Tag Archives: Crew Communications

Yes we can! (maybe)

And he doesn’t have any HTS capacity coming onstream. Nati Harnik/AP

With the political fervour in the US growing daily stronger it seemed appropriate that the 2016 Satellite show followed hard on the heels of the Conservative Political Action Conference at National Harbor on the outskirts of Washington DC.  But even once the politicos had departed, the prevailing mood echoed the incumbent president’s best-known slogan.

There is a pretty simple reason for this. The huge amounts of new capacity coming onstream over coming months and years contrasts starkly with the depressed end user market. Where FSS/mobility providers are eyeing expansion into terrestrial markets and talking up compatibility to the next generation of cellular services, there is no escaping the gap between ambition and reality in the maritime market.

This means the providers have to believe in something that at first look seems highly questionable. As more capacity and greater competition acts to lower prices, shipowners can be persuaded to pay to use more data, the pie will grow and the supply side will prosper.

These same providers must be able to differentiate on more than just cost and in doing so must still make money. This is happening at a time when the trend in VSAT is towards lower margin, more commoditised services, similar to current L-Band offerings.

The maritime panel at Satellite 2016 featured three network operators, all of whom are bringing new capacity to market, either High Throughput or enhanced L-Band and service providers that enable the ground segment and whose role is to distribute services to end users.

Billions of dollars are being spent on campaigns to convince owners and managers not only that they need more bandwidth, but also that they should choose a particular product even if it is more expensive than what they are using now.

This makes it more like an election campaign than the participants on the maritime panel would probably admit, but if this is a battle, what wins?

To Matt Broida of HarrisCaprock, the formula “is 60% cost, 30% business model and 10% technology” and he sees significant growth potential from the latent demand in a number of deepwater segments.

But that cost element shouldn’t be all about price. Broida pointed out that Exxon has cut staff by 20% in 20 years but produced 25% more oil in the same period. “That’s the model we have to go to. Bandwidth and hardware prices are going to come down but keeping that value for yourself is the business model. Staying competitive means you don’t want to give that all away to customers.”

His view is that it is the value chain that is disruptive “and if your strategy is to keep doing what you’re doing but better, you’re waiting to go out of business”. Service providers have to figure out who to partner with. “If you choose the right partners you can come out of disruption on the right side of it. It forces you to place some big bets but it enables you to place more bets than you could make on your own.”

For Inmarsat’s Drew Brandy the move from the company’s legacy L-band services to VSAT is an inflection point with a similar metaphor. “Like us many others are gambling on increased demand driven by new applications and that we can evolve to provide new differentiated solutions,” he said.

The Inmarsat FX VSAT model is designed to mirror its L-band offerings, built for simplicity and pre-assembly so moving away from bespoke nature of VSAT. “It strips some of the cost out of the solution because you’re not doing bespoke customised installations every time.”

Perhaps driven by the need to prepare previous damage to its partner relationships caused by waves of price rises, Inmarsat is focussed on adding value for its distribution channel to provide sufficient margin support and Brandy thinks there could be more for SPs than in current L band deals.

Inmarsat was one of the innovators in crew calling but less than 30% of crew are still properly served. Crews consistently put comms access near the top of their wish list but the lack of delivery is not going to change until vessel operators accept it as a differentiator. “As costs start to fall over the next few years, the internet will become for accessible and available and owners will start to make that change provided strict access policies are in place” he suggested.

The price elephant is still in the room. Intelsat’s Chris Insall bemoaned shipowners’ decades-long focus on price above all other things. “It’s just been part of the process but the focus we see is increasingly on operational efficiency. We’re entering a phase where there is a realisation that sub-500kb [ie L-Band] systems are unable to match the requirement of crew and operational demands. I hope we have moved beyond area of focus on cost.”

As a result he took issue with the assertion that maritime bandwidth is in oversupply for either crew or operational demand. “The majority of users say they want more bandwidth than is currently available, there is a need for genuine broadband services.”

To Comtech EF Data’s Louis Dubin the proliferation of HTS products and solutions is still creating confusion and he stressed a need for innovation to be baked-in. “If price is your only differentiator, we’re all going down quick.”

The risk for owners he said is that they cannot capture the benefits of HTS because they are relying on a previous generation of infrastructure. You might buy multi-megabit but end up getting kilobits. In the space segment very little changed for decades but with so much happening so fast, owners are increasingly looking for a consultative approach to their investments. “It’s not their core competence. They need you to prove it for them.”

So this need not be a zero sum game – even if the session title was Battle on the High Seas. What the supply side must do is find ways to help users make money, not just with cheaper communications but with applications that allow them to realise efficiencies, according to Iridium’s Brian Pemberton.

“Some customers are very content with the basic operations they are running but others are interested in what might be possible with 10x or 20x connectivity without having to increase their spend 20 or 30 times.”

Iridium to a great extent made its reputation in crew calling, providing commodity voice services at competitive prices. Nonetheless this is a segment that remains underserved and Pemberton doesn’t expect that to change. Much of this comes back to the ability to monetise the service.

“Understanding crew behaviour and cultural expectations is very tricky. We see a lot of opportunity going forward, but the willingness to pay and ability to pay are definitely challenges,” he said.

There are still too many operators who analyse the opportunity and conclude crew communications is a pot of gold. “In fact it’s about taking mean margins from a lot of people and aggregating those into something. There are a lot of broken business cases out there,” he added.

And neither does he see the operational segment as a cash machine as owners bank on increased data for competitive advantage. “They want to enable that connectivity but what they may find is that they already knew 99% of what the data is telling them. What I think we could see is that processing taking place on the vessel with just the exceptions sent back.”

But he added that customers shouldn’t expect the same from Iridium’s new services as they have in the past. Iridium he said planned to be “quite disruptive to the market in migrating our customer [and] putting tools into hands of distribution partners which they can use to differentiate and earn better margins.”

At the time of writing, there are 228 days to the US election. But for the mobile satellite providers and their partners the battle for hearts, minds and wallets is only just beginning.


Crew retention is the tip of the digital iceberg

Almost 12 months ago an ambitious project began to take shape. Roger Adamson of Stark Moore Macmillan, Vizada (now Astrium Services) and two of the largest crewing agencies in the world, Philippine Transmarine Carriers and CF Sharp, joined forces to embark on the most comprehensive survey of crew and their attitudes towards and use of communications at sea ever undertaken.

The resulting report has generated considerable interest. But while Adamson says it is encouraging to see so many shipmanagers and operators recognising the operational benefits of improved communications from a crew retention perspective, in this guest blog, he lays out why he believes there is a wider opportunity which comparatively few in the industry are really grasping.

Considering the enduring importance of crew retention it may seem surprising that until last year no organisation had commissioned definitive independent research into the communications requirements and habits of seafarers.

However, when confronted with the logistics of reaching, collecting and analysing the written, paper responses of almost 1,000 officers and ratings, this lack of comprehensive research becomes rather more understandable.

Key to any research project is the quality of the data and the sample. Had we not been working with PTC and CF Sharp which between them send over 47,000 crew each year to over 1,000 vessels in the commercial cargo and passenger sectors, it is unlikely such a survey would have been possible.

It certainly wouldn’t have produced such high quality data and responses. With the total market for satellite based crew communications estimated at approximately 925,000 individuals, our sample represents in the region of 1% of the market – making the dataset both fascinating and statistically significant.

One of the headline results has been that 68% of seafarers now have access to communications whilst at sea either all or most of the time with only 2% reporting that they never have access to communications. However those headline figures mask a wide variance between different sectors. For instance the passengership sector, despite having the highest levels of communications equipment on board, provides the lowest levels of free crew communications of any sector.

In common with the passenger sector, offshore vessels have very high levels of equipment, but neither of these are principally driven by crew communications requirements. For the passenger sector, high-bandwidth communications systems are major revenue generators with the penetration of VSAT extremely high.

Similarly, the offshore sector is well penetrated with VSAT systems as charterer requirements dictate high-bandwidth be available, but in contrast to the passenger sector, offshore vessels offer far better access to free and paid-for communications, most likely a reflection of the scarcity of qualified offshore crew.

Across the sectors 46% of crew are not provided with any form of free communications at all. In the context of crew retention that figure should be raising eyebrows.

As a regular speaker at the Informa Manning & Training conference, where this year I’ve been asked to speak to delegates in Dubrovnik about crew communications, I consistently hear managers and operators wrestling with the issue of crew retention.

I’m repeatedly being told that the expense of training crew means that retaining them offers real dollar savings and competitive advantage. When one considers the noise VSAT has been making over the past several years it is curious that we are still in a situation where almost half of all seafarers have no access to free communications, when the ability to provide them with such would not only assist in their retention, but also offer broader opportunities to ship managers and operators.

I think this is where the real issues lie. Traditionally the expense of satellite communications together with the necessity for robust equipment and reliability in an environment where mission-critical literally equates to life and death, has always meant failure wasn’t an option and experimentation challenging.

As one of the most regulated industries in the world, shipping is about compliance and meeting minimum requirements. In many respects it is a unique industry, but it is not immune from the digital revolution which has swept up every other.

With the IMO advocating an over-arching e-navigation strategy combining ECDIS with new technologies converging across navigation, IT and communications, the landscape of maritime business is changing fast.

The opportunities for forward thinking ship managers and operators are highly significant, but unlocking maritime’s digital promise will require a major shift in thinking. IT, communications and digital technologies have the potential to drive cost savings, service improvements and the all-important crew retention.

In my experience shipmanagers and operators are hungry to understand how and where their businesses can implement and benefit from these changes, but as yet suppliers aren’t creating the cross-businesses value propositions to help them.

By commissioning the Crew Communications 2012 survey Astrium have signaled their intention to address this need. The wealth of information it has provided to shipmanagers and operators about the crew they depend upon is extremely valuable, but it’s only the beginning of what’s required.

Case studies have always been the primary tool in the maritime salesperson’s armoury, but what’s needed now are more independent, in-depth studies and analysis which can inform both suppliers, and ship managers and operators.

The advent of new High Throughput Satellite systems, from Intelsat EPIC to Inmarsat’s GlobalXpress, O3B to Iridium NEXT, means bandwidth and speeds will accelerate further. But without the context of operational implementation and potential cost efficiencies these systems are just adding a new level of complexity for ship managers and operators.

We are approaching an era of real technology convergence in maritime which has the potential to transform the industry for the better. Doing so will require technology suppliers to gain a far more holistic and in-depth understanding of the shipping business. And for ship managers and operators to help them.

A condensed version of the Stark Moore McMillan report, Crew Communications 2012 is available for download from here.

Further on up the road…

Do we spend enough time thinking about the future? I’m not just talking about the next quarter or the next six months, but the really big picture, the kind of blue sky thinking that lets your imagination take off the fetters and consider what might actually might be coming next.It might seem not just blue sky but stark raving bonkers given that the next 12-18 months represent make or break for many in the shipping industry.
But for shipping, I would suggest, such thinking is more important than ever. There are a couple of reasons for this, some more obvious than others.
To begin with a very short history lesson, let’s consider some competing propositions.A couple of lone voices did in fact predict the bursting of the financial bubble in 2008, but why did no-one predict the end of communism and the fall of the Berlin Wall in 1989? Why did no-one predict the Arab Spring?
Why did so few people predict the explosive growth of Social Media and the threat it poses to not just traditional communications but to the kind of governments unseated in the last 20 years? Where was the appraisal that said 20th century medicine would become excellent at keeping the old alive but increasingly ineffective at fighting old enemies like malaria?
The end of communism was an opportunity worth billions to a few, millions to hundreds and representing nothing less than a complete change of lifestyle to millions more. It wasn’t a stable time, nor a long-lived boom, but Europe and the world are living with and paying for the consequences, so one imagines having some handle on events would have been useful.

The Arab Spring is even more confounding. With so many analysts and pundits on hand to opine about the Middle East, why did no one see the uprisings in Egypt, Iran, Syria and Bahrain coming? Perhaps they had been numbed by the false dawns in Palestine and Lebanon, but for a moment it seemed as though the ability to imagine what a future Middle Eastern might look like had gone for good.

Predicting technology development is, granted, even more difficult than political events but the stakes, while valued differently, are just as high. Only last week, I saw a satellite gateway where banks of processors had been replaced by one trim cabinet.

Social Media took some time to take hold with some early failures dropping by the wayside so perhaps we should go easy on digital pundits. But given that the internet has taken the lid off communications once and for all, it should have been easier to see that the rules were going to change forever.

In shipping, I’d suggest there have been far too few examples of forward thinking. DNV’s Shipping 2020 publication is one of the few that provide a firm vision and in its case, the findings are predicated on shipping’s ability or otherwise to adapt to the changing regulatory landscape and grasp the competitive opportunities that they present, while also managing the risks.

What it doesn’t mention are the other trends that I think need more debate and greater understanding.

Chief among these is political and business risk, or put another way, that the shipping industry which emerges from the current recession will not only look different to the one that went into it, it will work to different rules, be subject to different forces and ultimately be controlled by a different set of leaders.

For shipping this means a continuation, not an abating, of short-term volatility in rates and earnings, with new sources of cargo and finance in equal measure. As commodities shift more towards spot pricing, so will shipping. Some even predict the end to long term charters without a link to index pricing, so uncertain is the picture looking more than 12 months ahead. That increases pressure on the whole supply chain to not just reflect price levels but payment terms too. The risk that quality suffers must be considered a real one.

Demographic changes are continuing too; not least the impending retirement of a wave of senior Caucasian seafarers and their replacement with officers from the booming markets of Asia and Eastern Europe. The ceo of a large shipmanagement company last week told me that their problem was not just a shortage of competent seafarers but that with crew choosing to come ashore earlier, skills were under pressure in the office as well.

The seafarer issue has been highlighted – telegraphed even – by BIMCO/ISF manpower survey seafarer surveys of the 2000, 2005 and 2010 but according to some manning agencies, shipowners and managers  weren’t listening clearly enough at the start of the last decade and are suffering now as a result.

Other trends – the shift to new fuel sources for reasons of cost and compliance are better known and the industry will spend the next decade chasing multiple single-digit improvements in fuel efficiency until someone grasps the nettle and chooses to build the truly next generation ships that are currently still concept designs.

The final trend – and one that has been to some extent ignored by those outside the IT department – is the growth of computing power that continues to drive Moore’s Law headlong into the cloud.

Until recently, cloud computing for ships was a pie in the sky idea, made impractical by the cost and practicality of ship to shore communications. For some users, simply overcoming latency was challenge enough. When it came to complex computing and sharing of data and documents, there was too big a mountain to climb.

The ability to compress and optimise data not just over land-based networks but via satellite too has started to make cloud computing a reality in shipping. Just as with other major changes there are winners and losers from this change. Ships and managers can use the systems they use ashore and finally use the same tools of social media that are so quickly changing life ashore. The suppliers that counted on the fact that shipping would always do things differently will need to adapt or die.

As I discussed on the Admiralty blog earlier this month, the piteously small number of seafarers with access to anything other than some voice and limited email, demands that things change here and fast if young people are to see anything other than a last chance choice.

But where do we go from here? I’m en route to Athens for the DigitalShip Conference and hoping to pick up on some of the next wave of trends. These will hopefully be not just extrapolations of what we already know but insights from people who have taken the time, against the grain to look out of the window and wonder what’s really out there.

If this is something you or your organisation have done and you are willing to share the results, I’d be pleased to hear from you. Post a comment and I’ll get back to you.