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Navigating the best path to digital transformation

2019-06-03 / Number of views:762

Carole Plessy, Head of OneWeb’s Maritime Product Development, argues that reliable, flexible connectivity is required to harmonise the fragmented maritime supply chain and help the industry to attract investment and comply with tough new regulations.

Delivering Return on Investment is the ultimate goal for any sector looking to realise its digital ambitions, but the logistical and financial challenges of deploying consistent connectivity across entire fleets has been a significant stumbling block for the shipping industry. The sector has already invested substantially in digital products and services that have not always delivered, so it’s no great surprise that some are hesitant to invest further.

However, digital transformation is becoming an operational necessity, rather than a nice-to-have, if we want to make the shipping industry more efficient, leaner and cleaner, and to prevent stagnation.

Shore-based logistics networks have successfully introduced environmental and cost efficiencies through digital technologies, yet the sea freight industry has lagged significantly behind its shore-based cousins in digital adoption. The fragmentation of the sector has deterred investment within the sector, while the patchy and inconsistent quality of offshore connectivity falls far behind the standard of onshore broadband.

In terms of the wider business drivers, the fragmented nature of shipping companies and the freight rate war that has raged over the past decade have translated into a volatile profit margin, which has put equity investors off supporting traditional shipping companies. Moreover, macro-economic events such as tariff wars, volatile oil prices, the construction sector and consumer purchasing power directly impact the volume of goods, the trade routes and the type of goods being shipped. This has further impacted the amount of external investment reaching the industry, with investors taking a ‘wait-and-see’ approach to determine who will emerge from the fray. Furthermore, until now, each vendor has been able to deliver its own equipment to the market without a requirement for interoperability; and now this is a major hindrance to modernisation.

Now, however, we are set to see new players emerge that are more agile to operate on an OPEX rather than CAPEX model, leveraging their know-how acquired in other sectors and deploying the full potential of digitalisation. There has already been some movement of service providers to capitalise on this model, with equipment manufacturers moving to “as a Service” models where equipment can be borrowed for short periods of time or kept indefinitely without the need for upfront investment.  For all cases, the only solution is for greater standardisation and integration of maritime equipment, services and data through greater market collaboration.

The other barrier to maritime adoption has, until this point, been terrestrial-grade connectivity at sea. Reliable connectivity is the backbone of digitalisation, and without it, the success of digital transformation will always be hampered. Maritime internet has often been delivered to operators as a single channel which requires ships to carve up data between everything from crew social media to emissions monitoring. Currently, they do not receive any higher-priority, higher-speed connections for more important functions such as speed, fuel or emissions analysis, and the lack of high-throughput, low-latency services makes real-time monitoring and analytics impossible.

At OneWeb we are building an ecosystem of maritime partners to help us deliver globally-consistent connectivity across ship and shore. We anticipate that this will spur digital transformation and adoption of services such as data analytics by delivering terrestrial-quality speed and a tenfold increase in bandwidth to the shipping industry. OneWeb’s new fibre-like communications service for maritime will enable specialised, prioritised connectivity ‘channels’ for maritime businesses for crew communications, automation and even Artificial Intelligence applications.

A raft of new environmental regulations from the IMO and European Commission have served to create a new imperative for digital transformation across the maritime industry, raising it higher on the agenda as a business necessity.

Shipping emissions are on course to rise by up to 250 per cent and container ships are the worst offenders, promoting regulators to clamp down hard on larger vessels, with just 15 of these vessels estimated to produce more pollution than all the world’s cars combined. As a result, IMO 2020 will require a 0.5 per cent cap in sulphur emissions while recent updates to the EU’s Emissions Trading Scheme will require emissions monitoring, verification and reporting from any large ships using EU ports.

These new regulations create a need for real-time collection and analysis of data in a secure and trustworthy format. Operators will need to find new ways to co-operate between ship and shore to transform fuel efficiency, which will require new technologies to ensure greater standardisation, integration and communication of maritime data.

Globally consistent connectivity and specialised analytics channels will also enable shipping equipment vendors to sell add-on aftercare services such as remote real-time analytics of fuel use to aid compliance with emissions regulations.

Beyond regulation, digital transformation enabled by reliable and flexible connectivity also promises to deliver major cost efficiencies to the maritime sector. Unlocking the capability for real-time data exchange between all equipment and ships in all locations, will empower crews to make management and optimisation decisions not only on their own vessel, but fleet-wide.

Reliable, flexible connectivity will enable maritime shipping organisations to meet new challenges, but also get ahead by implementing their own transformative changes to benefit efficiency and profitability for years to come.

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