BIMCO: Shipping Can't Afford to Be Another Kodak

by Steve Leonard
Friday September 29, 2017

Anastasios Papagiannopoulos, President of BIMCO, was the key note speaker at the 3rd ShipIT conference held this week in Athens. The event brought together an impressive list of subject experts to address the "administrative burden on board ships, autonomous ships, blockchain, cyber risk management and not least the human elements of all these issues." ShipIT is designed to create a networking platform focused on knowledge exchange for the maritime industry, for owners, senior business and IT executives to discuss how digital technologies might improve business process and operational goals.

Mr. Papagiannopoulos, while acknowledging that he is not a specialist in all things digital, warned the industry of the importance of embracing new technologies and cyber security, which, if ignored, stakeholders will do so at their peril. He cited the well-known Eastman Kodak example of a company that "failed to grasp the significance of a technological transition that threatened its business." Kodak "failed to see the impact that digital cameras and smartphones would have on the way we take and share photos" leading to its ultimate downfall."

His shot across the bow: "Shipping can't afford to be like Kodak."

The BIMCO president acknowledged that digitalisation and disruptive technologies present the industry with "great opportunities but also with very real threats." The industry needs to "seize the opportunities that new technologies can offer, but also be prepared to manage and mitigate the threats." He emphasized that we must not ignore the "human element – especially our seafarers" who are and will continue to play a very important role "for safe and effective shipping."

I recently wrote about the industry's "human and organizational challenges in the areas of safety, standardization, adherence to procedure and reduction in administrative burdens". In line with the same theme, Mr. Papagiannopoulos acknowledged that the administrative burden placed on the ships masters is too heavy and needs to be eased. So much so, that the "IMO has recognized this to be a growing issue and one to be considered in the development of new regulations."

Despite BIMCO's support, Mr. Papagiannopoulos is not convinced any efforts will "make a substantial difference to ships' masters in the short term." In his view to accelerate this, there needs to be a focus on "standardizing… information that flows between ships and ports and even to automate the exchange of this information." As such, BIMCO's participation in the EU project "Efficiensea2" has it working with partners across the industry, OEMs and authorities to develop standards and "transmission protocols that could enable automated exchange of information between the ship and shore."

BIMCO is also working with SHIPDEX to "support the development and exchange of technical and logistical data across the shipping community." In addition, BIMCO has partnered with the International Association of Classification Societies (IACS) to ensure that "new technologies can be safely and securely built into the ship designs of the future, while ensuring that the next generation of ships are designed to be cyber resilient right from the start."

This is the first step that will in essence make autonomous ships a reality. Although the number of unmanned ships is relatively small when compared to their manned counterparts, Mr. Papagiannopoulos expects "this is about to change, with prototypes for larger unmanned container carriers and small island ferries currently in development."

However, for this to develop there are a "range of practical issues which need to be resolved before we will see autonomous ships trade globally." No matter what, the human element is still the most important constituent and will not be summarily replaced. Roles will have to redefined, new skills developed for the new technologies; in addition, responsibilities in such cases where technology breaks down will have to be identified, but there is no denying the industry will undergo a transformative change.

Commercial Opportunities

Digitalisation will also bring forth an array of commercial opportunities, among them blockchain. Although not a new technology blockchain "has the potential to be used for all sorts of things that involve transactions – particularly those that involve a trusted middleman." BIMCO sees opportunities for blockchain applications "such as supply chain logistics – containers, bunkers, ship's supplies and spare parts." Blockchain will also "speed up the handling of bills of lading - and together with other technologies, we could see charter parties built on blockchain platforms."

All of this will not come without a set of challenges. First and foremost: cyber risk management, a "global issue impacting all industries and public services." Although shipping is far behind many industries when it comes to technological advancement, we did witness last June, the impact of the NotPetya ransomware attack on Maersk that prevented customers from accessing their data unless they paid $300 in bitcoin, an attack that Maersk claims cost the company as much as $300 million in lost revenue.

The threat of such cyber-attacks is particularly acute on new ships that "are increasingly using systems that rely on computers, integration, automation and networking (and) shipboard systems that are connected to the internet." For this reason, "cyber security remains at the top of BIMCO's agenda." (See: 'Guidelines for Cyber Security Onboard Ships' and the second edition of this important document was published in July 2017). 

These challenges however will not slow down the industry's push towards digitalisation. Mr. Papagiannopoulos sees these changes resulting in the "industry becoming leaner and more transparent" and in turn forcing the industry to take the necessary stringent measures to mitigate the risks.

Mr. Papagiannopoulos wants the industry to look at automation as a means of "helping our seafarers in their everyday tasks by reducing their current workload and improving communications with the shore – not just with their employers but also with their families." He ends by reminding us all the "digitalisation aside, we must never forget that we are still a people industry."