SMART SHIPPING CULTURE: The rise of Big Data
24th economia Student Contest
1st Prize/Group Essay
- PAPAGIANNI MARIA
National Technical University of Athens
Marine Engineering and Naval Architecture
- PAPAGIANNI CHRISTINA
Athens University of Economics & Business
Msc International Shipping Finance
The world is being digitized and so are even traditional industries like shipping. According to the data presented by the chairman of the Union of Greek Ship-owners, the Greek commercial fleet consists of 4.746 vessels accounting for almost 20% of the world fleet and 50% of the European fleet. The total contribution of commercial shipping to the country’s GDP is reaching 7%, offering 200,000 jobs (isalos.net, 2018).
Shipping is stepping into a new era where smart technology and advanced data analytics is the key to survival. Changes are taking place in such a short time pushing decision makers to act faster. We are going through a period of transition from the old traditional version of the shipping industry to a more digitally advanced one where the main drivers are the access and process of Big Data, automation, Internet of Things and limitless connectivity (Klaveness.com., 2018).
Despite the serious impact on most of the industry, this is not really reflected in the pace at which companies have been adopting Smart Shipping. Currently only a few in the Greek shipping community are making use of this trend as a means of cost effectiveness and risk management to keep up with competition (Seatrade Maritime 2018).
For this reason, this paper aims to promote the adoption of an integral digital and data-driven culture to Greek maritime players. To be or to remain on top of the game, someone must be a forward thinker and adapt to the new environment. But why be a follower when you can be the trend-setter? Invest in new technologies.
2. MAIN ISSUE
According to Mr. Alex Buchmann, CEO of Hanseatisoft, there are some Greek shipping companies that are open-minded and start to recognize the great potential of modern software (MfameTeam, 2017). However, adoption of Smart Shipping is delaying significantly. There might be those that are advancing a lot but there are others that prefer to wait and see, especially when it comes to regulatory compliance (Lloyd’s List, 2017). What is making the rest of the shipping players hesitant though?
Shipping, in terms of how it operates, is a notoriously conservative business, something which many tech companies have found out the hard way (Seatrade Maritime 2018). On that note, co-founder of Oceanus Foundation, Christiana Zoupa stresses that Greek shipping is especially more conservative when it comes to complete integration of new technologies since it heavily relies on the traditional know-how in ship-management (NEWSROOM, 2018).
The next reason is the scale of the investment required. Richard Meade, Managing Director at Lloyd’s List, claims there is no first mover advantage in shipping (Lloyd’s List, 2017). The key concern for ship owners is that they need to ensure they are not investing in technologies that will either become redundant or fail to take off, particularly when budgets are as tight as in recent years (Seatrade Maritime 2018).
This approach results in Greece importing “shipping technology” from other countries, says Michael Mantzafos, chairman of the Hellenic Institute of Naval Technology in an interview with “N”. The existing human resources are naturally absorbed by Greek shipping. However, if Greece wants to climb first in shipping technology, it must invest in innovation in an effort to keep Greek minds in the country by offering the appropriate conditions (Naftemporiki.gr., 2017).
3. PROPOSED SOLUTION
The proposed solution is the adoption of a Smart Shipping Culture within an organization. Smart Shipping is a spectrum of processes using smart technology and Big Data analytics as a tool in order to optimize shipping and maritime operations.
By the term ‘culture’ we mean that smart shipping is a collective concern affecting several areas throughout an organization and it evolves as the business changes (UK Chamber of Shipping, 2017). The importance in developing a Smart Shipping Culture lies to the fact that any digital development cannot be achieved without the right mindset (Lloyd’s List, 2017).
3.1. WHY ADOPT A DIGITAL AND DATA-DRIVEN APPROACH
The industry has to cope with a changing environment and certain challenges coming ahead such as the 2020 sulphur emission limits (IMO, 2018) and ballast water treament implementation (IMO, 2017). Therefore, clarity is needed due to the change in competencies, mindset and framework (Lloyd’s List, 2017). According to Mark O’Neil, CEO of Columbia Marlow, by using digitalization comes the ability to optimize services, obtain huge savings in time and costs, and remain relevant (Capital Link Greece, 2018).
Smart Shipping basically consists of Smart Ships, Smart Fleet Management and Smart Logistics. It tackles the historic problem of global ship mobility and limited communications between ship and shore. Shipping has been following the business model which considers each ship a small management unit. Smart Shipping can change this reality through improved operational and transport management. Generally, Smart Shipping will add value in previously impractical or uneconomic ways (Stopford, 2016).
Digital culture is related to crew/staff skills, attitude and motivation since digitalization should be a positive journey for all, says Svend Lykke Larsen, Sales & Business Development Director for Marlink (Lloyd’s List, 2017). Big Data as a smart shipping tool can create opportunities for existing companies and entrepreneurs who can potentially invest in Greek shipping (Stopford, 2016).
4. MARITIME BIG DATA
“Big Data” is “a massive collection of digital data that is so large and complex that makes difficult its processing by using traditional data management tools and techniques” (Catlett et al., 2013). General characteristics of Big Data are the so called 5 V’s as presented on the image below:
Big Data analytics is a new trend to the shipping industry since shipping generates a huge amount of data from different sources and in different formats, traffic, cargo, weather and machinery data included (Zaman et al., 2016). However, it does not seem possible to give an absolute definition of Maritime Big Data because there are several groups of stakeholders in the maritime society who have different interests (Koga, 2016).
4.1. MARITIME BIG DATA CAPABILITIES
Data analytics in the maritime domain can be used to provide insights to improve decision-making in a variety of sectors (Chow, 2017). Big Data Capabilities are summarized below:
• Fuel consumption: Optimization techniques can be used in order to provide optimized fuel consumption at maximum performance and consequently save money.
• Route and supply-chain optimization: Advanced analytics can be applied on the data related to the ship routes in order to derive an optimal strategy.
• Threat management: Identify companies that pose credit and security risks, with extensive use of ship, company and Automatic Identification System (AIS) data.
• Market size and competition: Understand the world fleet and new markets.
• Maintenance prediction: Identification of priority areas through advanced predictive analytics in order to prevent delays, increase efficiency and reduce maintenance mode time of the vessel.
• Risk Management: Preventing ship accidents by monitoring vessel activity,etc.
• Cargo tracking: A possible solution to the lost shipping containers issue could be to apply data analytics on a dataset related to these lost containers and derive some special characteristics about them and their environment to minimize future problems.
• Regulatory compliance: Adopt a data-driven approach for environmental and safety reasons since data related regulations, both internationally and European, are continuously increasing (Cyprus International Institute of Management, 2018).
For example, the European Commission(2016) has proposed a monitoring, reporting and verification (MRV) system for CO2 emissions from vessels equal or greater than 5000 gross tonnage calling at any EU ports from 2018 (DNV-GL, 2015). CO2 emissions and additional data will be collected per voyage. IMO(2016) respectively, adopted mandatory fuel consumption data collection system for international shipping in October 2018 which has entered into force as of 1 March, 2018. Under the new Regulation 22A, the aggregated data should be reported to the flag State after the end of each calendar year (Hellenicshippingnews.com., 2018). Regarding safety, Voyage Data Recorder (VDR) is required by SOLAS(1974) and has been fitted on many vessels since 2002 for data analysis purposes in case of accidents.
4.2. CHALLENGES OF BIG DATA ANALYTICS IN THE SHIPPING INDUSTRY
The industry is now getting familiarized with the challenges of big data as presented below:
• Sound competitive conditions
The shipping industry is based on a complex supply chain; many stakeholders are associated with it including ship-owners, operators, customers, port authorities, and Classification Societies. Each stakeholder will need access to different sets of data therefore, ownership of data is crucial (ISO, 2015). Currently there is no set of rules to control the rights and responsibilities of data holders and secondary users. This could prevent many relevant parties from sharing/exchanging Big Data with others because of the fear of losing business-related information, their profit and business opportunities (Koga, 2016).
Two proposed solutions are a) either a local and closed partnership among the limited number of Entities or b)sharing open-data with a number of entities/parties in the public domain (World Maritime News, 2015). In both, the government is expected to take a significant role by developing corresponding guidelines to promote fair use of Maritime Big Data.
• Human Resources
It is highly important to increase the connectivity between the crew and ashore staff in shipping companies. The existing personnel will be soon required to undertake additional training to provide relevant support. Also the demand for specialists who are sufficiently qualified in terms of Maritime Big Data is amplifying (Zaman et al., 2016).
Without doubt, the private sector will accept rewarding specialists of Big Data as long as they can generate enough profit. Furthermore, as far as new staff is concerned, developing a national strategy for nurturing associated human resources and establishing a cooperative framework among the government, university and private sector are equally considered (Koga, 2016).
The shipping industry will need to create an environment and awareness across the stakeholders to adopt new technologies, tools and processes and also to regulate standards. The current data collection systems in the marine industry are inconsistent and often unreliable. Data from different sources will need to be integrated for analysis. This leads to the invention of more powerful tools and electronic equipment (Zaman et al., 2016).
Based on the principles of market competition, companies or research institutions can invest in R&D of the associated equipment and information technology.
Low-quality data leads to misleading interpretation. The database will not be able to keep track of all new entries so ideally the data should be error free (Zaman et al.,2016). With regards to data protection, data will move between individual parties because of different interests so they will need to be protected from external interventions such as piracy, viruses or terrorist attacks. Cyber-attacks could interrupt the overall system and be responsible for significant losses in the business (Lloyds Register, 2015).
In terms of the legislative aspect, as represented by the example of Japanese laws, it is necessary to define illegal activities, prohibit them and set penalties for violations through national laws (Japanese National Law, 1993).
With respect to the technological aspects, investing in cyber security software is advantageous.
4.3. CURRENT SITUATION IN GREECE (STATE-OF-THE-ART)
Despite Big Data utilization being still new to the shipping industry, there are signs of adoption in the Greek reality. In fact, in Posidonia 2016, new software have been presented by the largest Greek shipping companies that facilitate the collection and processing of information resulting in reducing bureaucracy and incorporating automation.
Fortune Technologies, a marine software vendor, presented in collaboration with Microsoft, the new Microsoft Dynamics NAV 16 solution. This is an innovative system that provides solutions related to the management of finances, markets, procurement, personnel management and payroll. ABS Nautical Systems introduced software that allows the ship’s energy performance, status and full range of functions to be monitored and controlled during the voyage. DANAOS Management Consultants presented the “WAVES”, a tool that through sensors captures real-time data on procurement, fleet management, consumption and safety issues, and then processes and rationalizes them according to the programmed algorithms. The “Waves” was awarded with Lloyd’s List Intelligence Big Data Award in the Lloyd’s List Greek Shipping Awards (Palli, 2016). “Aspida” won the same award on November of 2017 (Nautilia.gr., 2017). The same year, Mr. Giorgos Christopoulos of Prisma Electronics SA, presented system LAROS, improves processes and reduces both costs and risks similarly to the above (AYA, 2017).
Luckily, the European Research Council (ERC) supports excellence of European research and has addressed the need for R&D in the Big Data field by providing several projects that apply to the shipping sector as well.Concerning ongoing projects, ERC implements Horizon 2020, the European Union’s Research Framework Program for 2014 to 2020.
In 2017, the EU funded the BigDataOcean project coordinated by the National Technical University of Athens, as part of Horizon 2020. Its objective is to enable Maritime Big Data scenarios for EU-based companies, organisations and scientists, through a multi-segment platform that will combine data of different characteristics under an inter-linked, trusted, multilingual engine to produce a Big-Data repository of value and veracity back to the participants and local communities European Commission, 2017).
The datAcron project has also received funding from the European Union’s Horizon 2020 program under grant agreement No 687591. It aims to advance the management of voluminous and heterogeneous data-at-rest and data-in-motion sources so as to significantly improve the capacities of surveillance systems for safety purposes in critical operations (Popovich et al., 2018).
From the above analysis we conclude that digitalization and Big Data handling is the future of Greek shipping and shall be considered as an investment instead of an additional cost. Shipping may be a bit conservative but ship-owners and ship-managers are gradually grasping the true costs of not adapting. Therefore, a mindset change is the key to success, combined with public sector and EU support. Greek shipping players are capable of ceasing the opportunities Big Data offers to create competitive advantage. Such approach would also be beneficial to the Greek State considering the huge role of shipping in the Greek economy and the job opportunities that will occur.
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