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Lloyd's List Business Briefing: Oslo

 

Topic video - Who and what is driving the digital agenda?

 

We are not an industry that necessarily relishes in being a first mover, largely because there is no first mover advantage in shipping.” said Richard Meade.

 

Is the shipping industry too conservative to invest in new technology, or are the competitive advantages that digitalisation offers too attractive to miss? Understand the realities behind the media hype surrounding smart shipping and digitalisation with our panels of experts from the shipping industry and beyond, who offer their opinions and practical advice on the digital agenda.

 

 

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Scroll down for the full video transcript.

 

 

Also of interest

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Video transcript

 

We have a fantastic afternoon lined up for you today. I'm very grateful that some of the biggest brains in the business have accepted our invitation to talk about opportunities and threats in the shipping industry.

 

We talk about modernise or sink, we talk about digitise or die, or we even say things like big data is for us like sex is for teenagers, are you thinking? So, everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so I think this is also one of the articles recently published in Lloyd’s List, it's a good way to describe digitalisation in shipping.

 

It's interesting because we talk about digitisation in the broader sense of the term but obviously these things do not exist in isolation, the decision to invest in technology one way or another does not happen without understanding and having a view on where the markets are going, it doesn’t exist without having a view on where the regulatory future of the industry lies, so these decisions are not being taken in isolation and we can't really view digitalisation as a single decision, but it does feel like we are in the midst of some fairly fundamental change, on a market level, on a technology level, and it feels like we are shifting towards something that is perhaps greater than the sum of these individual conversations and I think it's certainly something I take from each of these comments.

 

The thing that I find perhaps perplexing and worrying is the fact that shipping is such a conservative industry. I've accused it in the past in editorials of being an industry of laggards, regulatory laggards, technical laggards, we are not an industry that necessarily relishes in being a first mover, largely because there is no first mover advantage in shipping. Why would you invest a huge amount of money in technology or changing what you do if your competitor is not going to do the same? And that has always been an issue, it's been an issue with safety, it's been an issue with technology and that is the way that shipping works, we like a level playing field and if the markets aren’t equal we will do whatever we can to make sure that we are competing at the same level.

 

Knut, let's come back to you, you have a good overview I think of your customers making demands of you in terms of what they ask for, they are clearly asking you to guide them on a lot of the investment, what's the feedback from the customers? Are they willing to take a risk? Are they willing to be the first movers? What is the partners’ sentiment here?

 

Want more expert opinion on digital disruption? For interviews, videos, infographics and reports, visit our dedicated topic area. Just click here!

So, naturally this depends a lot on which segment you operate in because there are quite big differences depending on which segment you are in but I would say that from the conversations that I'm having with a lot of the top executives in shipping companies and yards and manufacturers is that they see a lot of potential in say the broad term of digitalisation and my impression is that these days everyone is looking for a competitive advantage and many see that moving ahead, say inside the field of digitalisation might give them a competitive advantage in an otherwise very competitive environment.

 

There are those that are advancing this quite a lot and there are others that would say like to hold back and wait and see as many do also when it comes to regulatory compliance but I think this is the nature of such a broad industry where you have so many different philosophies and so many different strategies, but what I really feel a lot of traction on is there is no discussion about connectivity increasing, and connectivity is say the platform, the foundation for what we are talking about. And the flipside of connectivity is naturally cyber security and these two issues are fundamental for progressing on that journey of digitalisation, and that I think everyone is well aware of and very much takes active steps towards.

 

Well aware of, but the word that I heard you use repeatedly earlier today was trust, and this is a question of trust, this is a question of compelling people to believe in the fact that if they do enter into this conversation they do enter into data sharing and transparency, and this cuts across everything we're talking about from Blockchain onwards, transparency and trust is the fundamental bedrock of what we're talking about, can you rely on the data? Can you trust that your data is going to be secure and you're not going to give away an advantage to your competitor? Is that possible? I mean your Veracity system I'm sure is wonderful but it is very similar to my mind to a lot of other class societies offering a similar thing, is there really that trust in the industry right now? Is there a common direction where people aren’t just going to be sitting there thinking I'll wait to see which comes out as the dominant technology here?

 

Trust is a demanding topic. Trust is something that needs to be earned and I think trust is not given by anyone to anyone else so this is something that needs to be earned, and what we are say building up on the Veracity platform is a lot of experience with the pilots that we are running and let me use this metaphor that if you go a few centuries back in time people kept money in their mattresses, they didn’t trust to keep it anywhere else. I would say that that money can be much better leveraged if you put it to work, and that is the same with data, if you are sitting on your own data. If you are sitting on your own data and not really making use of it you are not leveraging the potential of that data and that is where we have to have say trust in how we relate to the data, how we share the data and who controls the data and that is a steppingstone that we need to make. A lot of owners are too concerned about the ownership to really put the data to use and I think that is a key issue.

 

Ari, Blockchain, amongst other things, we're talking about trust here, we're talking about technology and data doing things that we otherwise wouldn’t have been prepared to get involved in, you're a believer in this but is trust there?

 

Let me comment on this, I'd like to comment about the fundamental changes in the industry, but I also agree to your points. What I think is we're actually talking about two different things here and the blockchain element plays back into that. We're seeing fundamental change in the business model and a likely disruption to the concept of shipping. Take something like additive manufacturing that has the power to take out significant portions of what's being shipped. In our own industry as a RORO carrier of course we see that the automotive industry is going through a pretty massive disruption which requires us to think quite far ahead to what might happen given that the vessels that we operate will be with us for 30 / 35 years, there’s quite a lot of change that could happen in this scope, and that changes the business model.

 

A lot of the digitalisation talk, however, is on a very local level on the vessel, it's about the connectivity, getting the data out, but when you put that in your context it feels a little bit like rearranging the deckchairs on the Titanic, because it's a pretty significant change, which is why I'm using Blockchain as an example of something that we as an industry needs to focus on to improve our own position. I think the worry is not really that we will beat each other to death, it's rather that someone else comes in and steals our business model and all the technology, a fundamental demographic shift or something that completely screws up our game, we will in the meantime of course be competitive to each other and push profits down and make life miserable as shipping always does and we will need the cost reductions that this offers.

 

But I think in terms to offer the platform that the industry could do and then jointly go forward I see Blockchain as one way of creating the tapestry of trust and bringing transaction costs down, sharing benefits between all of us in the industry, it's not really about competitive advantage but we have to work together to create the strongest foundation possible given that we will be hit in the face with some serious changes and that's why I'm; I think there are different levels of discussion here.

 

Absolutely, and what I'm trying to get to is distinguishing between technology that simply improves efficiency on a vessel level, technology that allows fleet level efficiency and technology that allows organisational change structurally across the industry and I think that is the pallet within which we're working but, Christopher, is all this drive for efficiency really rearranging the deckchairs the Titanic?

 

I think that the impact is real and I think that what we are about to see, you mentioned 3D printing and robotics, you didn’t mention robotics but you could easily have done that, and artificial intelligence robotic, 3D printing, we are basically about to see that manufacturing are relocating, not just to the next cheap labour economy but also close to the consumers whether that is in North America, Europe or Japan, basically to say that we are rearranging the whole container industry, where in the future we will expect to see much more regional trades and much fewer intra-regional trades and this will significantly change energy demand, demand for electricity, diesel and all the links feeding into the supply chain of driving an economy, so this is quite significant what we are looking into.

 

And in regions like for example western Europe, North America, Japan where we have aging consumers this is good news because then we can maintain GDP growth a little bit longer even though we have fewer hands, but there's awful news for all emerging markets where we have population growth and we basically need to create millions of jobs each month just to stabilise the unemployment weight. So, for example India this is difficult news.

 

Can I just offer a quick comment to that? I think the bad news is really that we have to do everything at the same time, we can't not optimise the vessels, we can't not leverage all the data that's there, we can't not look at the fleet and try and do the best thing we can in terms of getting the most juice out of the lemon, we can't not look at the supply chain as an area of information sharing and transactions that digitalisation obviously influences, but likewise I think we cannot; that does not suffice, we also have to think as an industry way further down what might come and that really is supported by that outlook, and we have a little bit of a tendency to stick the head in the ground and think that it will be the same as it's always been, and that's the question, is it really different this time? There are some indications saying that well maybe it actually is.

 

Thorston, from your perspective, what we’re really talking about here is efficiency on the supply chain but we’re talking about transparency that actually allows that to happen and as I said at the beginning, digitalisation is really a means to an end in many ways and your interest in the ends, how can I get a more efficient supply chain? How do I get transparency in terms of what it is I am dealing with? Do you think the industry is actually changing or are we just talking about it right now?

 

It’s constantly changing, so maybe starting with the different perspective, our company is one hundred and twenty five years old and still in business and some seventy five years ago, the computer was invented and since then, we use the computer and innovation is happening and is used and that’s the way it’s going and the last big hype I remember was in the late nineties about supply chain management and now, twenty years later, we are one of the leading companies in supply chain management but the main vision we have been talking about there is still not realised and what I see changing now is technology, as I said, is always coming but it’s not happening enough, there’s sometimes a big step you are making.

 

When a big step is happening, it needs somehow a wake up and this wake up in the past was always done by consultant, mainly by consultant and by media. So, what is changing now is, instead of consultants and media picking up, what I see is that CB2B.com companies are hyping here and they are hyping much more and this is probably what is concerning us not so much and we have been looking into this latest development. We see in most companies and people working, not coming from the industry but seeing it’s a big market so let’s go in and make some big money in there and then they are investors, even more far away from our industry and believing stories and hearing stories within an hour and then decide if they invest or not.

 

Because this is all happening now then replicated in all medias, it’s now time to back to reality and yes, we are digitalising and you said earlier, in the first panel, maybe this industry is not good in doing this, I think we are much better but we are not good at marketing and telling about it. We consider ourselves already very digital and when I see our interaction, for example, with carriers, it’s nowadays by ninety five percent completely electronic.

 

Then, coming to block chain, that is, for me, the next level of EDI, what we do today and there is a lot of opportunities which we are focusing now on to even upgrade again and again and again to make things better.


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