All posts by maritimeinsight

Shipping is not having a ‘Weinstein moment’, but maybe it should

With the debate raging about the conduct of those in high office and positions of power and how to hold them to account, it seems we are in autumn of discontent. And rightly so.

Accusations of personal misconduct, the abuse of authority and the ability of the rich to avoid tax have combined with the mood of opposition that drove the Brexit vote, Donald Trump’s election and the growth of popular discontent across Europe.

There may be little direct comparison between the harm experienced by victims of abuse and the ability of elites to legally circumvent national laws, but the confluence of these events has created a palpable feeling that a genie is out of the bottle.

I would contend that something similar is happening in shipping, for a number of reasons.

Firstly, the IMO process of agreeing a consensus on how shipping should pay for carbon has descended from gentlemanly disagreement to internet trolling.

Second, the bunker market, for so long a redoubt of questionable practices and poor product quality, is under intense pressure to clean up its game.

Lastly, the industry seems to finally have accepted that abandoning crew, unpaid and alone in foreign ports is not just an issue for welfare charities, but rather casts a shadow that is at least as long as any positive messages it can convey .

It was interesting to hear a colleague remark of allegations that industry lobbyists had ‘taken control’ of the IMO process in the same terms as the accusations swirling through film and theatre; ‘everybody knew, nobody said anything’.

The alleged evidence, released by InfluenceMap suggested that the IMO committee process has essentially been hijacked by corporate interests (read: shipowners), using national delegations to lobby against stricter targets for carbon reduction.

The response was the sort of outrage that simply makes the cynical believe there must be something to the rumours. Salvos back and forth, through the press, social media, official announcements and everything in between, have resulted in the whole business setting tongues a-wagging.

This is despite – or perhaps because of – the industry declaring itself satisfied with the outcome of the IMO intercessional meeting around which this melee centred. Also perhaps because the European Commission agreed to give shipping a pass on inclusion on the emissions trading system, though this had been widely expected.

One particularly passionate outburst carried in the trade press resulted in a Twitter account – ownership unconfirmed – trolling the author until he was forced to resign from a teaching post. His crime? For laying bare his own experience at IMO of when industry lobbying removed the teeth from regulation he was backing on safety grounds.

The author’s general point was that we should stop deluding ourselves about why people are in shipping and accept that decisions are made principally for financial reasons. Nobody is in this for the good of their health or that of the planet and to suggest otherwise is simply deceitful.

And what of the issues that have dogged the bunker market for years? Quality, quantity, reliability, veracity; all have been a problem for owners, yet as consumers they have seemed to accept a string of poor practices part of the process.

This seems to be coming to an end. Greater use of mass flow meters will make simple cheating on deliveries harder. The IMO 2020 sulfur cap will to a large extent remove the problems associated with heavy fuel oil quality because few owners will be consuming it.

Higher quality low sulfur material will be the fuel of choice, though to begin with, owners and associations are concerned that the rush to meet demand could result in some unstable blends hitting the market.

In practical terms, the higher costs of buying, storing and supplying the fuel could mean that small operators find it hard to maintain their positions and cede business to bigger concerns. That could be a shame for good family concerns, good if it forces bad actors out of the market.

On a corporate basis, greater pursuit and punishment of offenders and the removal of licences from fraudulent operators suggest that courts and regulators are more prepared to act where in the past they might not. One only need read the trade news headlines to see numerous current and former operators being called to account.

So lastly, to the problem of crew abandonment, a subject much on the mind of some editors and industry observers, all the more so since the offshore supply vessel market shows no signs of improving anytime soon. It is a sad fact that shipping will always attract some operators for whom the financial imperatives noted above do not translate into a long term commitment to their market or the professionals they employ.

While this remains within the industry’s ‘four walls’, it could be seen as the usual rough and tumble of the markets, however wrongheaded an assumption. When it appears on local and national news (as it has in the UK in recent weeks) it is a shameful reflection of how irresponsible some operators are prepared to be.

Few people could have lately watched the footage about the crew of an OSV abandoned in Aberdeen to wonder what more they could have done; some giving up and going home unpaid, others prepared to stick it out until the vessel was sold, in hopes they would be in line for some compensation.

When the editor of one trade publication has to write to the industry’s leading shipmanagers and suggest to them that working with these owners should be off the table – and the majority reply in the affirmative – one senses that the Rubicon has been crossed.

It would have been even better had every major industry association immediately lept on this initiative and backed it to the hilt, but it could be that there is too much to lose to make very strong comments in public.

Of course, there are other issues for the industry to confront, many of them far more problematic than where rich people hide their money, why countries act the way they do in support of their national interest and whether trust or fairness can ever truly exist in business.

On balance, shipping is nowhere near a ‘Weinstein moment’ in which a the drip-drip of complaint turns into a torrent and the ability to avoid the news becomes impossible.

Perhaps though the timing is right, in the sense that, with many analysts broadly optimistic about a return to better earnings, we could be seeing the start of a new era for shipping, its suppliers, employees and stakeholders. Perhaps it would be wise not to hold one’s breath here, but a bigger dose of this sort of transparency would certainly be a good place to start.

Move slowly, wear things out, then fix them

When the founders of Facebook coined the motto ‘move fast and break things’ they probably didn’t have the shipping industry in mind. As those that work in it know, few people have the shipping industry in mind unless there is an oil spill or they take a ferry.

So it is strange that an industry that has largely contented itself by keeping its head down and profitably supporting global trade since the second world war should find itself drawing so much attention from purveyors of digital disruption.

Could it be that the new generation of tech giants have reached the edges of the digital frontier and sitting around a virtual boardroom table said, ‘OK it’s time to take on shipping’? Doubtful.

The problem with this strategy, should it actually exist, is that shipping is in many ways quite happy being inefficient. Money is made from the opacity of information flows, from relationships that are not subject to much competition and very often, on the basis that while quality is the goal, price will be the final determinant.

Yet things are changing. The unpredictable impact of goal-based, aspirational regulations as well as the uncertain dynamics of the oil price are making operators realise that doing things the same in the future will not pay as well as it did in the past.

Even so, however much the trends in consumer technology find their way into our business lives, many shipowners and operators are struggling to get to grips with how technology can really benefit their operations.

Read the full post here.

 

Free trade trumps the perfect storm

There was a time when most shipping conferences included at least one presenter with a set of data pointing to a sustained increase in demand for commodities, goods and services well into the middle of this century and beyond.

From nearly a couple of decades in, the confidence in those assumptions looks shaky. Alongside potential disruption from technological advances, the rise of economic nationalism and changes in economic development mean that shipping can no longer rely on its position as globalisation’s silent servant.

Whereas before the financial crisis, a 1% rise in GDP growth meant a 2-3% increase in container shipping demand, the latter is now expressed in fractions rather than multiples.

Events such as the Brexit vote and the election of Donald Trump demonstrate the apparent willingness of administrations to use trade as a political tool while the longer term risk is that shipping demand will decline as 3-D printing becomes cheaper and more convenient.

However, just as with the arguments about the impact of other technologies in shipping, these positions bear much closer examination than they are often receive.

As Jan Hoffmann, Chief of the Trade Logistics Branch at UNCTAD pointed out to the ICS annual conference during London International Shipping Week, the liberalisation of the maritime sector is in general positive for economic development and the job is far from finished.

Read the full post here.

London delivers a new tech reality check

reality_check‘London can take it’ was the slogan designed to keep morale high during the dark days of bombardment in wartime. These days the threats to London’s survival are more economic and political, but nonetheless serious.

The impact of the decision to leave the EU loomed large over London International Shipping Week, as the organisers sought to portray a strong industry ready for any challenge.

It didn’t always feel like that in the trenches and whether or not the UK government can deliver a form of Brexit that protects the country’s ports and services industry remains to be seen.

Perhaps because we were on high alert for existential threats, another observable trend was how much time industry players spent repositioning their comments on technology, disruption and digitalisation.

This was perhaps a response to the this year’s Nor-Shipping which left participants shell-shocked and wary of a subject that had seemed to have taken on an agenda of its own. There were still skirmishes of course but plenty of reasoned debate too, enough to indicate that contrary to the prevailing narrative, the industry’s imminent destruction at the hands of the barbarians has little place in most realistic assessments of the near future.

The tone in London was one of adjustment, recalibration and in particular an understanding that critical human thinking and the human factor will be more important than ever in a digital future.

As Chairman of the International Chamber of Shipping Esben Poulsen pointed out to the main LISW Conference, the term disruption ‘has become so over used as to be almost meaningless’.

The idea that Silicon Valley tech companies want to increase their exposure to an industry with as many structural problems and whose margins are as fragile as shipping’s seemed questionable. “Don’t bet on an Uber coming into shipping,” he added. “We have always been very good at finding solutions to our problems.”

Similarly the number of headlines proclaiming the imminent adoption of autonomous ships is in inverse proportion to the number of real projects. IACS Chairman and CEO Maritime of DNV GL Knut Ørbeck-Nilsson delivered some much-needed clarity about the goals and the tactics.

“The aim is not autonomous ships,” he said. “The aim is a safer and more efficient shipping industry.”

“We have a tendency with technology to go from one extreme to the other,” he continued, pointing out that the idea of a remotely-controlled shipping fleet remained somewhat unrealistic given that the majority of ships are not yet connected to anything that could be described as broadband communications.

It was also illuminating that leading legal commentator and honorary QC Joshua Rozenberg had, in his overview of the regulatory changes that might be required in order to make autonomous vessels acceptable to the many parties involved in shipping, described a mountain rather than the foothills. That the industry knows this of course doesn’t make it any less complex – in fact the degree of that complexity is only just beginning to dawn on many.

It was less of a surprise that seafarer unions question the wisdom of further reducing manning levels, since its members could be the direct losers. Mark Dickinson of the International Transport Workers Federation made a familiar but still important point about the need to correctly frame the debate.

“Luddites were portrayed as people who opposed technology because of the threat it posed to their jobs but what they in reality opposed was the use of technology in a way that did not enhance work and society,” he said. On that basis he was happy to declare himself a luddite, though he welcomed technology if it enhanced and improved the working experience.

So as LISW drew to an end, and the debate on new technology paused for a truce, perhaps the most important conclusion to draw is this.

The adoption of advanced technology, whether robotics, data or AI, will have huge implications for humanity, society and work; implications that that have yet to be resolved or in some cases properly understood. Given the lack of standards, consensus and legal frameworks, why should shipowners be expected to roll over at the first salvo from manufacturers with a product to sell?

This is not to say the industry can avoid change. It must adopt a more collaborative, less confrontational approach to its customer relations and business models, prepared to engage with and not merely destroy the competition, as well as understanding its place in the supply chain. The advance of connectivity and the transparency it will bring leave little alternative.

I was talking about old times and new technologies with a colleague who was on the inside of shipping’s dotcom boom in 2001. At that time, the industry was awash with other people’s money and tech companies that promised either victory or death depending on your role in the industry.

It proved to be a phoney war but the stakes are much higher now. The difference between 2001 and 2017 is that the coming few years will not be marked by the euphoria of sky-high markets that came to the industry’s rescue between 2002-2008.

Overcapacity, under-profitability, inefficiency, not to mention a welter of ever more costly regulatory compliance mean that for the industry a war of attrition lies ahead. To win – smartly and as quickly as possible – it needs new weapons and perhaps new leaders too.

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Leading industry figures gather in Naples for ‘Shipping & The Law’

Important names from shipping, ports, finance, law, insurance and technology will meet to discuss the pressing issues facing the maritime industry

Naples, Italy, 25 September 2017. The eighth edition of the international Shipping and the Law conference, organised by Studio Legale Lauro, will take place on October 12 and 13 at the Court Theatre of the Royal Palace of Naples.

The conference will include participation from a number of leading figures from shipowning, finance, law, insurance and other players from around the world. The conference concludes with a Gala Dinner in the Apartments of the Royal Palace, hosted by CR MAG and SMIT.

The conference procedings will be officially opened on October 12, followed by a welcome from well-known Naples lawyer and conference organiser Francesco S Lauro. It will be followed by a roundtable: Full Steam Ahead in the Age of Uncertainty on important challenging topics, among them the threats and the opportunities for European operators in the context of the rise of maritime China and other Asian countries.

The panel will also consider how the maritime world confronts global warming and the future of shipping in the age of growing protectionism, particularly the uncertainty created by Donald Trump, Brexit and other new political movements.

This session will include contributions from the president of the International Chamber of Shipping Esben Poulsson, the president elect of the European Community Shipowners Associations (ECSA) Panos Laskaridis, the president of Confitarma Emanuele Grimaldi, the president elect of Confitarma Mario Mattioli, the director for Waterborne Transport in Directorate-General for Mobility and Transport within the European Commission Magda Kopczynska.

Also taking part will be past presidents of the Union of Greek Shipowners and of the ECSA John C. Lyras and Thomas Rehder, chief economist of the Sheikh Yamani’s Center for Global Energy Studies Leo Drollas, the president of Banchero Costa Lorenzo Banchero, political analyst Roberto D’Alimonte, RINA CEO Ugo Salerno and member of the UK House of Lords Baroness Byrony K. Worthinghton.

The morning session will be moderated by Terry Macalister of Tradewinds and David Osler, Finance Editor of Lloyd’s List.

After lunch hosted by Palumbo Group, the conference proceedings will continue with a session dealing with shipping and port infrastructure finance with the participation of owners, bankers and investment fund managers, as well as the president of the Port Authority and vice-mayor of Antwerp Marc Van Peel and president of the Port Authority of Naples Pietro Spirito.

Among others, the president and the president elect of the Italian Young Owners Andrea Garolla and Giacomo Gavarone will take part to the proceedings.

The morning session on October 13 Law and Shipping will be opened by former International Oil Pollution Compensation (IOPC) Funds Director Mans Jacobsson’s keynote addess on Compensation for pure economic loss in relation to tanker oil spills. Past president of London Maritime Arbitrators’ Association Clive Aston will introduce a roundtable with CMI vice president Giorgio Berlingieri, Ince’s Ian Cranston, General Counsel Scorpio Group Luca Forgione; arbitrator and mediator St Philips Stone Chambers Jonathan Lux and Hill Dickinson partner David Pitlarge.

The final session of the conference Better Vessels for a Better World, moderated by Umberto D’Amato and Alberto Moroso, will be dedicated to new technologies. Participants  will include a representative of Tefin who will speak on a new system to prevent fires on ro-ro vessels, while Board member of Caronte & Tourist Lorenzo Matacena will talk on gas propulsion. Among the speakers there will be also representatives of Wärtsilä, WindDG, ABB, as well as Ecospray’s Franco Porcellacchia.

A post conference programme will follow on the island of Ischia commencing in the evening of Friday October 13 and concluding on the afternoon of Saturday 14.

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To register for the conference, please visit: www.shippingandthelaw.org/

For media enquiries, including attendance at the conference, please contact Neville Smith on: neville.smith@marinercommunications.co.uk, tel: +44 7909 960 182.

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Shifting oil market dynamics key to 2018 tanker trade prospects says MSI

Q3 earnings have floundered but peaking fleet growth and increased tonne-miles could see spot rates stabilise and T/C rates make a modest improvement

London, August 16, 2017. The Q3 2017 tanker market is proving vexatious for owners still struggling with the effects of fleet oversupply. But in its latest monthly forecast, Maritime Strategies International observes that changing trade patterns could help stabilise the market towards year-end and into 2018.

With all-OPEC crude exports setting record highs in July, the cartel’s attempts at lowering production are clearly open to question. There was a reduction in flows from OPEC’s Gulf producers while China’s imports tumbled to seven-month lows in July.

Exports are seeing a divergent trend in the group though, with African volumes of lighter grades on the rise while Middle Eastern medium/heavy crudes have been receding.  China’s decline could signal the potential start of a slowdown in imports, yet the July figure was still up by 12% from a year prior and the ongoing downtrend in China’s domestic crude output should continue to lend support to imports.

With Saudi Arabia pledged to cut September crude allocations to Asia by 10%, Asian importers may buy more longer haul crudes from the Atlantic Basin to fill the gap, according to MSI Analyst Sierra Highcloud.

“Though the remainder of Q3 will be weak, fleet growth has now moved past its peak which should have some stabilising effect as we look to 2018. Despite falling in June, T/C rates are set to see a modest improvement over our forecast. However, liquidity is thin and should the upside expected in Q4’s spot market not materialise, the period market could move lower as owners look to protect against spot market downside.”

Other factors are in play too. India has been able to buy more US crude after recent upgrades which have allowed refiners to easily switch between running light and heavy crudes. African OPEC volumes of lighter grades have tracked higher while Middle Eastern medium/heavy crudes have been receding.

In Venezuela, where output has already seen a dramatic decline due to political turmoil, any possible oil-related sanctions would invariably have numerous and far-reaching impacts across the tanker market, adds Highcloud.

“There would be winners and losers within the different tanker segments, and were the flow of 750,000 bpd between Venezuela and the US to dry up, Aframaxes would suffer and likely cede trade to larger vessels as the bulk of these volumes would be diverted to Asian buyers. Equally, the US would have to source replacement grades from further afield, giving an additional leg of support to tonne-mile demand.”

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* To receive the MSI Tanker Freight Forecaster, please contact MSI: https://msiltd.com/default.aspx

About Maritime Strategies International
Since its inception in 1986, Maritime Strategies International (MSI) has established itself as one of the shipping industry’s foremost independent research and consultancy firms. Our success is built on a strong focus on maritime economics and econometric modelling. We provide a comprehensive range of advisory services, including forward valuations market forecasts, reports and commercial consultancy services for all shipping sectors. MSI asset price forecasts are used by ship finance providers holding 40% of all shipping bank debt and we provide analytical and methodological support to give the context and credence to our results.

For further information and interviews, please contact Neville Smith, Mariner Communications Tel: +44 7909 960 182.

Supply/demand improving but shipyards must still fight for survival, says MSI

Sea storm

Some major market indicators are improving but yards remain underemployed and newbuilding and second-hand prices have not yet hit bottom

London, 2 August, 2017. After a painful decade in which the shipping industry has suffered from an unhealthy supply position, a sustained reduction in contracting has at last begun to move the orderbook into closer balance with an improving demand picture.

But despite the positive news, shipyard prices may still fall according to the latest MSI analysis. Too many yards still have too little forward cover and even those considered high quality facilities must be considered at risk of closure.

Comparing the situation of mid-2015 with today’s orderbook, MSI analysis shows that orderbook levels across all the main sectors have come down significantly. Even so, several factors weigh on the yards’ ability to compete until demand and earnings pick up towards the end of the decade, says MSI Director Dr Adam Kent.

“On an annual average basis, MSI believes there is around another 5% for newbuilding prices to fall in 2018. Obviously this will be partly dependent on the shipyard and the vessel type, but we think that shipyard forward cover will fall further in 2018, as deliveries outstrip contracting. What this means for newbuild prices as a whole, is that we don’t believe the bottom of the price cycle has been reached yet,” he says.

Many shipyards will remain woefully underemployed in 2018. The only facilities looking relatively healthy on a historical basis are European, where cruiseship orders placed in the last 12 months will keep them busy for some time to come.

Scheduled output in South Korea in 2017 is at around 100%, but looking just six months out to 2018, the country’s Tier One yards are only at around 50% utilization. Yards that remain so severely underemployed will continue to price low to attract new orders.

“China is looking a little better at the Tier One yards, though there is still a large swathe of Tier Two yards that have no orders, and the same goes for Japan. There has been a lot of talk about a ‘Chinese White List’ of shipyards but when we look at these, it is apparent that it has been a long time since many of these have taken any orders, ” adds Dr Kent.

MSI expects shipyard costs to decline marginally in 2018, largely driven by commodity prices and the reduction in steel plate prices in 2018 before we see some uptick in 2019 and 2020.

Looking at second-hand vessel prices, where the actual bottom of the price cycle will be found is also dependent on the sector under analysis, but MSI does not expect a sustained recovery second hand prices across the sectors until 2019 or 2020, according to Dr Kent.

“Based on MSI’s quarterly forecasts for second hand prices, Capesize vessels will actually come off further this year and the bottom of this cycle will be in Q1, 2018. Tankers will hit bottom a little later but MSI believes the worst stage of the cycle has already passed for containerships.”

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About Maritime Strategies International
Since its inception in 1986, Maritime Strategies International (MSI) has established itself as one of the shipping industry’s foremost independent research and consultancy firms. Our success is built on a strong focus on maritime economics and econometric modelling. We provide a comprehensive range of advisory services, including forward valuations market forecasts, reports and commercial consultancy services for all shipping sectors. MSI asset price forecasts are used by ship finance providers holding 40% of all shipping bank debt and we provide analytical and methodological support to give the context and credence to our results. For more information please see www.msiltd.com

For further information and interviews, please contact Neville Smith, Mariner Communications Tel: +44 7909 960 182.

Education, Technology and the Fourth Industrial Revolution

The future of shipping requires that we invest in education and skills with the same enthusiasm as we embrace technology

The fourth industrial revolution – that is, the digital technology revolution – should not be defined within the maritime industry by technology alone. Rather, it should also promote education and training, seek poverty alleviation and knowledge propagation as the foundations of sustainable global trade.

By adopting an approach that puts the emphasis on development as a means of meeting human needs, we have an opportunity to create an industry that reflects diversity, encourages personal achievement, reflects social values and is fit for the challenges of the future.

Technology alone cannot achieve this, it requires skills and innovation, new champions and entrepreneurs to shape it. These are all traits common to shipping but in the next generation of emerging leaders, they must be used to develop an industry which encourages the development of human capital.

The Trouble with Technology

The shipping industry is in danger of being overwhelmed by a focus on new technology and in the process, being led into a future defined by the technology vendors. Unfortunately, the western view of technology tends towards the patrician – as divisive as it is unifying – and does not address the needs of the majority of the world’s citizens.

This does not stop it being touted as the solution to everything from the crewing crisis to greenhouse gas emissions, but without the social and political groundwork in place to enable it, there is little chance of such results.

In particular, the industry is very bad at recognising the difference between the personal technology that we in westernised economies enjoy and the industrial technologies that can be used to further global development.

These are emerging – quantum computing, gene therapy and AI for example – but the lesson from consumer technologies is the necessity of understanding whether the benefits and risks are properly understood before they are adopted.

The other problem with a technology-led approach is that very few of technologies with which we are apparently obsessed are the solution to the majority of our very physical problems.

They are like another patch of code released to update software that is no longer performing as designed. Simply adopting new technologies as a means of solving short term problems is not a long term answer.

Instead, we need to create a future defined by a sustainable development strategy that actually reflects global trends and the needs of communities around the world.

Trade and Development

It has become fashionable for western economists to call the end of globalisation and a consequent structural decline in world trade, even though serious poverty still exists around the world.

Shipping is the connector between global supply and demand and given the scale of economic development challenge remaining, there is good reason to believe that demand can be sustained, albeit at a lower rate.

In fact the world may be about to see another period of economic development that completes the gravitational shift to the east. China’s Belt and Road programme covers an area that is home to three-fifths of the world’s population and could re-shape supply chains in regions and countries whose development has been stalled by isolation or political systems.

This includes some countries for which the positive impact of globalisation is an increased opportunity for learning and education. We know that bringing people out of poverty depends to a large extent on better access to education, especially for women. It is a once in a generation opportunity.

We know too, that many in the industry fear that the regulatory regime that has governed it for nearly 70 years is, if not broken, then in desperate need of reform. This is not because the ideals are necessarily wrong, but because with an apparent breakdown of political consensus, regulation that makes rules by consent cannot function to its fullest extent.

While this may be true at local and some national levels there are other trends in play. For example, we have already seen that citizen activism is beginning to play a more important role in political and social processes.

Greater connectivity makes it harder for barriers to exist in practice but we also need rule-makers who are able to respond to the challenges of the 21st century. The shipping industry needs people who can advocate for it as well as those who can critically appraise it.

A Lack of Image?

While these external influences are continuing to make their mark, the shipping industry is – in some quarters at least – still wringing its hands over its public image. This is ultimately a pointless and diversionary process, a rabbit hole of self-regard that simply skirts around more important issues.

While the industry obsesses about why it does not garner its share of the news headlines, shipping is missing an opportunity to use its central role in world trade to support the creation of better societies and win back trust in globalisation.

In the process it would have a much better chance of building for itself a sustainable public policy position, using the profits it generates – even in the bad times – to invest in further education. Such a programme could help to create the professionals that the industry needs and in turn could also foster new technologies from which it could benefit in the longer term.

If the shipping industry wants something back from society it needs to put more in. There are laudable and concrete projects that are already doing this – physical commitments that should be applauded – but education, unless it is for the seafaring workforce, receives far too little attention.

Above all, what is needed is an understanding about the kind of people we need to attract to the industry in future and how to train and educate them.

In the future we are likely to see an increase in automation and machine learning, a change to the way that industrial sectors operate and how many people they employ. The same is arguably true for education; it cannot simply rely on either national public education or mandatory skills training to shape and nurture the talent we need.

Machines of loving grace

The worst possible error would be to simply shrug our shoulders and say ‘not to worry the machines will run everything in future’. Not only is this to misunderstand the relationship between humans and machines, it is an abdication of our responsibilities to each other and to succeeding generations.

The head of the leading international shipping organisation said recently that equipment vendors should not be allowed to push shipping down a road towards the adoption of certain technologies simply because it is possible.

The reason that technology is so attractive a solution to so many owners and operators is that it requires so little intellectual effort, only more capex and opex. It allows the patch to be applied without addressing the industry’s deeper needs.

In part because of the clamour around technology adoption, too few people recognise the importance of educating the workforce we need to work with these new technologies, systems and business models.

Those Millennials and Gen Zeroes are likely to take a much less indulgent view of shipping’s traditional exceptionalism and instead see their professional lives as a means of addressing social issues as well as professional ones.

Yes, their ‘native’ attitude towards the use of technology will cause its own displacement and disruption, but if this is something they are doing with broader goals in mind then the result is likely to be a greener, leaner and more socially-engaged shipping industry.

Creating that future would be a far greater achievement than simply applying technology as a means of circumventing the industry’s current challenges. They are far too numerous for that.

And we do have an opportunity to develop that future. It is almost within reach, but it must reflect not just the dreams of a technology-driven ideal, but the education and nurturing of the minds that will help to make it a reality.

Institute of Chartered Shipbrokers signs agreement to increase access to professional education resources in China

Co-operation programme will promote professional standards by making Institute learning materials available in Chinese for the first time

London and Shanghai, April 4, 2017. The Institute of Chartered Shipbrokers (The Institute) has signed a strategic agreement with China’s Ministry of Transport & Shanghai International Shipping Center to expand the delivery of its professional education services.

It promotes co-operation between The Institute and the Ministry of Transport which is designed to improve professional standards for shipping personnel in China and increase opportunities for international exchange in educational excellence.

The Institute will be responsible for developing curriculum content and implementing the programme using experience gained from its work in other developing maritime economies. The Ministry will translate the teaching materials and promote the courses to universities, vocational colleges and the wider shipping community.

Director of The Institute of Chartered Shipbrokers Julie Lithgow said:

“One of our core aims at The Institute is to increase access globally to our qualifications and promote professionalism, especially in key shipping regions. China has been a developing region for us for more than a decade, from the establishment of a Teaching Centre in 2005 to the launch the International Shipping Professionalism Development Programme in 2016. We look forward to welcoming more Chinese students and shipping professionals to a network that stands for lifelong learning, knowledge and integrity.”

The agreement was signed in China during a trade delegation visit organised by Maritime UK and attended by United Kingdom Trade Minister Mark Garnier MP, building on The Institute’s growing footprint in Asian shipping markets.

Mark Garnier MP, said:

“This historic agreement combines two sectors where the UK is an acknowledged world leader; education and maritime services and demonstrates the strengths of UK business in forging new partnerships in high-growth economies. China is a major engine for maritime trade and I’m pleased The Institute has been selected as a key partner to support China’s growing demand for professional education and standards.”

In addition to organising Institute Tutorship courses and training for China’s shipping community, the Institute’s teaching centre in China has arranged Institute Examinations in Shanghai Maritime University every year since 2007. Seminars and networking events are regularly held for Members and candidates, attracting strong attendance from across the local shipping industry.

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China March 2017_1

Picture Caption: Julie Lithgow, Director of ICS and Ms. Lei Xiao Fang, Director of Jiaotong International Cooperation Service Center sign the agreement on behalf of both parties. Standing behind are Mr Zhu Chuan Sheng, Vice Director of Professional Qualification Authority, Mr Xu Guo Yi,  Deputy Head of Shanghai Composite Port Management Committee, Mark Garnier MP and Doug Barrow, Chief Executive of Maritime London.

Notes to Editors
The Institute of Chartered Shipbrokers (The Institute) was established in 1911 and received Royal Charter in 1920. It is the only internationally recognised professional educational body in the maritime arena and represents shipbrokers, ship managers and agents worldwide. ICS is based in the heart of the City of London and has 25 branches in key shipping locations worldwide with 4,000 individual and 120 company members. ICS membership represents a commitment to maintaining the highest professional standards across the shipping industry.

For further information and interviews, please contact Neville Smith, Mariner Communications Tel: +44 7909 960 182.

 

Can Blockchain help design a better maritime internet?

2017-03-02 12.27.58When all you have is a hammer, so the old saying goes, everything tends to look like a nail. When a revolutionary technology such as Blockchain comes along, the temptation must therefore be to view it as the solution to something.

It’s a subject that is beginning to seep into shipping and the pace looks likely to quicken with the announcement of a joint venture between container giant Maersk and IBM. For these partners, the opportunity might be relatively straightforward, since Maersk moves physical cargo and financial information around the world, sometimes with little more than trust as the down payment.

The issue confronting anyone attempting to get to grips with Blockchain is to understand what it might mean for the shipping industry.

As Deanna MacDonald, CEO and Co-Founder of Blockchain Labs for Open Collaboration told the DigitalShip iShipping event in Copenhagen this month, Blockchain is a system of technical components whose abstract nature makes it challenging to explain.

Among these components are platforms, which are the application space for Blockchain, where users can contribute to and take from the open source computing that makes it possible.

This allows the creation of protocols, essentially rules that dictate the types of Blockchains that exist, the first and best known of which was for crypto-currency Bitcoin. Its second plank is ‘smart contracts’ which can be used to embed business logic and processes into a digital space, allowing for business work flows such as documents, messaging, systems or processes to be executed automatically.

Blockchain relies upon users – known as Miners or Validators – to check, confirm and record data, acting as gatekeepers to validate information. In Bitcoin the miner solves a cryptographic puzzle to mint the currency and is paid in that currency for their time and effort.

What makes Blockchain of interest to business as well as hackers is the very high levels of security that enables information exchange or transactions. Users sign to show that they contributed data using public or private keys but what can be seen and by whom depends on familiar read/write privileges.

Underneath the cryptography is a public ledger system or database of digital assets where assets are tracked and traced. Because the ledger is distributed among the network, users can contribute but the data can’t be compromised because it is stored among so many computers.

This fiendishly complicated arrangement, conceived as only a hacker could, is part a secure system of information storage and verification and part social experiment. Or as MacDonald helpfully put it: “the Blockchain provides the digital infrastructure on top of the internet of things. What it asks is can we not better organise the internet and have a single source of digital assets that we can all access?”

The answer for the majority, assuming they can grasp the concept, is maybe. Blockchain’s ‘origins’ in the crypto currency make it appear shady but financial information service providers are already pushing its adoption as a means of clearing the millions of equities, derivatives and other trades made globally every day.

The same is true of larger shippers, carriers and ports – anyone in fact with complex multi-party physical-financial transactions to complete. The paper trail that still dominates shipping, requiring dozens of documents per container move has been crying out for a solution for decades. But MacDonald says Blockchain is about going beyond digitising existing processes, it creates the opportunity to completely re-think approaches.

It opens up the potential for regulatory applications where large amounts of information must be validated and reported – and shipping has plenty of those – in a way that trades manpower for computing power.

“The Blockchain enables peer-to-peer exchange and because you can’t change the records even though the database is accessible by all, it enables trusted interaction between peers and businesses,” she continues. “Essentially you don’t need a third party to validate your information any more, you’ll have trusted immutable source that is tamperproof and common to all.”

This potentially opens up a market to improved checks and balances through the ability to track and store any kind of tangible or intangible digital assets. Reputation can be managed by viewing past dealings and transactions to verify if counterparties are valid.

If this degree of transparency sounds horrifying, MacDonald says the potential to create new types of network models that allow people to exchange information in a trusted and transparent way are clearly of interest to some.

MacDonald’s organisation BLOC has already worked with the Danish Maritime Authority to examine whether Blockchain could be used for compliance with EU MRV regulations. Putting in place a regime for the IMO’s global 2020 sulphur cap might be too big an ask by the deadline, but the IMO is set to begin its own CO2 data collection process, likely to be followed by some kind of regulation.

Some shipowners have pointed out that the issue facing the industry in 2020 is not compliance but enforcement of the regulations and how to ensure a level playing field that does not discriminate against those who want to show leadership.

MacDonald’s vision of Blockchain as a tool of good governance suggests applications in anti-corruption, faster payment and what she describes as ‘frictionless’ global trade. Proving regulatory compliance seems a natural extension.

“As a shipper of cargo, can you explore and conceive new ecosystems to move assets, create trust in your partners and your supply chain,” she asked. “There are lots of middlemen in the maritime industry and this could remove the need for many of them.”

As a tool of digital disruption Blockchain sits right in the middle of the current debate about whether established service providers are adding value or adding to problems in the supply chain.

Just like that conversation it requires that we set aside some preconceptions. In a business where many sectors are still struggling to make a profit that might sound like a stretch, but this is precisely why liner operators are interested, if it enables them to get paid earlier and faster.

Whether or not one buys into the shift of computing power from centralised sources to a wider community of users, it is hard to argue with MacDonald’s assertion that Blockchain “is going to be the next layer of the internet, it will enable us to use the internet like we haven’t done before.”