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Bimco, Shipping digitalisation: main opportunities and threats

The BIMCO President Mr Papagiannopoulos highlighted the main opportunities and threats for shipping coming from digitalisation at the 3rd ShipIT conference in Athens on 27 September 2017. The opportunities and threats include the admin burden on board ships, autonomous ships, blockchain, cyber risk management and not least the human elements of all these issues.

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Opening keynote speech by Anastasios Papagiannopoulos, President of BIMCO

Ladies and gentlemen, thank you for inviting me to speak here today at the third ShipIT Conference. I am delighted to be here with you.

The topics being discussed today are all key themes for my term as President of the world’s largest international shipping association.

And while I do not presume to have the specialist knowledge of many of you here today, increasing digitalisation, embracing new technologies and cyber security are all subjects we ignore at our peril.

Eastman Kodak is often cited as an example of a company that failed to grasp the significance of a technological transition that threatened its business.

The irony is that Kodak invented the digital camera, but the story goes, that the company failed to see the impact that digital cameras and smartphones would have on the way we take and share photos. The company couldn’t see the fundamental shift that was happening right under its nose, and that was its downfall.

Shipping can’t afford to be like Kodak.

Digitalisation is coming to the shipping industry and it is coming fast.

Digitalisation and disruptive technologies present us with great opportunities but also with very real threats.

We need to be ready to seize the opportunities that new technologies can offer, but also be prepared to manage and mitigate the threats.

We also need to remember that the human element – especially our seafarers – are a very important factor for safe and effective shipping. When considering modern technology, we need to take the human element into consideration at every stage of the ship’s lifecycle including its design, build and commercial trading.

First of all, I would like to consider the opportunity that increased digitalisation offers shipping in terms of easing the administrative burden – one of my key themes as President of BIMCO.

Traditionally, ships’ masters are responsible for a huge amount of administrative work onboard.

This is not just about log keeping and other paperwork related to a ship’s voyage. Each port that a ship calls at requires different information on port clearance, while the ship has to provide cargo information to terminals and customs and many other national authorities.

The administrative burden on ships’ master is a heavy one. The question is, what can be done to ease it?

The IMO has recognised this to be a growing issue and one to be considered in the development of new regulations. BIMCO certainly welcomes and supports this, but I am not sure it will make a substantial difference to ships’ masters in the short term.

It should be possible to standardise much of the information that flows between ships and ports and even to automate the exchange of this information.

This is where BIMCO’s participation in the EU project “Efficiensea2” comes in.

BIMCO is working with partners across the industry, original equipment manufacturers (OEMs) and authorities to develop these kinds of standards and the transmission protocols that could enable automated exchange of information between the ship and shore.

This is an important part of the e-Navigation agenda that will change the way ships operate in the future.

BIMCO also recently announced its partnership with the SHIPDEX organisation, signing an agreement to support the development and exchange of technical and logistical data across the shipping community.

Facilitating the standardisation and digitalisation of ships data, linking OEMs, shipyards, owners and onboard the ship, SHIPDEX can ensure that a ships’ documentation is current, specific and available to use in other systems, such as planned maintenance and purchasing systems.

Having the right information about your ship, its systems and equipment from the time of its construction, saves time for the crew onboard, as well reducing costs and potential errors when trying to code a ship’s planned maintenance system.

We must examine how new technologies can be safely and securely built into the ship designs of the future, while ensuring that the next generation of ships are designed to be cyber resilient right from the start.

And, BIMCO is working with the International Association of Classification Societies (IACS) to ensure that this is the case.

Leading on from this, new technology has made autonomous ships a reality.

Today, the number of unmanned ships is modest compared to their manned counterparts.

Unmanned ships are mainly being used for marine scientific research and by the defence sector. Even so the largest seldom extends beyond 15-20 meters in length, and they are operating in near coastal waters.

However, this is about to change, with prototypes for larger unmanned container carriers and small island ferries currently in development.

The International Maritime Organization (the IMO) has set out to determine how the operation of autonomous ships might be introduced in IMO instruments.

But alongside the regulatory developments, there are a range of practical issues which need to be resolved before we will see autonomous ships trade globally.

A few questions come to mind instantly:

What new skills will seafarers need to cope with the new technology?
Autonomous ships won’t need as many seafarers onboard. What will be the role of those remaining and will they be stressed by more admin?
Who will be responsible for the cargo, if the technology breaks down?
What will the service time be, for more advanced technology?
But, the price and many more questions of a practical nature, will have to be answered before shipowners can determine whether an autonomous ship is actually commercially viable.

Digitalisation is bringing other commercial opportunities too.

Modern technologies invariably spawn “buzz” words. “Digitalisation” is one; “blockchain” is another.

Blockchain is not a new technology. It was born out of the creation of crypto currencies like Bitcoin. But people have begun to realise that blockchain has the potential to be used for all sorts of things that involve transactions – particularly those that involve a trusted middleman.

Trust plays a big part in our industry – but at the moment, it is to a large extent based on centralised systems like banks who verify our transactions. Centralised systems can be corrupted and they can be hacked. But blockchain is decentralised and could offer ultra-secure solutions.

In our industry BIMCO can see opportunities for blockchain applications such as in supply chain logistics – containers; bunkers; ship’s supplies and spare parts, to name just a few.

We are already seeing several container lines working with major IT providers to explore possible blockchain solutions. BIMCO’s role in this emerging technology is as a facilitator – bringing together the key stakeholders; informing, advising and sharing information.

BIMCO’s world leading standard contracts and clauses have been used across the shipping industry for more than a century and they are recognised all around the world, establishing and setting international trade standards.

BIMCO sees opportunities for blockchain technologies to decentralise and speed up the handling of bills of lading – and together with other technologies, we could see charter parties built on blockchain platforms.

As we move into a new digital era, there is a key role for BIMCO in ensuring that contractual standards are maintained in whatever new form charter parties and other contracts may take.

This is an area where technology, commerce and the freedom of contract come together and the industry must self-regulate to preserve that freedom of contract.

It is also an area where more structural changes could occur as digitalisation has an increasing impact on the role of brokers, agents, and shipowners, and it will affect the future employment of people in our industry.

I have covered some of the opportunities that digitalisation offers us, but covered little of the challenges.

I think we can all agree that the biggest threat to digitalisation is poor cyber risk management.

Cyber risk management is a global issue impacting all industries and public services.

But shipping is at a relatively early stage of technological advancement compared to other industries.

Many older ships still use analogue systems and have little or no interconnectivity with the shore and often no form of networked automation on board.

Newer ships are increasingly using systems that rely on computers, integration, automation and networking. And increasingly these shipboard systems are also connected to the internet.

Three years ago, BIMCO spearheaded a cyber security initiative on behalf of industry associations, and we are proud that, as a result, cyber security is now a watchword across our industry.

Cyber security will remain at the top of BIMCO’s agenda as there is still a lot more to do, to ensure that our ships are safe and our important information is protected.

Cyber security threats are dynamic by nature and protecting against those threats is a continuous “catching up” task.

This means that the industry guidelines need to be a fluid, evolving document – updated on a regular basis.

BIMCO has led the task of revising the ‘Guidelines for Cyber Security Onboard Ships’ and the second edition of this important document was published in July 2017.

The guidelines are now supported and endorsed across the industry, and produced in partnership with CLIA – the Cruise Lines International Association, Intercargo, Intertanko, ICS – the International Chamber of Shipping, OCIMF – the Oil Companies International Marine Forum and IUMI, the International Union of Marine Insurance.

Our next steps must be to build awareness among our seafarers and to train them effectively in “cyber hygiene”. They need to be aware of the dangers that their own and others’ “digital” activities can have for the ship.

BIMCO supported this process recently with an onboard poster campaign launched in partnership with the Maritime and Port Authority of Singapore and the International Chamber of Shipping. Both the poster and the guidelines are freely available to the shipping industry, and can be found on the BIMCO website.

But while building awareness we need to ensure that enhancing onboard security does not create as many problems as it resolves. Greater widespread connectivity of ships means it’s easier for seafarers to keep in contact with their families at home, which is great. But at the same time, greater use of the internet must not hamper the safe and efficient operations of the ship, by creating additional administrative burdens.

Which brings us back to the beginning.

Digitalisation has the potential to bring dramatic changes to our industry.

Some of those changes may be exciting opportunities and some of them may be serious challenges. Our industry may become leaner and more transparent. But it could also make our industry more vulnerable and we will need to manage and take measures to mitigate our cyber risk very carefully.

Automation may be a means of improving safe operations, but we must ensure that the result is not simply fewer crew, stressed by even greater administrative burdens.

Applied technology must help our seafarers in their everyday tasks by reducing their current workload and improving communications with the shore – not just with their employers but also with their families.

Digitalisation aside, we must never forget that we are still a people industry.

Thank you.

Source: Bimco
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