Business File, September-October 2018, No. 117
by Professor Orestis Schinas
The Maritime Safety Committee (MSC) of the International Maritime Organization (IMO) upcoming session is ready to open the Maritime Autonomous Surface Ships (MASS) file. The issue, as professor Orestis Schinas explains in this article, is huge and complicated for various reasons, as it will shake the international public law foundations and the shipping markets, and it will aff ect the mariners, as collateral damage.
The provisional agenda of the 100th session of the Maritime Safety Committee (MSC) of the International Maritime Organization (IMO), to be held in early December in London, includes an item called “Regulatory scoping exercise for the use of Maritime Autonomous Surface Ships” (MASS). Readers familiar with the IMO practice and jargon, realise that the horse-trading about the definition of terms, procedural approach, and interaction with existing instruments is on. This is the beginning of a lengthy and bumpy journey in the unchartered waters of autonomous shipping.
To the detriment of many technology providers, the role of the Master, and therefore of the crew, comes out in critical articles of the Law of the Sea (UNCLOS III) that govern the relations among States, such as:
This means that the working group on MASS, and then the Member States of the IMO should revisit fundamental concepts, such as those of innocent passage, pollution prevention, rights of Coastal State, etc. This is not an easy task. Considering also commercial aspects directly linked to regulation deriving from UNCLOS III, such as:
1. International Safety Management Code (ISM) implications;
2. Manning levels, and Flag State rights and obligations;
3. Seaworthiness and liability;
4. Due diligence;
5. Security, and not only within the strict limits of International Ship and Port Facility Security (ISPS) Code, but in respect of cyber-security and antiterror deterrent means;
6. Navigation and International Regulations for Preventing Collisions at Sea (Col-Reg), then it becomes obvious that many vested interests already have many tools towards resisting or slowing down any such kind of progress.
The key question
However, the key question is not how to hinder the evolution of marine technology, but how to use technology as a tool to achieve internationally-accepted, levelled, and fair rules for all States and for their ships servicing international trade. Therefore, the next question does no other than examine the motives of introducing autonomous ships.
Assuming that the motive is safety, as the human element is directly or indirectly associated with the majority of severe accidents and disasters, then the evangelists of autonomous ships and shipping should convince the international community that a substantial higher degree of automation will lead to fewer accidents. Moreover, they have to convince that all the sensors that will partly or fully replace humans onboard may transmit to the command-centre all the signals that a human mind consciously or unconsciously assesses. In short, the improved decision-making procedure of MASS should be somehow demonstrated.
The issue of improved decision-making is critical, as it will pave the way from the current manual, or relatively low automated operation, to the almost fully automated one. The degree of success of shifting command and control from sea to shore will also support the evolution of the regulation, as well as of technology and of the related markets.
In view of the fact that the degree of automation and that the levels of automation are not even defi ned yet, the preparation of realistic economic assessment is still infeasible. Member States have already proposed defi nitions, currently under consideration or provisional use, yet no framework is available to support cost estimations. Considering that the MASS will require remote operating centres (ROC), ie watch-keeping or assisting, but also commanding centres, the cost of the ROC should enter the formula, as should the manning of the ROC with the necessary experts. The necessity of ROC implies that the operating expenses (OPEX) of the ship might not vary signifi cantly, given the current levels—although their structure will be different—but it does ignite a series of legal questions. Indicatively but not exhaustively, these questions are related to the liability of the team ashore and onboard, the training and the command levels onboard and ashore, and they are definitely related to the liability of the owner as a carrier (and not only that)!
A chain reaction
The above challenges should not be underestimated by all parties and actors involved in the evolution of the international maritime regulations. In this case, the international community faces a chain reaction; it is not just a ”regulatory issue”, it is not only an issue of compliance, nor it is about the challenge of complying while at the same time remaining competitive in the market. It is an international public law issue that might shake the foundations of private law.
Returning to the original question of the need and motives for automation, the fallacies claiming that automation is a panacea or that existing shipping will not be aff ected—as the market share of autonomous ships is expected to be rather low, since they do not offer a competitive advantage—should be uprooted. Once MASS gain some critical mass in terms of number or tonnage, they will shake up the market, as they will introduce once again the concept of ”identical” ships to the market. Automated solutions and operations are enhanced when the assets are identical. Production line economics apply, and the reduction of the cost per unit of asset will pass to the operators in the form of fewer capital expenses (CAPEX). So OPEX might remain at the same levels, as current research yields, yet the total running expenses will be lower, therefore MASS for selected trades will be more competitive. The industry has a positive experience from “production line” ships in the past. The good old Liberties proved their value both in war and peacetime.
To whose benefit is the “production line” shipbuilding promoted? The answer is simple when identifying the Member States openly supporting MASS. It is a battle of technologies, a clash of industrial interests, where the human element, the mariners, suff ers the “collateral damage”, and new fi elds of business emerge, such as those providing the “necessary infrastructure”, ie space, satellite, and telecommunication networks, and technologies that can support report operations. Finally, autonomous shipping off ers a unique fi eld of opportunities for profits; those who can shift from the hype to the real business will reap the benefits of this technological and regulatory evolution. As the threats and the perils are not fully identified yet, the risks remain high! So are the expectation of gains and yields!
ABOUT ORESTIS SCHINAS
Orestis Schinas is the Professor of Shipping & Ship Finance and Head of the Maritime Business School at the Hamburg School of Business Administration (HSBA—www.hsba.de), since 2008. His department has been recently awarded the premium quality seal, demonstrating top academic and organisational excellence. His professional career includes large corporate assignments, such as IPO and advanced research and business development projects, as well as start-ups and fintech endeavours in the fields of shipping and ship fi nance. He has gained great experience and has offered his services in many sectors, regions and international organisations, and he was recently also appointed as Permanent Representative of a Member State to IMO. His work on marine bunkers, air emissions, and energy efficiency of ships, as well as on ports and infrastructure is published in renowned journals and collective works, while his book ‘HSBA Handbook on Ship Finance’ is also available in Chinese, reflecting the visibility of his work.
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