Digitalization’ and ‘Decarbonization’ walk Hand-in-Hand
Saying your organization has ‘gone digital’ is easy; unlocking the true value of digitalization, particularly when it comes toward meeting and beating increasingly strict decarbonization goals, is much more challenging. Andy McKeran Director Maritime & Performance Services, Lloyd’s Register, discusses LR’s in-depth approach to understanding the specific problem before delivering a solution.
By Greg Trauthwein
The maritime industry's going through a transcendent period right now with work ongoing concurrently on digitalization, decarbonization and autonomy. How does digitalization and decarbonization fit in the same sentence?
What we see is that decarbonization and digitalization are absolutely linked together, and I think that's across two time domains: first, the short-term, and then the medium- and long-term.
In the short-term aspects of digitalization (the industry is asking) how do we operationally improve our fleets? Specifically, how do we improve the efficiency of shipping by approximately 20%, which would be the equivalent of close to 3,500 zero-emission vessels going into the water in 2030. That's through things like voyage optimization.
In terms of the medium- and long-term perspectives of how digitalization and decarbonization work hand-in-hand, this is centered around that we cannot build the ships of tomorrow today with ‘future fuels.’ Future fuels have half the power density of current fuels, so we have to reduce the overall power plant. So what we learn from digital improvements today will be built into the ship of the future to allow us to cost-effectively adopt new fuels.
Photo courtesy Lloyd’s RegisterAnother thing we are seeing is a lot of lower CapEx type solutions. So we're seeing more cloud-based solutions and software as a service (SaaS)-based solutions, which lends itself to the smaller owners to pay monthly subscriptions, as opposed to a large capital outlay for digitalization or digital solutions Andy McKeran Director Maritime & Performance Services, Lloyd’s Register
We talk a lot about data-driven decision making in the maritime space. But as you know, not all ship owners are cut from the same cloth. You have the very large shipowners, but you also have a majority of very small companies. What is the reality on the street? Where are we on this continuum as far as making true data-driven decision making in the maritime sector?
Continuum is the word. Because we are not all about transformation, we are about transition. There are a lot of smaller steps that a lot of owners and operators can make today to operationally improve their operations, today. That's really about how they can adopt some of the smaller technologies that are out there now, ultimately building out to larger platform-type solutions of the future that are de-risked by some of the larger companies. Because as you quite rightly say, 80% of the shipping is made up of companies with 10 ships or less. The other thing we are seeing is a lot of lower CapEx type solutions. So we're seeing more cloud-based solutions and software as a service (SaaS)-based solutions, which lends itself to the smaller owners to pay monthly subscriptions, as opposed to a large capital outlay for digitalization or digital solutions.
What does LR offer, or what are you advising your clients today?
What we are looking at is, how do we help our clients go on that transition towards transformation from an advisory perspective within our professional services team? We really dig into how they can transition their organization through the change that's coming? And that's done on a professional-services basis. So we actually go in, understand how they run their operations, and then also what they can do in terms of some of those small steps leading towards transformation. We also have two software platforms, or portfolios, within our maritime performance services, which includes our fleet management solutions and our fleet optimization solutions.
The fleet management solutions are designed for the owner operators and it looks at a marinized ERP-type system. How can they look at crewing? How can they look at logistics? How can they look at planned maintenance? Ultimately to reduce the bureaucratic control or logistics costs associated with running their ships.
Then we also have fleet optimization, which then takes it to the next level. This starts looking at voyage optimization and weather routing optimization to reduce fuel consumption and to reduce ship emissions.
LR has fleet optimization, which then takes it to the next level. This starts looking at voyage optimization and weather routing optimization to reduce fuel consumption and to reduce ship emissions.
As you know better than I, deploying digitalization solutions is one thing, quantifying its impact on the bottom line is quite another. Can you discuss specifically how digitalization is helping to positively impact the bottom line of ship owners?
This is one of the biggest challenges with software solutions, answering the question: how much are you actually going to save me? Does it financially make sense, or is it just a tick in the box that we've ‘gone digital?’
Where we start is looking at the current balance sheet and the future aspiration balance sheet. We focus on how are we delivering operational expenditure savings to our clients, whether it's through fleet management or fleet optimization. And we always bring it back to their P&Ls or their balance sheets, for example, to show those quantified benefits that we make with the solutions that we have.
What I would also say is that what we've seen, I think, in maritime over the last 10 years is a lot of solutions that have come out to solve a problem that does not exist. So I think when we collaborate with our clients and collaborate with other partners within the industry, what we look to do is really define the problem statement. If that's the true problem statement that our clients want to solve, we create the solution to solve that problem. Therefore it provides the benefit to our clients that's tangible.
Let’s switch gears a bit and dig a bit deeper into Artificial Intelligence (AI) and its role in this discussion. From my own experiences, I don't think that ‘AI’ is very well understood. From where you sit, how does AI play into the maritime and the offshore sectors?
I'm going to build on what I've just sort of said before, in terms of, if you've defined the problem properly, you then create the solution, and then decide on the technology that you're going to use to create the solution to solve the problem. AI and machine learning, in its own right, is just a technology that sits there and can be of potential use. So I think our advice, and what we've done through the acquisition of GreenSteam, [a marine data intelligence company specializing in improving vessel efficiency through machine learning] for example, is we bought an organization that is absolutely focused.
They break it down into the number of signals, whether it's noon reports, whether it's weather data, whether it's class data, to look at where machine learning can be used, or AI can be used, against thousands of data points. It's very much third-tier in your decision making. So I think AI has been bandied around now for a number of years, but hasn't really found that problem statement that it was trying to solve. I think we're going to see more and more applications come up that will use AI and machine learning, where we've got thousands of data points and trying to create a solution to solve an industry known problem. AI is something that LR has been looking at very closely and we recently published a report titled ‘Artificial Intelligence in Maritime - a learning curve’ in conjunction with Thetius.
Lloyd's Register have been using remote inspections probably for about 10 years now.
Obviously the last two years have been defined by COVID. It's presented a number of challenges. It's also presented a number of opportunities. More so than ever, personally, professionally, we're online. We're remote. How has this newfound comfort and capability impacted the business of remote inspection and diagnostic?
First things first: COVID has definitely accelerated the adoption of technology. There's no CTO in the world that has ever moved an industry as far forward as COVID has for the maritime industry in terms of adoption of remote techniques and also digital solutions. Within Lloyd's Register, we've been using remote inspections probably for about 10 years now. But what we have seen over the last sort of two years is that adoption rates go up to 20 to 30% of the surveys that we provide on an annual basis. I don't think we're ever going to see a surveyor replaced, but what we are going to do is make that surveyor more efficient, less disruptive to operations, and ultimately a better customer experience for our clients, owners, and operators, for example, across the offshore industry and also the maritime industry.