The year ahead is likely to be a complicated one for the shipping industry – but how will that translate into new opportunities and even new ways of running businesses? But even with such testing times ahead, there remains a need to ensure seafarers are trained and kept happy. So here we look at how 2017 may pan out and the biggest challenges ahead.
READY FOR THE FUTURE
There are seemingly very few certainties for shipping as 2017 picks up pace. The only inevitability seems to be change itself – so it is important to assess what the new world for global trade will look like, and for shipping to be ready for it.
For shipping it seems that the challenges will fall into a number of different camps – there is the problem of over capacity, then the threats posed by uncertain markets. Who will be importing and what to where, and who will be exporting. According to a leading maritime futurist, KD Adamson, the predictions for the coming 12 months are ones of immense potential for positive change.
She sees that this is the year in which the foundations of a “new shipping industry” will be created. According to Adamson, 2017 will see the industry players who will shape the future developing the new ecosystems, platforms and relationships of how business will begin to be done.
Shipping is becoming “information-enabled” and shifting onto an exponential growth curve rather than the linear one we’re used to. All things will seemingly change, and change increasingly quickly.
2017 KEY CHALLENGES
1. Consolidation and joined up thinking – According to Maersk, consolidation is the biggest challenging facing shipowners. The company believes that by 2018 the top five carriers will have about two thirds of the global market. This consolidation in the liner sector is seen as being the answer to grabbing more business share, but without the need to build or buy new ships.
The industry simply does not need any new ships, there are hundreds of idle, laid up container ships as it stands, so anything that can give a more positive shape without making the problem worse has to be welcomed. Quite what that means for smaller companies though is up for debate – and a whole new issue.
2. New business models – For shipowners it seems 2017 is the year of both revolution and evolution – there are so many new ideas coming to for in business, as technology, data management and the power of online buying really come to the fore. Again it is has been Maersk leading the charge, and their deal with internet retailer Alibaba means that shippers can now directly book space on vessels. This could be a real game changer.
3. Old Ways No More – KD Adamson’s vision of the “new shipping industry”, is one in which the old linear approach to business no longer applies. With shippers able to use “OneTouch” booking, simply clicking to reserve vessel space, it seems the old cycles are changing.
The old ways in which a wily shipowner would place a bet on a counter-cyclical investment, buying or selling ships at the right time is seemingly coming to an end. The thinking is that the days of the cycles and of hunches have gone, replaced by algorithms and data.
While today it is container shipping leading the revolution, it could well be that change will come to other sectors too. While it may perhaps seem a bit far-fetched to today would suppose that an oil rig supply charter, or space for 200,000 tonnes of iron ore would be booked like this, it does seem that change is coming.
4. Autonomous Ships – The rise of the autonomous ship is still in the pipeline, and 2017 is likely to see a host of new developments. With new sea areas dedicated to testing and development, and with companies pumping in investment, it seems that the future is gaining traction.
However, for all that, there is still a long way to go. There will need to be changes to the fundamentals of shipping, such as maritime law and insurance – and there will need to be far greater emphasis on how such vessels deal with the challenges of cyber security and crime. Until there is a reassurance that autonomous vessels are truly the answer, then the questions will keep coming.
5. Cyber Security – 2016 was dubbed by some newspapers the “year of the hack”, as the public profile of cyber-attacks reached a new high and 2017 is set to follow suit. Thankfully there hasn’t yet been a major attack on shipping, well not that anyone admits to…however, it seems to be a matter when not if.
The challenge for shipping when it comes to cyber risks and threats is to ensure that the hardware is better designed and protected, that modern and update systems are used and perhaps even more importantly that people are aware and make the right decisions.
Training is vital for this, and seafarers need to be confident in how to deal with cyber threats. They need to understand their role as both potential problem and vital solution.
6. Piracy – Maritime piracy has reached an 18 year low according to the latest industry reports. Which is surely something to celebrate. Alas though, the good news is tempered by the fact that kidnappings of seafarers are at a 10 year high.
So there are less attacks – which proves that much of the systems put in place are working, the navies of the world are protecting vessels, as are private security guards. However, when attacks do happen – then all too often seafarers are taken ashore and made to suffer terribly.
We need to recognise and take some pleasure that piracy is on the slide, but there should be no complacency – and less attacks does not mean an end to the story. There needs to be concerted action to tackle the kidnappings, especially off The Philippines and West Africa.
7. Global Trade – There is a real sense of upheaval going into 2017, and with politics shaping the horizon for trade it seems incredibly hard to know which way things will swing. Will localisation become the norm, or will new opportunities emerge as the old blocs break down? Time will tell, and that is the challenge for shipping – to be ready to respond, whatever the reality and however the ebb and flow of the trade tide pulls.
8. Scrutiny – With all this new technology comes the ability to manage data differently. Information becomes ever more accessible, which can also force change as pressures to react develop. In keeping with the new age of transparency and accountability.
Recent news that brand owners and representatives from the international shipping industry have joined forces in signing an historic statement aimed at preventing the maritime transport of counterfeit goods. The “Declaration of Intent to Prevent the Maritime Transport of Counterfeit Goods”, marks the first time such a public commitment to ensuring only the right goods are shipped seems a clear indication that people want to know what is being moved and how, and so scrutiny is increasing and that means things need to be in order – there can be no place to hide.
9. Training – 2017 is a time of change with regards to training, as amendments to the STCW convention enter into force – it is also a time in which training truly modernises and enters a new age. The Danish Maritime Authority is embracing the charge towards technology when it comes to seafarer licensing, and that will likely be followed by other flag States too.
That will push for greater levels of technology in certifying and of how information on seafarers skills, attainment, experience and qualifications are likely to be managed – which can be hugely beneficial for all.
10. Seafarer Happiness – One of the biggest challenges will remain, that of ensuring that people at sea are happy and satisfied with their life. At KVH we provide the content, connectivity and training which plays such an important part of this work/life/career balance. Seafarers need to feel in touch with home, they need to have entertainment and a good quality or life, and they need to be supported. That is one thing that will remain, whatever the other changes that 2017 might bring.