping, ports and logistics industries.
Simultaneously, it is hard to overstate the scale of upheaval that the COVID-19 pandemic and evolving economic situation has unleashed within the shipping industry. Analysts across the board have predicted a steep drop in seaborne trade which is also reflected in the major container lines’ expectations of decreasing volumes amounting to 20-25% this year. So, it would be difficult to talk about trends in Svitzer’s market without paying some thought as to how COVID-19 is impacting operations in the short, medium and long term.
Before COVID-19 and its economic impact hit, the towage sector was already being reshaped by trends of its own. The last few years in this market have been marked by consolidation of players, a push for innovation, and an increased focus on safety.
In some respects, the towage sector is mirroring the wider shipping industry that it serves. These trends are a reflection of the demands being placed on our sector, as we respond to new vessels, new technologies and new legislation.
Nevertheless, they are worth examining, because their potential impact for towage will be vast, and because they provide a blueprint for commercial success in the coming decade.
It would be fair to say that the shipping industry’s transformation is increasing pressure on towage, as every operator strives to continue providing safe and cost-effective services.
Part of this pressure is from new and increased demands, such as the call for more powerful tugs to handle the largest vessels on the world’s oceans. With ship sizes soaring over the last few years, including the delivery of the world’s first nearly-24,000 TEU container ship, the technical and operational capabilities of tugboats need to scale up dramatically in order to handle such vessels efficiently and safely.
Yet more pressure comes from the need to be able to be reactive and responsive, turning the art of deploying towage assets effectively into an even more complex ballet of moving parts.
Cost and consolidation
It also goes without saying that part of this pressure is on cost. As a sector, towage is therefore tasked with improving the operational capabilities of its crews and vessels while managing customer expectations; a difficult and delicate balance to reach.
Supporting the shipping industry in navigating its current challenges effectively means that towage is having to take a close look at its available resources. This simple fact is what has led to the overarching and arguably defining trends of consolidation – and professionalisation – across the towage sector in the last decade.
Towage leaders of the future will be defined by their ability to invest in operational efficiencies and technological innovations to keep pace with customer requirements. This will likely involve refitting vessels and training crews, both of which are dependent on access to funds.
To keep up with the requirements of the customers and the industry requires access to funds, talent and innovative capabilities.
Svitzer, for example is a wholly-owned subsidiary of Maersk; an arrangement which gives Svitzer the ability to benefit from Maersk Group’s innovative capabilities and financial stability, as well as its experience, scale and expertise in shipping and maritime.
Clearly, these wider group resources are a part of our ability to capture new growth opportunities as they arrive and to provide consistent high quality towage services for all our customers. Expansion will be guided by our pursuit for sound financial results and we are constantly looking for global opportunities, including mergers and acquisitions, that allow us, and partners we work with, to adapt and evolve in line with the wider maritime industry.
Overall, we can expect that the coming decade will see the trend continue, resulting in fewer towage operators with greater global coverage of their fleets.
Driving this will be operators closely considering the ways that they handle busier and more complex day-to-day operations, expand their fleets and maintain an emphasis on safety while keeping high utilisation and flexibility. For a number of them, merging with others is one of the best means to leverage the resources they need to meet these challenges.
Safety and technology
The pursuit of even greater safety – an area of real improvement over the last few years – will also be a key driving force. This will initially take the form of greater levels of automation, starting with smaller tasks on the tug, before expanding. This will help us to reduce the risks crew are exposed to during the most dangerous points of a towage operation.
Several towage operators, including Svitzer, are exploring the use of remotely controlled technologies. It is reasonable to expect in the near future that more and more elements of our operations being automated. At first, this will impact operations such as the connection of vessels and focus on augmenting situational awareness for our crews.
We see that ship and shore-based automated processes and remote operations that support the crew will precede full autonomy, and towage operators have an opportunity to step out in front as leaders in human-led automation. As a whole, innovation is important for the future of our sector – again requiring the resources to innovate and develop new technologies – but the end result is likely to be a hybrid of human skills and technological capabilities for some years to come.
Proactive towage operators should embrace innovation and support the development of new technologies. In tandem, they should be equipping their workforce for the tasks of the future, investing in training so that the development of a safer future for towage is a journey shared by everyone who works within it.
Finally, a thought about COVID-19 and its impact, beyond the economic implications. We have already seen discussion forming that this current crisis may prompt a permanent change of mindset within shipping, so transformative are its anticipated effects.
The COVID-19 pandemic could be seen as a catalyst for change. Once the dust has settled, we may well find that COVID-19 accelerated the trends that are reshaping our market, instead of slowing them down.
We must seize the initiative and use all the resources at our disposal to respond to this situation, and ultimately improve the safety, sustainability and efficiency of our operations. The smooth future of towage – and the wider shipping market – depends on the proactivity and initiative that we show today.