The pros and cons of the digital world

Malcolm Latarche

Malcolm Latarche · 21 September 2017


Digitalisation is very much a buzz word in the shipping today with seemingly everyone claiming it to be the answer to all problems but is it well understood and what is possible?

Whether its referred to as digitisation or digitalisation is a moot point although there are subtle differences in their meaning, the fact is that the use of computers is changing the shipping industry in many ways. Some might call it transformation but to others it is just a new way of working with information.

One of the pioneers of trim optimisation software, Eniram has recently released a white paper titled 'Starting your voyage towards the new world of marine digitalization'. As the title suggest this is less of an in depth technical treatise on the subject and more of a primer exploring the possibilities.

The paper begins by looking at where the industry stands and what it describes as barriers to change. It makes the point that only a fraction of today’s cargo vessel fleet is fully connected beyond simple email and dial-up capability. This is something that some observers overlook when focussing on possibilities for new digital products and services.

It makes the point that this is the main reason why digitalisation has had very little impact on core shipping processes. One sector that the white paper singles out as being a leader in accepting digitalisation is the cruise sector saying it is years ahead in using advanced solutions for data collection, real-time optimisation and remote monitoring. It says the reason for this is probably a combination of owner-operator type of long-term thinking, a high level of propulsion complexity and the fact that the vessels may cost up to 1$bn to build. All this justifies investing in the latest high-end, hardware-driven technology. It goes on to say that beyond the cruise line segment, the short charter cycles has not invited large investments into the performance tracking of the vessels.

Cloud services are seen as being a spur to further take up as data collection, hardware and delivery of insights could be leveraged as a service. The trend is from hardware-based to cloud-based solutions. Once data is cloud based, data enrichment and integration to other business systems can be done fast and at fraction of the cost in comparison to traditional IT integrations. This changes the game radically for most of the vessels in the world and is likely ignite a major digital revolution throughout the shipping industry.

Three degrees of engagement

Eniram believes across shipping, operators fall into one of three categories according to their approach to digitalisation. Satisfied operators have opted to go ahead with it and have succeeded while unsatisfied operators have been unsuccessful in their efforts – mainly because of poor project management and lack of skills in using acquired data. Non-engaged operators have yet to act on digitalisation at all and will quickly start lagging behind the more advanced operators.

Looking closer at the latter two categories, it says that unsatisfied operators have made a conscious decision to move ahead with the digitalisation of their operations. However, after some time (often years later) they still do not believe to have had any return on their investments or are not at all satisfied regarding expectations and results.

Lack of satisfaction often originates with the lack of defined outcomes from the whole digitalisation process. If it is perceived as a normal IT project with a focus on technical implementation, the outcome ignores what the aim should be: data-generated insights that can be acted upon. This requires an appointed team that understands the changes that need to happen in the company’s daily operations – a team that is able to demand the right solutions from the technical implementation.

The usual outcome can be summarised as “We did this years ago, we now have all this data, but it we can’t do anything with it”. Usually this is because the process has not been steered towards any actual use of the data insights. Furthermore, rather than treating the development work in an agile manner, the view is that the system implementation has been completed – often with a significant cost – and that no further investments should be made before the management sees some ROI for the initial investment.
Non-engaged operators have showed no interest in moving towards new technology or digitalisation. They operate their businesses with the help of traditional manual reporting, communication and record keeping. The paper identifies three main reasons why some operators choose not to engage with digitalisation.

  • It’s so complex that it can’t be automated.
  • The operations are very different from how others do it.
  • Others pave the way. Shipping hops on board once everything has been thoroughly tested.

Depending upon their role in shipping, it is a fair bet that there are many who fall into the non-engaged category who may have a point at least as far as some aspects go. For example, later in the paper, Eniram discusses better charter party compliance with regard to vessel performance.

Theory and practice in conflict

This of course only applies to ships operating on time charter. It is quite surprising the number of bodies and organisations in shipping that ignore the fact that a very large percentage of the world fleet operates on the spot market for their own account and no time charter is involved. That said, the owners can always benefit from improved performance, fuel efficiency and safety aspects. It is of course possible to fix a ship without any negotiations merely by accepting the initial offer and that could be done by digitalisation, but the art of negotiating and evaluating new offers and geo-political events simultaneously are skills that no computer can yet replicate.

The paper says that there is no place for acting slow in shipping. But digitalising one’s fleet and at the same time increasing efficiency can be a daunting task. It can be easy to postpone digitalisation with the excuse of short-term efficiency. However, this will inevitably leave one losing out on significant efficiency increases that only digital solutions can bring.

Three key areas can be seen as major benefits of well-executed digitalisation: it opens a new world of possibilities within fleet management, operational performance tracking and commercial efficiency.

The paper covers ground that many will find familiar from reports of products and services some of which have been available for some time. Little of this will be new to some operators but small companies may still have to discover the claimed benefits. It is often said that vessel and fleet operations can be significantly improved through digitalisation and while some operators – perhaps those that fall into the unsatisfied customers category – may have been disappointed with early products they may wish to revisit the market.

New technology provides opportunities for more precise reporting, data collection from vessels and third-party data streams such as weather reports. In addition to automating and delivering this data in real time, it is possible to combine these and create real-time insights that benefit both on-board performance and onshore operations.

Automated reporting enables fleet operators to gain accurate insight into the vessel’s fuel consumption via a speed-fuel curve. It enables faster and more accurate planning. Statistical models that “fit” the data while focus on speed through water (STW) by using speed over ground, current, and weather, are proving to be much more accurate compared to average speed logs. The aim is for both onshore and on-board personnel to be able to take action based on real-time data. When everyone has access to the same reliable data, transparency becomes a platform of trust.

Automation ensures that everyone has the same visibility and minimises the risk of oversights. More precise data based on larger data sets ensures that the reality at sea is reflected correctly onshore.

Some assumptions made in the paper may be challenged by experienced hands who recognise that the reality does indeed sometimes differ from the perfect conditions that proponents of digitalisation suppose exists. For example, the paper makes the point that digitalisation of navigational data gives the operator insight in how the crew has executed each voyage. This gives the operator the ability to evaluate and optimise the crew’s nautical performance. Some would argue that this is a dangerous assumption and quite often, the expertise may not be available onshore to make valid judgements especially when safety and commercial expediency come into conflict.

However, it is true that with With digital reporting tools, the operator can benchmark nautical performance across the fleet, take action where needed and optimise the vessel’s speed against its fuel consumption. This can lead up to 10% in fuel consumption savings.
Combined with real-time location data, the operator can evaluate the planned route based on actual fuel consumption and recommend change for a more energy efficient route – all the while taking changing weather conditions into account. Optimisation of speed and route planning saves fuel costs and by doing so reduce emissions but can also allow for routes to be chosen which avoid ECAs and the need to burn more expensive fuels but which may take a slighter longer time to complete.

New solutions need new thinking

Another change that may have been overlooked is that newer digital solutions and transponders are able to function independently from the AIS. Autonomous transponders enable operators to safely track their vessels in case of blackout in areas where the AIS has been turned off or in areas where it has limited functionality. This provides improved safety for the crew and transparency for the operator, regardless of the location or situation of the vessel.

One particular area where digital reporting could be an advantage is that where from 31 August this year when the EU MRV regulations came into effect. Now all vessels regardless of flag and over 5,000gt visiting EU ports must monitor and report their CO2 emissions. Typically, new regulations like these often increase the workload and amount of paperwork for operators, owners, and crews alike. The latest digital monitoring tools give accurate knowledge of a vessel’s speed-fuel curve and its fuel consumption during different draughts and conditions. While intended to allow for optimised operations and faster, more accurate planning, leading to lower fuel consumption they will as an added benefit also fulfil the regulatory reporting requirements.

The paper is an interesting document but as mentioned will give rise to some dissenting views. One aspect that is missing is the need for security of data to be taken into consideration. The cyber-attack experienced by AP Møller Maersk in June this year apparently cost the operator $300m in lost revenue. When planning digitalisation projects, defence and vulnerabilities are matters which must also be taken into account along with the desired outcomes.

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