DNV GL White Paper

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Maritime Intelligence

A DIGITAL PRIMER

A guide to the terms and developments that exemplify the digital transformation of shipping From DNV GL and Fathom Maritime Intelligence

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Welcome from DNV GL Who is the Chief Digital Officer How Smart is Smart Maritime Business Trust

ALWAYS AT THE HELM WITH MY DNV GL My DNV GL is our common, freely available maritime customer portal which gives you single sign-on access to digital services and a wealth of useful maritime information. And My DNV GL’s flexibility means that whatever you are doing and wherever you are, you are always in control.

Visit My DNV GL at my.dnvgl.com

SAFER, SMARTER, GREENER

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WELCOME Today, advanced sensor technology and powerful satellite connections have opened up a new range of possibilities for understanding more about vessels and their operation. While at the same time, the amount of data that ships and vessel components are generating is continuing to expand, and they are connected to each other and linked to the onshore world to a greater degree than ever before. Essentially, there is exponentially more data from the ship and from the fleet in front of more managers than we could have imagined even ten years ago. And as such, the potential for smarter use of data in our industries is enormous.

For DNV GL as a classification society, it is vital to always be exploring ways we can help our industry to leverage new technologies to improve the safety and productivity of their assets. Today that means being out in front of digitalization and the vast amount of data being produced and gathered on vessels by advanced sensor technology and interconnected systems.

Our recently launched Veracity open industry data platform is a natural step and important component in quality assurance of the whole digital value chain. It will secure data with data ownership in mind. It will ensure data quality, cluster it, and make it ready for other companies for their applications. DNV GL will primarily use the data for its ship classification role, where we assure a safe condition of the hull, machinery, systems and components. But we also foresee data-sharing mechanisms with other platforms to enrich data, providing benchmarks, new and deeper insights.

At DNV GL we are continually adding to the ways we use data and IT to deliver services to customers, including electronic certificates to ease port processes and a survey booking system that uses predictive vessel tracking to give guidance on which are the most beneficial ports for minimal disturbance to operations.

For us digitalization is not an end in of itself, but another means to fulfil our main purpose: ensuring safe operations at sea and protecting life, property and the environment.

KNUT Ă˜RBECK-NILSSEN, CEO, DNV GL – MARITIME

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MODERN CLASS FOR SMARTER OPERATIONS Today’s market needs smarter solutions – and a modern classification partner. Find out how our modern classification solutions can turn possibilities into opportunities – and make your operations safer, smarter and greener.

Learn more at dnvgl.com/maritime

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WHO IS THE CHIEF DIGITAL OFFICER? “Shipping is analogue, the chief digital officer is, well, digital,” said one CDO with pride when describing the role he has in pushing his company into the future.

The chief digital officer, or CDO, is the hot new job title to join the shipping industry and it has a lot to do with the fundamental challenges that are shaping it, both from top down, the so-called Shipping 4.0 revolution, to the bottom up where start-ups and new tools are offering streamlining and cost effectiveness.

Shipping 4.0 could also be called smart shipping, cyber-shipping, digital shipping or more dramatically the fourth revolution.

The CDO is seen by some as increasingly important in driving this and has begun to appear in both shipowners, operators and OEMS: Wärtsilä’s CDO is an appointed board member.

So, what do chief digital officers do? What is their function, what is their role? And is it a job that is likely to be around for long?

There is no short answer to what the CDO does, but in ship-owning and operating businesses, it is those large companies with forward thinking agendas that tend to create such roles.

“These are exciting times and we are making key decisions on platforms and solutions,“ said one CDO that will be involved in the transformation of the ship owner and operator as it tackles what are huge challenges in the fundamental structure of the business.

One key function of the CDO appears to be in streamlining and creating the link between the

company and its partners, whether suppliers, customers or other business partners. “That is still not done digitally today; it’s like banking in the preinternet banking era” said one.

In several shipping sectors customers are well advanced in what could be called digital business processes, therefore they want their logistics and shipping suppliers likewise to be applying the digital tools or approaches they have adopted.

Streamlining external business flows is therefore one function of the CDO, and some of the maritime CDOs are eyeing blockchain as a key enabler in achieving this. Blockchain is described as a trust tool, allowing sensitive businesses to be enacted without required costly intermediaries or complex systems needed to secure the trust.

KEEPING AN EYE ON THE TANGIBLES

One CDO does offer caution about the over-blown coverage being shown by media and the industry to digital evangelism.

“One can grow weary of the exuberance of the disruption and digitalisation talk. It tends to miss the physical reality of logistics and the maritime industries - the tangible facts that make these industries what they are.”

It is, he suggests, like the internet bubble 20 years ago when everyone was excited about the huge

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disruption the worldwide web would create then.

The bubble burst, the honeymoon was over and a sense of commercial reality quickly emerged.

But while offering caution, the same expert also extols where digital solutions can offer value, such as blockchain.

Other CDOs are likewise minded about the potential of blockchain in the shipping industry. It is a tool to overcome trust issues and will soon be as common place as an IP address, said one “And we do not get all excited about IP addresses anymore, do we?”

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OPENING EYES

Sure, there is disruption, but most CDOs have a vast amount of experience in other industries where new tools have become commonplace, particularly in consumer markets.

“How you define disruption will depend on where you stand and for some it may be big, others small, some not at all,” suggested one CDO with a long list of consumer and business- based start-ups under his belt.

“We need to start seeing the trees from the leaves.”

The chief digital officer therefore feels a bit out of place. It is their job to. As much as linking with customers as the company changes, it is also to show people in the organisation how to use, trust and adapt to the tools that are emerging. It is about how they work innovatively with each other, and are more comfortable with risk.

The CDO must work on a company’s mindset; many of the employees may have, what one called, a more analogue attitude and need to see what the possibilities are with the new digital tools, rather

SHORT LIFE SPAN?

But will the maritime CDO be a long-term job title in shipping? Looking at other sectors, one may suggest not.

An article in Forbes magazine early last year by Theo Priestly, a self-proclaimed global evangelist at tech giant SAP, already suggested that the days of the CDO may soon be over.

The term digital has been around for decades, he suggests, and it does not, deep down, make a fundamental change to a company’s engagement with customers.

The problem is, suggested Priestley, that the functions of the CDO are also covered by C-Suite

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than see them as a threat.

One CDO also pointed to the role in linking different silos within large organisations that have hitherto not been closely linked, but need to as the company evolves. In a period of change trust is important, especially internally in a company.

“We are the bridge builders, and the eyeopeners” adding that the CDOs job is not as much about working with software code and digital data as working out how the company will evolve with the market and keep customers that may be evolving faster or slower.

“It is important to be on the lookout for tools that can leverage the opportunities being offered,” said another, hence a handful of companies have begun launching workshops and venture capital incubator style labs that can bring in startups and offer them the opportunities they need (ships, technology and even willing customers to beta test).

job titles that are already deeply entrenched in a company. He also thinks that the common traits of CDOs should be ubiquitous across the company, namely a champion of innovation, transformation, of the customers, of agility, of collaboration and of marketing.

So while the role may be fading in mainstream businesses that are comfortable with their transformation, the role may be around in the shipping and maritime sectors for a while, especially given the reluctance in these industries to willingly give up old habits.

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YOUR DIGITAL 101

For many in the maritime and shipping industries, the plethora of new terms relating to digital solutions can be confusing.

This handy list of short definitions of some of the key words and phrases will give you a short-cut to the inside track.

3-D DESIGN

ALGORITHMS

Ship design processes are increasingly turning to 3-D modelling. For naval architect firms, shipyards and class societies like DNV GL that need to approve designs, this is an opportunity and a challenge, but one that will lead to increased design efficiencies. The main challenge will be designers having to think in terms of 3-D spaces rather than lines, as well as software connectivity, integration and standardisation.

A process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer. Many vendors supplying operational efficiency tools rely on bespoke algorithms to calculate performance (analytics) and then advise on adjustments to a vessel’s operational parameters (trim, speed, weather routing, draft and even when to clean the hull).

ARTIFICIAL INTELLIGENCE Artificial Intelligence, (AI) is the replication of human intelligence by machines, especially computer systems.

This will include machine learning (and self-correction) self-assessment and even reasoning. Applications can be seen in speech recognition of user interfaces, video recognition such as proximity alerts and in autonomous systems. AI is considered an integral part of the advancement of autonomous shipping.

BIG DATA & ANALYTICS

AIS/ VESSEL TRACKING The maritime Automated Identification System has been around for a number of years and is increasingly used as a business intelligence tool, but it also gives the opportunity for accurate vessel tracking to help enhance vessel or fleet performance, which has clear economic and environmental implications.

AUTONOMOUS SHIPPING Autonomous vessels differ from unmanned vessels.

A vessel that is effectively controlled from a shore based centre would be unmanned, a vessel that can take decisions through machine learning and artificial intelligence without interference from shore would be autonomous.

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Big Data is the broad and evolving term to define a huge volume of data (either structured or unstructured) that can be interrogated for relevant information.   The requirements for big data are volume, variety (of data types and sources) velocity (of analysis) and veracity.

Big Data is a mathematical, statistical approach to data, different from an engineering approach where input output parameters are known.

BLOCKCHAIN A digital ledger in which transactions are recorded chronologically and publicly. The key benefit of blockchain is it creates trust in an increasingly complex world of digital transactions. The best-known example of a blockchain is Bitcoin. A number of blockchain projects are emerging in shipping, notably in relation to trade finance, compliance and contracts.

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CHIEF DIGITAL OFFICER

CYBER SECURITY

The Chief Digital Officer has been the new job title in the maritime sector with OEMS and ship-owners and operators employing them. Their role evolves around looking at existing business channels and finding how they can be improved with digital pressures, managing the data streams of a company across silos, looking at how new software tools, apps and even partnerships with start-ups can be best utilised. Similar roles include the transformation officer.

With the increased threat of malicious or unintentional attacks, cyber security is an ever-present concern for anyone involved in the advancement of online solutions.

Malware is malicious software or code, which includes any harmful code designed to damage the computer or collect information (Examples are trojans, worms, spyware, adware).   Cyber security also alludes to the development of solutions that help prevent accidental problems such as bad code, poorly assessed data etc.

CLOUD COMPUTING/CLOUD TECHNOLOGIES Cloud computing is about devices being connected via the Internet to servers where the data is hosted and the actual computation is done. Cloud solutions offer device and location independence, scalability on demand, low upfront investments, and low maintenance cost. They are increasingly used in the maritime sector to house accumulative vessel and fleet data for analysis.

CONNECTIVITY Improved connectivity, providing increased bandwidth at reduced cost, will become an enabler for new digital opportunities. There are some key connectivity tools available, and their robustness and potential are rapidly increasing. Terrestrial radio-systems VHF, MF, and HF are well known and established in the maritime community. VDES (VHF Data Exchange System) is a promising, though limited, initiative to provide a digital data service based on the existing terrestrial VHF radio infrastructure. VDES may become a viable solution for e-Navigation applications and some narrow-band shipto-shore reporting applications. Terrestrial-based mobile communications (as found with 4G and ICE on most personal mobile smartphones) can handle marine traffic.   Unlicensed frequency bands are increasingly used to provide broadband to ships, for example Kongsberg MBR (Maritime Broadband Radio). Mobile satellite systems (MSS) on L-band is well established, as is VSAT (on C-, Ku- and Ka- bands). They provide broadband connectivity, though both come with their own limitations including cost, speed and reliability.

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DATA Data is the core information used to make decisions. It can have many forms, such as the values related to a shipborne sensor, market rates, global fleet positions and weather conditions. Its value is in its continual collection to help determine trends. Quality assurance is a key feature for data to be usable for further analytics.

DIGITAL/DIGITALISATION While it is tending to be used as a general catch-all definition for many of the advances in the maritime sector, digitalisation has been around for a long time.

In terms of signals or data, it is expressed as series of the digits 0 and 1, typically represented by values of a physical quantity such as voltage or magnetic polarization.

In terms of devices, digitalisation relates to the use of the data to create value. In the maritime sector, data from vessel operations is turned into a digital format to allow computation and then assessment, either manually, but increasingly by computer algorithms, thus being able to add value. More broadly speaking, digitalisation is a means to eliminate inefficiencies in or caused by processes, using digital tools.

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DIGITAL CERTIFICATES

HARDWARE IN THE LOOP TESTING

Starting September 2017, DNV GL will introduce electronic certificates for the class and statutory regimes.

Available from anywhere in the world, the use of digital certificates brings many advantages for both DNV GL and its customers. By eliminating paper handling, they greatly reduce the administrative burden on the owners and associated stake holders. In addition, digital certificates are easy and convenient to share, and compiling them in My DNV GL provides a comprehensive overview which cannot get lost and is just a few clicks away. Increasingly flag states are also moving towards digital certificates too as they search for their own efficiencies.

Hardware In the loop testing has been applied in the automotive, avionic and space industry for decades. In HIL the control system may be connected to a simulated system rather than connecting it to the real system, having the control system believing it is controlling the real system. Simulated failure situations may now be introduced to verify that the control system detects and handles these failures in a safe manner.

With HIL testing you may stress the control system in a safe environment without the need of access to the real live system. HIL testing may be performed using a replica system enabling testing outside of the vessel’s delivery schedule.

DIGITAL NATIVE/ GENERATION ALPHA Generation Alpha (those born after 2010) and digital natives are generally described having an acceptance of the digital world around them.

DIGITAL TWIN A digital twin is a virtual replica of an asset including its 3D structures, models of its systems and software which has included in it all required information to allow any assessments and simulations to be made.

It is becoming a central part of any digital asset ecosystem and enables a new generation of advanced predictive analytics.

The digital twin integrates data from many different software products. Data smart asset solutions are key to reducing operational costs. www.dnvgl.com/digitaltwin

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INTEGRATED SOFTWARE DEPENDENT SYSTEMS ISDS (Integrated Software Dependent Systems) is an offshore standard and recommended practice guideline covering systems and software verifications and classification of any integrated system that utilises extensive software control.

The ISDS standard focuses on how to set up and run a project and how to develop system and software quality assurance processes that will last the lifetime of the Asset.

It provides a framework for working systematically to achieve the required reliability, availability, maintainability and safety for the integrated unit of software dependent systems.

One of the innovations of ISDS is that it assigns systems and software responsibilities to one or more of the roles in a project: owner, operator, system integrator, suppliers, and independent verifier (typically the yard).

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MACHINE LEARNING

SIMULATION/VIRTUAL REALITY

Given the size and complexity of some of the maritime industry’s assets, there are significant possibilities to use machine learning. Machine learning is the methodology and technology that gives computers the ability to learn without being explicitly programmed. One way to do this is to present the computer with example inputs and their desired outputs, and the goal is to have the computer detect and enhance by itself rules that link inputs to outputs. Recent advances in IT technology allow for the integration of large amounts of data. This, combined with new developments in data analysis, and machine learning, can lead to remarkable insights.

DNV GL has recently introduced a tool that uses machine learning to automatically match customers with the right expert for their question. The tool has already analysed more than 200,000 requests and is continuing to learn. DNV GL expects it will be able to answer simple questions on its own.

The concept of simulation in crew training is not new, academies have long been using simulators to create life-like bridge scenarios to put bridge teams through their paces. But simulation has gained extra pace with the advent of 3-D goggles and virtual reality, allowing for companies to begin looking at immersed training scenarios where people feel like they are really in the situation being portrayed. Another word has also emerged within this sphere, Gamification, to represent how online gaming models are being used to educate.

OPEN DATA EXCHANGE Open data is the idea that some data should be freely available for all to use, for the benefit of all. In a commercial world it may be that an open data exchange will make specific data sets available for all required stakeholders in a project or service to achieve a specific benefit or goal.

OPEN SOURCE Open source code is programming code that has limited or no copyright restrictions. Therefore any programmer can legally modify and share the software program.

PLATFORMS The key to any platform is assured access and sharing of data. DNV GL has created a digital platform called Veracity.

The Veracity industry data platform is designed to help companies improve data quality and manage the ownership, security, sharing and use of data to ensure improved asset lifecycle management.

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SOFTWARE AS A SERVICE Software as a Service is an outsourced enterprise solution that can be leased from a single vendor. If you use Microsoft office 365, Google Docs or Dropbox, you are using a SaaS. In the maritime sphere solutions offering web-based administrative, compliance, logging and planning tools are likely SaaS.

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HOW SMART IS SMART MARITIME BUSINESS?

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At Fathom’s Smart Operation’s Hamburg 2017 event, experts were asked what they thought about the digital journey the maritime sector is on.

The audience of experts in the shipping and maritime sectors were asked what their definition of ”digital” is as related to their industry “Having the knowledge of our business in a way it was not possible before” “Way to keep people safe, work efficiently and keep equipment in good condition” “Smart automation and self decision” “Changing the mindset of a traditional industry” “Gamechanger” “Autonomous vessels” “A chance for collaboration” “Transparency and high efficiency” “Vehicle to operate more efficient, transparent and on a higher technological level” “New opportunities and risks” “Connecting ship and shore as well as developing ships to floating offices, i.e. monitoring and steering ships' operations from shore” “Reduced cargo and more transparent transport of goods”

The aviation industry has long been cited as a role model for shipping. We asked Smart Shipping experts what they thought aviation could best offer the maritime sector “How to collaborate for improving safety” “Standard documentation” “Traceability of and responsibility for equipment, from design throughout working life” “The benefits of automation” “Risk assessment will become a key role” “Improved data evaluation mixed with higher transparency and finally safe fleet operation” “Standardisation of procedures between ports of call” “Training methods, tools and risk management”

With vessel operations capable of producing a huge volume of potentially useful data, we asked the Fathom Smart Operation’s audience whether they think ship operators are making full use of the potential being offered “No, due to money” “Not enough, because of resistance to change in an already very conservative industry” “Not really, a lot of legacy systems and 'documents' make it difficult to get all the data in one place” “No. The main challenge is lack of competence in software development and agile organisations” “No, the return on investment is not always as clear as lenders/banks/investors demand” “Yes, more and more” “No. The old style of working remains strong” “No since there is often a dispute when it comes to innovative investments in operation and new building phase” “No, real time shared access to data is another step to be taken”

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MARITIME BUSINESS AND THE DIGITAL REVOLUTION Who is making the digital investment decisions in your company?

60

Percentage

50 40 30 20 10 0

Board level

Chief Digital Officer (or other similar role)

IT department

Other

Decision Maker Technology appears to be having a stronger influence on the maritime and shipping sectors than ever before. Why? 35

Percentage

30 25 20

15 10 5

0

Because the latest digital solutions require little heavy engineering, class involvement, or changes to a vessel currently in service

Because they are more business orientated

Because the solutions are Because there is a new more cost effective than ever generation taking the help and before they are more responsive to new ideas

Reason

How much investment is your company making in turning digital and how is it allocated?

90 80

Percentage

70 60 50 40 30 20 10 0

It is part of the sales and marketing budget

It is part of the main corporate investment as the business shifts focus

Very little so far, but we have plans

Value

10

Nothing

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What will be the biggest challenge to the use of digital solutions in the industry?

Adapting commercial contracts to new slimmer processes 2%

Develop and implement the technology 0%

Evolving regulation to cater for the pace of change 6%

Creating common standards and infrastructure 92%

Which of the shipping sectors are more likely to be disrupted in the coming decade?

Tanker Industry Offshore

Sector

Ro-ro/ro-pax Hinterland transport Cruise sector Container shipping Bulk sector

0

5

10

15

20

25

30

35

40

45

50

Percentage How keen will Generation Alpha be in pursuing a career in the maritime industry?

10 (very keen) 9

Level of Eagerness

8 7 6 5 4 3 2 1 (not keen) 0

5

10

15

Percentage

11

20

25

30

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IT’S ABOUT TRUST

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Final Comment

It is all about trust, whether we trust the data, our analysis of it, and even each other. Trust is reliance, confidence and certainty of a person or system working as expected.

The digital transformation or change, the fourth revolution, call it what you will, it is all about creating more efficiency, and in business, efficiency is best achieved with trust.

And in the asset management side of the business, sensor and data integrity, it is all about trust, trust in the sensors, the data and the ability to analyse it.

Blockchain has seemingly appeared in the maritime industry like a flash of inspiration, (the idea of it appeared over 25 years ago, and the first one developed nearly a decade ago, but never mind that) and is being heralded as a super trust tool.

Create better trust and you create stronger, better business, better trade. The new roles being created in shipping, the chief digital officer for example, are all about finding new tools and new ways that are efficient and trustworthy. But it all comes at a cost.

There are a number of roles rooted in the shipping industry that are there to create trust that may be at risk. Brokers, forwarders and agents are the middle men who will look at disruption with trepidation. How will these evolve as autonomous trust tools grow?

Of course it may take time for the trust tools to become trusted, and there may be hurdles on the way.

Will blockchain and digital platforms become proprietary or open system? Will different systems become compatible?

In the mean-time the agents, brokers, forwarders and even verifiers may need to look at how they could be self-disrupters; create solutions that reshape their own role and keep it relevant and important.

There is a huge opportunity, as shipping 3.0 moves to shipping 4.0, to create significant gains in the industry that will benefit all players, or nearly all. But this may not happen.

International shipping is incredibly competitive while being based on a bedrock of common safety and environmental regulations. Many of these digital tools being tried out will be seen by some as hugely competitive gains by those taking the initial leap.

But what about in the long run? Will bespoke digital systems, platforms, blockchain etc, lead to a battle over standards and pricing, just as happened in the home entertainment market in the 1980’s when VHS beat Betamax, only to be swiftly superceded by new technology, or as is happening with Android and Apple.

Such a move, leading to a patchwork of solutions, in shipping could take a decade out of the advancement of the industry and benefit none. Now is the time to look around, find common ground and raise your hand to join in on common talks that will improve the industry, and create more trust.

Safety and environment will always come first, and a competitive commercial edge will always be necessary; but by talking about common ground, common trust, we talk about improvements for all.

Craig Eason, Editorial Director, Fathom Maritime Intelligence

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