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The dawn of digital shipping
digital shipping The dawn of
Exciting new technologies such as smart contracts and autonomous vessels will have a transformative effect on the maritime sector and offer huge potential benefits and efficiencies. But, these revolutionary advances need to be manged carefully and the continued critical role of humans in the process must not be forgotten argues Andrew Taylor, Chief Executive Officer at UK P&I Club.
Nearly every industry across the globe has witnessed or is undergoing a digital revolution of one form or another, and the shipping sector is no different. As technological advancement infiltrates further into wider society and our everyday life, exponentially increasing connectivity, it brings with it an inherent pressure to embrace a more digitised environment.
From blockchain to cyber security to autonomous vehicles and enhanced customer experience, there is much to ponder for the shipping industry. The industry faces new opportunities, and to some extent threats from the rise of digital, data, analytics, and automation. In a sector so focused on physical assets and rooted in traditional methods, change can be slow.
However, the digital era presents potentially disrupting business models and new value streams. Customer expectations of the global maritime sector are being radically reshaped by e-commerce and innovation in logistics. With outside innovation being gradually adopted, the industry is in a state of flux.
BUILDING THE BLOCKCHAIN Blockchain is the new buzzword in the shipping industry and, as such, is increasingly difficult to avoid. Put simply, blockchain has the capacity to transform and fully digitise contracts within the shipping sector. It is essentially an online communication protocol, which allows interdependent users to participate in a transaction.
All parties to the transaction have access to the same information and no one party can attempt to amend or vary the transaction unilaterally without acquiring the permission of the others.
Blockchain is extremely secure. It is virtually impossible for transactions to be manipulated by an external party as the whole process is guarded by sophisticated cryptography, with exact copies of the transaction’s ledger distributed among the participants. Its industry-wide adoption would have a tangibly positive effect on instances of fraud and corruption, for example eliminating demands for ‘grease payments’.
Blockchain can be used to convert shipping contacts and agreements, such as sales contracts and bills of lading, into self-executable computer software. As the technology progresses, the prospects are that natural
language contracts might even be done away with completely and be replaced with a contract made entirely of code. The higher the degree of automation in a contract, the larger the potential benefits.
Smart contracts can have a transformative effect on the maritime industry, leading to increased accuracy, security and transparency, as well as decreased reliance on intermediaries and savings of cost and time.
The World Economic Forum estimates that 10% of GDP will be stored on blockchain by 2027, highlighting the scale of impact the technology will have. Smart contracts technology is still in its infancy and some legal hurdles still need to be cleared. Nevertheless, they will gradually become pervasive in the wider maritime industry, offering practical solutions to challenges which have negatively impacted trade for years.
THE AUTONOMOUS EVOLUTION Another hot topic within the marine world is the potential and scope of autonomous vessels. Autonomous shipping is looking ever more likely to be the future of the maritime industry. The autonomous shipping market was estimated to be worth $6.1bn in 2018 and is expected to expand exponentially, reaching $136bn by 2030. The exciting development of “smart shipping” will revolutionise the landscape of ship design and operations, but, this revolution will come with many challenges. First, there is currently no international definition of what an autonomous or unmanned ship is, what the various levels of autonomy are, or whether an autonomous ship is considered a ship under international law. Bodies such as the International Maritime Organisation (IMO), European Commission and Lloyd’s Register have developed divergent classifications, which makes the legal and regulatory framework of autonomous vessels a minefield to navigate. The absence of an internationally accepted definition could have the con
Andrew Taylor UK P&I
sequence of an autonomous ship being considered a ship under the law of her flag state, but, not under the law of the coastal or port state. Other obvious challenges relate to the absence of crew, navigation rules, seaworthiness and perhaps most pertinently, cyber risks.
Autonomous ships are highly dependent on computers and other robotic equipment, that could exacerbate the consequences of a cyber attack. If there is no crew onboard, there will be no possibility of physically overriding remote or autonomous control. Therefore, a vital requirement is the adoption of best practices for cyber resilience. It may be that “the IMO’s cyber guidelines” could be fully developed and become part of flag and class requirements for autonomous ships.
Undoubtedly, autonomous shipping has the potential to revolutionise the industry with a shift towards a more technologically advanced future.
Blockchain is extremely secure. It is virtually impossible for transactions to be manipulated by an external party as the whole process is guarded by sophisticated cryptography.
However, there are still many challenging regulatory and legal hurdles that must be addressed.
If these legal and regulatory frameworks keep pace and adapt to the technological improvements, the industry can truly harness and embrace the full possibilities that autonomous shipping can offer.
THE HUMAN TOUCH While technology has undoubtedly moved the dial, advancing efficiencies, safety and processes within the global shipping world, the industry is still built on the dedication, expertise and experience of the people who serve it. It is important that we do not lose track of the human element, merging and aligning technological improvements to the benefit of the wider community.
A good example of this in practice is the newly accessible digital platform created for members, brokers, customers and network partners - Thomas Miller Connect. The online platform allows Members of the UK P&I Club, UK Defence Club and TT Club and their brokers to manage all their accounts, documentation, payment and claims data in one digital space via a single log-in and password. Users can download documents, export data and change account details quickly and easily, with industry-leading back-end technology ensuring robust security.
Though not characterised by its willingness to readily embrace change, the further digitisation of the global shipping industry is inevitable in a world driven by data and obsessed with faster technological solutions. Collectively as a sector, it is integral that we continue to adapt to these shifting demands, reviewing where, how and in what context technology can enhance and bring benefit to our methods, roles and end-customers.
Sources: 1. http://www3.weforum.org/docs/WEF_ GAC15_Technological_Tipping_Points_ report_2015.pdf
