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On the Seas of Digitization: Technology and IoT to spur digital transformation in the Maritime Industry

Maritime is essential to the global economy – today, the shipping industry transports around 85% (by tonnage) of international trade in physical goods, according to the World Trade Organization.

The global maritime industry is highly complex, fragmented and perhaps conservative but it is changing. In fact, we are in the midst of a digital transformation journey that is beginning to accelerate as the benefits of technology adoption become more apparent – and the costs of doing nothing become equally obvious. 

To transport at better and more efficient rate, at a lower cost, while constantly improving its environmental impact and safety, data is the industry’s only long term game plan.

If you’d take a gander at the number of sensors that ships nowadays have on board, you’ll realize that we have moved from the basic connectivity model to the ‘onboard office’ and now reached the ‘digital shipping’ phase; but the industry is now looking ahead to the development of smart shipping and then an increasingly automated future with autonomous or semi-autonomous shipping.

Two factors that are critical to this process are – access to connectivity and bandwidth; the amount of data generated by maritime vessels has risen in recent years from 10-50MB per vessel per month to 200MB-20GB per vessel per month currently – this will continue to rise exponentially as we move towards growing adoption of automation.

Increase in traffic due to control and command sensors onboard is at the base of the huge demand for connectivity – vessel data such as fuel monitoring; health & safety including telemedicine; crew leisure and entertainment; and specific services for special purpose vessels – cargo, fishing, passenger cruise liners.

The amount of onboard data, voice and video is turning ships into floating data centers.

The connectivity benefits are obvious for the crew’s quality of onboard life, and vessel management includes fuel management and monitoring (main engine, diesel generators, tanks refueling system); fuel is still the major variable cost and ROI is achievable in as little as four months with the right fuel management system.

Ships have been transforming for some time but sea ports are catching up fast, with network connectivity, IoT and cloud computing helping drive digital transformation in ports around the world. But ports face their own challenges.

The role of the port is also changing as they go through their own digital transformation into ‘smart ports’ but with complex ecosystems of organisations which also compete with each other - port authorities, customs, carriers, importers/exporters.

As with the carriers, ports are also actively exploring and developing their own digital platforms – often with technology partners - with blockchain at the core, to unify their own ecosystems. These different blockchain platforms are now becoming competitive but we have yet to see a ‘blockchain of blockchains’ that will unite the entire maritime industry.

This fragmented approach and rather uncertain digital journey is leaving the industry vulnerable and facing four digital dilemmas:

Firstly, the network; we can't have smart ports or carriers without data and so the fast and efficient transportation of data over the network is essential. Networks are becoming more integrated and being offered ‘as a service’ – this is being driven by technology but it also helps lower costs and enables greater visibility of operations. The question is how to migrate from a network to an integrated network that delivers benefits and shifts maritime from an opex to a capex model? 

Secondly, the digital platform that created the opportunity to move from isolated applications within ports and shipping organizations to an increasingly integrated approach by opening and sharing these applications with APIs in the outside world. The dilemma is ultimately how to expose an organization’s APIs to external partners, so blockchain (and even an industry-wide blockchain of blockchains’) can become a reality.

Ecosystem partners (ports and shipping companies) are creating their own platforms and building new business models on top, with cost savings and new revenues. The IBM and Maersk Trade Lens Blockchain Shipping Solution was announced in 2018 with more than 90 organizations participating in a blockchain platform linking a global supply chain. So, maritime CIOs may ask themselves whether they should partner with platform owners or build their own. If the latter, then at what point does it make sense to migrate to an industry-wide platform-as-a-service opex model? Major ports around the world are fighting back with their own digital platforms.

The third dilemma facing maritime is the channel. We see some new digital players disrupting to some extent the b2b maritime environment - ports and shipping – but what about customers? How can the industry aggregate and expose data to channel partners serving customers and end users? – Whilst still maintaining a customer relationship and influencing the customer experience? 

Finally, how can the industry nurture innovation? There is an enormous amount of technology coming into the sector and ports and shipping expect a lot from their in-house IT departments, to implement the latest and most advanced technology. More attention needs to be given to innovation hubs, incubators and other partners within the technology innovation ecosystem to develop the solutions the industry requires.

The maritime industry – and the companies within it - need help to navigate this process safely and securely and there is now an abundance of potential partners outside the industry. The cost of undertaking this digital journey has to be factored-in but the journey generally starts with a focus on cost saving and then continues on to the bigger opportunities and benefits.