Smart Shipping - Revolution can be slow
Martin Stopford from Clarksons comments on the pace of change towards Smart Shipping, article first published in The Naval Architect, September 2015.
Shipping revolutions generally take their time, creeping up on unsuspecting shipowners who just want to get on with managing ships and moving cargo.
This was certainly true of the steam shipping revolution there was a gap of 63 years between the first steam powered voyage on a Scottish canal by Charlotte Dundas and Alfred Holt’s ability to piece together a ship, the Agamemnon, capable of making the voyage to Asia with only a single bunkering stop in Mauritius and 75% of the deadweight available for cargo. Then the sailing ships fought back, incorporating the latest technology (steel hulls, steam winches, wire cables etc) and were still trading in the 1920s, by which time a completely new industry organisation had emerged.
Containerisation presented different problems. The first tentative container voyages were in 1956 and it was not until 1966 that the first transatlantic container service was introduced. Liner companies of the day were reluctant converts, to put it mildly. Not because they did not appreciate the benefits, but because they were appalled by the scope of the change and the difficulties it presented.
As Blue Funnel found: “the fundamental point was that, unlike most marine technological innovations, containerisation of a trade could not be adopted in a slow, gradual fashion. It needed…nothing less than a radical reorganisation of the whole shipping industry.” In 1965 they were looking down the barrel of a gun which was threatening to end a type of operation which the company had been pursuing for a century.1 Arguably it is only now, 50 years later, that containerisation is a mature concept.
The real question today is “what sort of revolution will smart-shipping” turn out to be?
Revolutions are based on hard work
The lesson from history is that each shipping revolution is different, but the common theme is that they all involve decades of painful development, risk-taking and evolution. There will always be doubts. Maersk, the biggest container operator today, did not really get serious about containerisation until the mid-1970s and even then many liner businesses remained dubious about the prospects and were still investing in multipurpose tonnage and ro-ros. But the simple robust system won the day and far more cargo was containerisable than anyone thought possible at the outset.
Shiploads of standard boxes, easily movable on land or sea were the answer and newcomers like Sealand, Evergreen and of course Maersk built them into the dominant general cargo business.
As we move into the smart shipping era, we are building on old foundations. Although technicians focus on hulls and engines, history shows that communications have played an equally big part in the development of the modern shipping business. The diagram in figure 1, which I have taken from my Grout Lecture to the Institute of Logistics in March 2000, discussed the way that the shipping business has evolved around information.2
The cable network was a true revolution, creating a real-time global market for ships and cargoes. It took 50 years to build up the cable network. This also allowed the cargo manifests to be shipped ahead of the cargo, leading to a much more efficient system for distributing cargo when the ship arrived.
Telephone, telex, fax and email all speeded up this process, extending the market place and improving efficiency in the use of assets. But the system shown in figure 1 is essentially static. It is communication between points on land. Although we had radio communication with ships for some time, it was limited, expensive and patchy. Each ship continued to operate as a stand-alone business unit. Indeed this concept pervaded the whole business, including finance, corporate structuring and maintenance.
In the 15 years since I gave this paper we have seen four dramatic changes in the global communications system which, in my January paper, I argued would transform shipping businesses from ships trading as self-contained business units to an integrated management unit; a fleet of ships becomes a production unit manufacturing transport. The four developments are:
- Satellite communications systems: we are moving into an era of when continuous communication with ships is likely to be global (or near global), cheap and reliable. That means data, voice communications can be close to real time.
- The cloud: provides the opportunity to store information in very large quantities globally with cheap and easy access. That means that any information generated by the ship can be stored for operational, management and research purposes.
- The Internet of things: the rise of the ubiquitous “sensor” offers the opportunity to generate digital information about equipment on board ship without the need for human intervention. This means you can monitor just about anything, and it’s exactly what is happening in many other transport segments. It is the basis for the “Internet of things” and the feedback loops which enable automation.
- Smart phone technology has provided both the example and the capability to develop “apps” designed to do specific jobs extremely well and efficiently, without the need for massive computer systems. The iPhone technology is light-years ahead of anything in business. But as such it provides a model, an example and a potential inspiration.
New Voyage of discovery
To naval architects used to designing ships, or marine engineers developing engines, all this may sound fuzzy and insubstantial. Where is the pattern? But when Alfred Holt approached the design of the Agamemnon, he was dealing with the equally fuzzy technology of the many embryo parts of the steam ship. He put the best design features together in a commercial package that worked.3 And to the liner companies of the 1960s abandoning the cargo liner system they had grown up with seemed surreal. Adapting to today’s digital technology revolution is equally surreal, requiring discipline, protocols and a lot of hard work; the big issue is how to do it.
If the principal of a shipping company with 10 vessels can cope with an iPhone, why not a cluster of smart shipping apps? As Steve Jobs famously said: “design is how it works.” The real revolution we need here is not in hardware, it’s in how we think about the business and the people who work in it, to turn a portfolio of “stand alone” ships into an integrated business manufacturing sea transport.
1. Falcus M (1990) The Blue Funne/ Legend, Macmillan, London pages 360 and 365
2. Stopford, Martin (2000) “ E-Commerce-Implications, Opportunities and Threats for the Shipping Business” Institute of Transport and Logistics 11th April 2000.
3. Holt’s rivals were convinced that Asia was not a viable market for steamers and Holt obviously had his doubts, which the first few difficult years reinforced. Then they opened the Suez Canal and the steam economics became decisive.