Ships and People in the future
by Steven Jones, Partner at McWatt and Jones
Shipping markets are at a very unusual, even pivotal time in history, and there is seeming confusion about what the future holds. For all the talk of the blockchain, will it be new technology that disrupts the markets, or old business practices which don’t evolve effectively? At the Shipowners P&I Club www.shipownersclub.com #LISW2017 event, the question was how maritime professionals will look in the near and mid future.
Today the real magic behind shipping is the Wizard of Oz style mystique that pervades the ways in which decisions are made, but very soon that could be stripped away. The new near future for shipping will be about transparency, and of business conducted in the harsh spotlight of the blockchain and of how millennials choose to shape the new industry horizon.
Speaking as keynote speaker, respected maritime futurist Roger Adamson surged though a powerful presentation, one sprinkled with challenges. However, perhaps the most telling one was the need to focus less on what is about to change, but rather on what will stay the same.
There was one word that kept bubbling to the surface again, and that was “blockchain”. The harbinger of gloom for those who like their shipping to be opaque and mysterious, the fact that soon space and time on vessels could be managed through an incorruptible ledger seems to have changed the debate on its head.
Where once we talked about the lowest common denominators in shipping, the blockchain effect is to make it about the highest common denominators. The likes of tech giants who are coming into shipping, and are unsullied by the failings or complications of history.
So, it seems the future maritime professional will be a technical person, one who takes a binary view of risks and opportunities, and who cares little for history or tradition, or of the way things used to be done. The future will be one shaped by the constant need to provide the right answer to the right question.
How can the modern maritime executive get cargo moved as efficiently, legally and ethically as possible? Not perhaps because that is how they would like it done, let’s be real, there will always be the secret temptation to do things on the cheap, but because that is how they have to show it to be done.
It seems there is going to be no escaping the move to digitalisation and the transparency that will inevitably bring. What does it all actually mean though? The blockchain rests on the concept of allowing digital information to be distributed but not copied. So, the blockchain is an “incorruptible digital ledger” programmed to record data.
Picture a spreadsheet that is duplicated thousands of times across a network of computers, and constantly updated. So, there can be no hiding place for shipping companies when charterers begin to seek out more information. The things of interest will be recorded, and will exist as globally shared information. This has obvious benefits as decisions can be made on factual, objective, agreed and undeniable data.
Even before #LISW2017, the blockchain was gaining momentum. Last month IBM began to coax shipping into the blockchain era, as the tech giant signed a memorandum of understanding with two of Singapore’s leading maritime firms, port operator PSA International and boxline Pacific International Lines (PIL). The three parties will work together to explore using a blockchain approach to achieve better security, efficiency and transparency, as well as facilitating faster approval and fraud prevention.
IBM and friends are not alone, Japan’s Mitsui O.S.K. Lines (MOL) has announced it will participate in a Japanese consortium to developing a trade data sharing platform also using this new technology.
There are new players too. Mizzenit.com, a global marketplace for freight forwarders has been launched to book containerised spot market space, based on live pricing. While a Hong Kong start-up has launched a new initiative, it claims could transform container shipping with a brand new crypto currency called “TEU”.
The moves are all about efficiency, and speakers estimated carriers could save about $38 billion a year by using Blockchain technology. The average saving is estimated to be about 15-20% per one container shipment. Which really does begin to add up, and throw the old way of working into cold financial light.
So, this means that doubts as to performance and data will be undeniable, the blockchain will reveal all. So, that in turn means that those looking to place cargo on vessels will know all, and will have to deal with the right ships for their needs. Given the fact that many of these will be autonomous, it seems that automation will likely spread ashore too.
A cargo owner will use an algorithm to place a cargo, with a shipping company represented by a digital executive, and performance will be openly exchanged. There will be any risks taken up by an insurer – who in turn will assess by computer based on digital data and assessed against an algorithm. So, as you can see – there are very few humans left in the chain.
The boxes will be stuffed, or wet cargo pumped by computers and robots – into an automated port, loaded onto an autonomous ship. Then taken across the seas, and the process relies little on human intervention. Which is almost as frightening as it is awe inspiring.
So what role the future shipping executive? As Millennials come to the fore, with a reliance on data and online interactions, as risks are removed and the marine adventure becomes more digital than Disney, there is no real answer.
So back to Roger Adamson’s point – what will stay the same in the future? Well, people will still like some more than others, they will still want to network and know things, and they will still have instincts that robots cannot be expected to even recognise. So, the future may be scary, but it could be about examining what value people can bring to that chain. It won’t be easy, but nothing about shipping ever has been.
At the heart of the debate is the reality that the history of shipping is about money, and money is about investment. That in turn is about a form of gambling, so there needs to be an element of risk which remains. Money needs to be pitted against itself to maximise returns, so in the same way that Bitcoins are artificially “mined” through computers, it seems that somehow there needs to be an element of risk in shipping.
It used to be that investors were backing the bravery, nerve and verve of those who would go to sea, or who would buy ships, or underwrite them…those characters are still needed, but now perhaps cast into slightly different roles.
If one is ever in doubt as which way to go, always follow the money. Investors want returns, and that is the thing that will never change. So, when you look to the future look to see how value will be produced, and how returns will be created and maximised…money makes money, and that is the past, present and future.