Regulation can inhibit innovation, ShipInsight panellists say

Paul Gunton
Paul Gunton
ShipInsight

06 March 2019


“Regulation is certainly a constraint on innovation,” said Matthew Williams, senior marine adviser at the International Chamber of Shipping, during discussion during last month’s ShipInsight conference. He was taking part in a session looking at disruptive innovation and autonomy and was responding to a question from the floor about how obstructions to innovation.

He acknowledged that IMO encourages safety- and goal-based standards where prescriptive requirements were previously set, but that works well only if work has been done to establish what safety level is required. “Unless you know what that is – and, being very frank, we don’t – how do you demonstrate that an equivalent design meets the goals and functional requirements?” he asked.

Aron Frank Sørensen, BIMCO’s head of maritime technology and regulation, shared his concern. Whenever a regulatory standard is changed, he said, approvals are needed to the new standard and “that is something that stops innovation.” He compared shipping with other sectors, in which good ideas can become successful businesses very quickly, he said. In shipping, however, “as long as we have a very rigid system for coming up with new pieces of equipment, innovation will take a long time.”

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But Gijsbert de Jong, marketing and sales director of class society Bureau Veritas, said that, although regulation can discourage innovation, “it doesn’t have to”. He pointed to IMO’s long-term strategy to reduce greenhouse gas emissions as one example where regulation “is actually pushing us all to innovate and to get ahead.”

He urged the industry “to challenge regulations to become more agile and more adaptable” and to make use of the engineering opportunities offered by goal-based standards. Unlike Mr Williams, he welcomed what he described as the freedom that IMO offers to find innovative ways to meet operational objectives. He cited cruise ships “with ever larger public spaces that are not allowed under SOLAS” as one area where this approach has been demonstrated.

Another panellist, Capt Kuba Szymanski, secretary general of InterManager, was sceptical that regulatory developments encouraged by this flexibility have helped seafarers. “Technology can be presented beautifully, especially to those who don’t understand it,” he said. “But then it comes to guys like me who have to use it in a Force 10 and it’s useless.”

He linked his remark to the trend for larger lifeboats on cruise ships and said that he could back up his claim from accident data collected by InterManager. “Any accident is a failure of the risk assessment,” he said, with the crew often taking the blame. Instead, the response should be to tackle the operating environment, mirroring the aircraft industry, in which similar accidents rarely recur, he said. “This is what inhibits us.”

Business priorities can also have an impact on innovation, said Mauro Sacchi, director of strategy and business development at Wärtsilä. He suggested that some people “are making a business out of inefficiency” because innovative improvements “might take them out of the game.”

He was particularly referring to those who are intermediaries and believes their desire “to preserve the status quo [is] one of the major objections to innovation.” But he does not think this is a universal problem. Some intermediaries are forward-looking and recognise that innovation can lead to them gaining a competitive advantage in the longer term, he said.

The panellists had earlier been discussing whether shipping had seen any disruptive technology, with some disagreement over whether what Mr de Jong called “an accelerated phase of innovation” was technically disruption.

Mr Williams said it was not. He referred to the Harvard Business Review, which claims to have coined the term in 1995 and which reassessed its use in a lengthy 2015 article. Its authors argued that disruptive innovation deploys off-the-shelf technology, which means it “is driven by what technology can actually do, not by expectations of what it might be able to do,” Mr Willams said.

In shipping, “two significant criteria of disruptive innovation have not been met,” he said. It should be observable and it should be industry-wide. So “sector-specific change does not count” and “existing shipowners are not being challenged by new entrants” offering alternative shipping solutions, he said.

But Mr Sørensen identified the upcoming 2020 sulphur cap as a truly disruptive change. Shipowners will be faced with a change in fuel options greater than any they have seen in the past 100 years, when coal gave way to diesel. But that was a gradual process; “this time 75% of the fuel market will have to change overnight [and] that probably is disruption,” despite what “the nice definition” might imply.