Waves of opportunity

Aiming for a sustainable maritime industry by connecting the ecosystem

Nick Lerner
19 November 2021

5 min read

To achieve environmental, business and social sustainability, key players in the extended maritime value chain are transitioning into a technology-equipped, industry-wide coalition that embraces new business models, digital governance and data-driven operations.

Shipping is crucial to world commerce, and it’s under severe pressure from regulators to become environmentally sustainable. But the industry is so varied, with many competing interests, that agreeing on a strategy for cutting the industry’s greenhouse gas (GHG) emissions is a challenge – especially when the Organisation for Economic Co-operation Development projects the industry’s 2.6% of total GHG emissions could more than triple by 2050 as the maritime trade volume also triples.

Harsh penalties – introduced by countries around the world and the International Maritime Organization (IMO), the specialized United Nations agency that regulates shipping – aimed at curbing pollution have increased the number of maritime companies pursuing data-driven business models, says Christopher Pålsson, head of consulting and managing director of Maritime Insight at Lloyd's List Consulting, part of the 300-year-old Lloyd’s List shipping intelligence service.

Pålsson says that industry-wide integration, where ships and landside operations are “data irrigated” and intimately connected, is the key to unlocking the social, environmental, and business benefits of carbon reduction. Integration helps by creating conditions where companies form coalitions to innovate, combining their knowledge, experience, and data to create scenarios via a cloud-hosted enterprise platform, and then testing them virtually to understand impacts and identify the best options.

“Virtualization is attractive for maritime companies of all sizes that need to demonstrate green credentials and future-proof capital investments,” Pålsson said. “It allows them to accurately visualize their operations and thereby make environmental, business and operational decisions based on the precise data that enables them to fully understand impacts of circumstances and choices within and beyond the enterprise.”

A breath of fresh air

Reducing CO2 and GHG emissions is a priority for every facet of the maritime industry. Exhaust emissions from ships contribute to climate change and include toxic fumes containing very fine particulates that trigger health problems including asthma, heart disease and cancer.

“Globally, shipping is responsible for about 16% of premature deaths due to emissions from transportation,” said Dan Rutherford, marine and aviation program director, the International Council on Clean Transportation (ICCT). In the UK alone, ICCT estimates that shipping emissions contribute to more than 3,000 deaths each year. The ICCT reports that the UK ranked fourth for the total number of people dying prematurely due to shipping fumes, exceeded only by China, Japan and India.

Pålsson, who has worked in the industry for more than 30 years, said virtual twin experiences can help operators see where they are wasting fuel, which lowers profits and causes avoidable pollution. Modeling fuel consumption with virtual twin experiences, he says, can reduce fuel demand by 5% to 10% through evaluating its usage and running alternative “what if” scenarios before making real-world changes. This process simultaneously reduces emissions and cuts operating costs.

Efficiency through virtualization

Technology that transparently connects every part of the extended enterprise helps companies compete sustainably using their core strengths. For example, a ship operator might use a virtual twin to optimize ship operations for maximum productivity and CO2 reduction.

“Virtualization is attractive for maritime companies of all sizes that need to demonstrate green credentials and future-proof capital investments.”

Christopher Pålsson, head of consulting and managing director of Maritime Insight, Lloyd's List Consulting

“Efficiencies such as weather routing and speed adjustments can, when they are fully virtualized, be improved to increase profitability of voyages and better understand and react to global market trends,” Pålsson said. He cites the example of a cargo ship, which can be quickly re-routed based on virtualizations that indicate opportunities to take advantage of both weather and market conditions to save fuel, reach ports faster and, thereby, operate more profitably.

The fragmented nature of the maritime industry means that achieving virtualization is not always plain sailing.

“Each of its parts from shipyards, ports and logistics, to ship owners, operators and financiers is vastly different, with its own issues, priorities and strategies,” Pålsson said. “Small fleet owners, who form the majority of the industry, have very different aims and resources than industry giants, such as container or cruise ship owners. It’s an uneven playing field in which the development and enforcement of universally ratified standards is hard.”

Collective intelligence

Having worked across railways, ports and the maritime sector, Vincent Balandras, vice president and partner at global consulting, technology services, design and digital transformation company Capgemini Invent, understands the industry’s need for rapid delivery of innovative, practical new business models.

“The global and very dispersed nature of the maritime industry has led to vast differences in the uptake of digital technologies,” Balandras said. “Many operators have no digitalization plans at all and think that change is not necessary.”

However, some operators and port authorities, notably Marseilles, Rotterdam, Singapore, and three major ports on France’s River Seine – Le Havre, Rouen and Paris, which collectively operate under the name Haropa Port – combine and leverage cloud-hosted data to achieve greater efficiencies. By integrating their enterprise data on unified digital platforms, each port operator achieves commercial and environmental capabilities through enhanced insight, understanding and control over its multimodal operations.

Numerous computer applications for land and seaborne operations offer point solutions that cover many aspects of the maritime industry – but the proliferation of these systems actually works against the goal of creating a well-coordinated industry, Balandras says.

“To achieve progress, organizations need to share data on a single, universally accessible digital platform,” Balandras said. “When this happens, the availability of relevant data from multiple sources will produce collective intelligence that helps the maritime ecosystem innovate and thereby perform better.”

“To achieve progress, organizations need to share data on a single, universally accessible digital platform.”

Vincent Balandras, vice president and partner, Capgemini Invent

In fact, Balandras says that virtual twin experiences are “absolutely key to advancing physical asset design and operations.”

Bridging the gap between real- and virtual-world operations, virtual twin experiences are real-time virtual representations of a product, platform or ecosystem that can be used to model, visualize, predict and provide feedback on properties and performance. Real-time data is shared via virtual twin experiences to enable collaborations among multiple stakeholders to better understand, fully analyze, monitor and master challenges.

Money talks

Companies that succeed in capturing and acting on data that improves the sustainability of their operations gain another important advantage – the ability to attract sustainability-driven investment capital.

For example, the Poseidon Principles Association, the governing body of the Poseidon Principles framework, helps financial institutions align their ship finance portfolios with responsible environmental behavior, using the power of their investments as an incentive for the industry to decarbonize.

“The operational efficiencies and environmental and associated reputational benefits that virtualization delivers certainly make it easier for low-carbon ventures to attract investment from Poseidon Principles’ existing and potential signatories,” Pålsson said. “Unifying data and viewing the big strategic picture, along with the minute details of ship design or contracts, pays dividends. Financial and environmental costs can be very accurately measured and monitored, and then improved and optimized. This is very appealing to investors because, when digital visualization is deployed, operational and system efficiencies can be introduced at every stage and their carbon benefits assessed and demonstrated in advance of investment.”

Interconnected industries

The advantages of virtualization don’t stop at the dock. Shippers, railway operators and landside logistics companies are now collaborating and sharing data to facilitate environmental and commercial benefits. These industries, which have operated in silos for centuries, are now connecting to new and existing services via shared digital platforms, Balandras said.

“Maritime and land-based industry actors can easily join a data-sharing platform and digitally evolve at their own pace,” Balandras said. Once these cross-industry connections are established, commercial advantages – which include process, asset and route optimization, port entry procedures and autonomous land and sea-based operations – benefit from fuel and time savings, coupled with reductions in CO2 intensity and other polluting emissions.

“Once the connections are in place via a shared platform, maritime has no limits in what can be achieved using 5G and the Internet of Things, together with smart equipment and systems that provide data on ports, ships, buoys, containers and infrastructure,” Balandras said. “Connecting with railways and onshore logistics data allows entire supply chains to be better understood, operated, maintained and optimized for better commercial and environmental outcomes.”

Pålsson agrees.

“Simplifying asset and operational complexity through technology provides maritime industry players with informed choices and the flexibility to benefit themselves, our environment and the whole of society’s sustainable development,” he said.

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