If you know anything about startups you probably know the statistic that 90% of startups will fail. But it's that edginess and ability to unceremoniously restructure a team, a strategy and often even a product that make them so powerfully innovative. Right now the shipping industry – succinctly described by Olaf Merk in Shipping Today as being a transport chain that’s “traditionally opaque, non-transparent and fragmented” - is ripe for solutions from startups. With quickly advancing pressures such as never before seen environmental regulations challenging the very fuel on which vessels run, Global cyber threats, and pressure to catch up with the rest of the world’s industries when it comes to digitilisation - maritime startup incubators have popped up around the world to nurture innovation and find solutions to these problems in places like Gdansk, Rotterdam and Mumbai. I approached several startup founders to ask them what it's like to be a startup in the maritime industry. The list of people is impressive for the diversity of solutions they’re offering to shipping: Dino Mandić, Founder of fuel reduction solution SailRouter B.V.; Dave Twining, COO of maritime drone startup Planck Aerosystems; Mark Swift, CEO and Founder of professional maritime development platform Profile; Ryan Petersen, CEO of freight forwarder Flexport; Marc Van Mael, Founder of seafarer health app startup Care4C (whose founder Paul van Emmerick speaks at Crew Connect Europe in May); and Constantine Komodromos, Co-Founder and CEO of online chartering tool VesselBot (a frequent speaker at our Shipping2030 events).
The Maritime Industry: Challenging for Startups, Yet “Ripe for Innovation”
The maritime industry is well known for being “traditional” and slow to change; SailRouter's Dino Mandić, VesselBot's Constantine Komodromos and Profile's Mark Swift all concur with this assessment. Mandić explains: “From my experience, a maritime startup is probably the most difficult type of startup because the maritime industry is a quite conservative sector where end users (crew members, office staff) don’t like to change how they do their regular business. The main idea behind any startup is to find a new business model or process; people from the maritime sector will accept it if someone else already accepted it and uses it. So the main problem for any startup in the maritime sector is to find the first client. Sometimes it looks like mission impossible. There are several competitive solutions and these products are mainly owned by big companies. In the maritime industry it's common that shipping companies will more likely use a product of a well-known manufacturer than from a startup.” "Maritime is quite traditional, and has not changed much in the practices it follows for the last 40-50 years" says VesselBot's Komodromos. "Ship designs, automation of processes, business processes have in their majority remained the same for a number of decades; only a small fraction of these has been changed. Definitely not in line with other markets of the economy."
A large number of market participants coming from various seniority levels was stating that digitization/digitalization is just a topic to be discussed at conferences, and not something that could be potentially reforming the market.
"Having interacted with a number of market incumbents as well as other similar companies in other industries I feel that we have a lot of way to go until the digital modus operandi reaches the maturity levels of other industries. For instance, the reactions and comments made in Social Media and articles published about BHP’s recent introduction of an e-auction platform for Freight. A large number of market participants coming from various seniority levels was stating that digitization/digitalization is just a topic to be discussed at conferences, and not something that could be potentially reforming the market." "Additionally, what we have experienced from our interactions in the market is the fact that a relatively large number of organizations is not aware of the capabilities of technology today, and the potential changes it could bring to the market, as well as about the developments that have occurred in other markets because of technology. Because of this companies like ours face significant barriers to entry, derived from resistance arising because of the traditional way companies have been operating for the last few decades. Furthermore, the non-awareness/skepticism with which technology is looked at, and luck of an organized way to promote such initiatives or even push the market to introduce such initiatives (like compliance to regulations, financial incentives etc) creates even more obstacles that need to be overcome."
We are introducing a disruptive technology to an industry that is steeped in tradition.
"It is always challenging being a start-up in any sector, it is especially challenging being a technology start-up" offers Profile's Mark Swift. "The maritime sector is very traditional and highly regulated so people are naturally cautious of change. We are introducing a disruptive technology to an industry that is steeped in tradition. Unlike non-tech start-ups who seek to compete with the existing competitive landscape, Profile (Europe) Ltd has the potential to dramatically improve the way that maritime recruitment is carried out, improving career management for candidates, reducing cost and waste for ship owners and creating a global directory of training courses."
An opportunity to be "the first"
Planck Aerosystems‘ Dave Twining, Care4C's Marc Van Mael and Flexport's Ryan Petersen all translate the particular challenge of being a maritime startup into a unique opportunity. "Working at a startup in any sector is challenging" says Flexport's Petersen "but one thing that's unique to the maritime vertical is it’s an incredibly antiquated, untapped industry, so we have an opportunity to be the first to address many of its inefficiencies and create solutions with software. We receive amazing feedback from our customers and partners about how their experience with us is night-and-day different from anything they’ve had before, which I think is a huge testament to how ready the industry was for change." Planck Aerosystems Twining says: “We love being a maritime startup. First of all, it's huge. For most people in other industries, maritime is out of sight and out of mind. They don't realize how much economy happens at sea. Second, it's ripe for innovation, with countless opportunities to make immediate and lasting impacts.” Care4C's Van Mael shows his passion for what he does on his sleeve: “It’s challenging but fun to create a Hi Tech startup in this dynamic, complex, but traditional maritime environment; It is global, round the clock and very diversified by its very nature. Due to our team composition, we started with a thorough understanding of the industry, cooperating closely, right from the conceptual and POC phase with a number of top tier ship owners and stakeholders who have supported and contributed to the project. Once we mapped out the needs and peculiarities of the industry the project was conceived as a hi tech medical start up for the marine industry from there on. Can we technically deliver what this industry needs? The answer is yes.”
Solving Unmet Needs in the Shipping Industry
With all of the challenges around being a startup in maritime – from lack of funding to an industry generally uneasy with “the new” – you might wonder why anyone would do this. The answer can be found in these entrepreneurs’ unique interests and experiences from backgrounds exposed to the maritime industry - at least one startup founder was a mariner himself, another was a navy helicopter pilot - which give them each a high level of insight into some very specific unmet needs. SailRouter's Mandić: “I was born in Split, Croatia where in the local shipyard they built a lot of merchant vessels. So as a young person I used to watch merchant ships in the front of city during their trial run or berths. I have a lot of seafarer friends who told me stories about the seafarer’s life; I recognized a problem in the recent years where seafarers have to use new software for different reasons (reports, weather routing etc.) but all these software applications usually ask a lot of inputs from the user and today it is possible to collect all possible data from ship except data about sea waves. We decided to use our expertise in machine learning and optimization to develop a new product which will be able to recognize sea waves during navigation by using a small and easy to install motion sensor.” "As a mariner myself I was frustrated with receiving job vacancies anonymously from recruiters that were not relevant to my skills and experience" says Profile's Mark Swift. "This CV mining approach wastes everyone's time and is not effective in connecting the best candidates to the best jobs. We realised that there needed to be a better way. So in building Profile we looked at the project from a mariners perspective and sought to dramatically improve the process by taking out waste and directly connecting job hunters to vacancy originators, in essence taking out the middle man."
As a society we are moving towards a directly connected environment where everything is at our fingertips, or as we like to say in our pocket.
"As a society we are moving towards a directly connected environment where everything is at our fingertips, or as we like to say in our pocket. We are in a 'Digital Out Of Home' market place, we communicate on the move. Recruitment as an industry is lagging far behind. Profile provides direct connectivity between hirer, candidate and training provider through an App based software platform. For a maritime job seeker Profile provides communication with hiring managers about real vacancies matching a candidates profile instantly and in real time. For ship owners/hiring managers Profile provides a means to instantly access a large pool of matching viable candidates that are available and interested in the vacancy on offer. Communication is direct, cost effective and in real time. Cost and time to hire is dramatically reduced." “We think we are quite unique in our offering and cannot see anyone active at our level of development right now in shipping,” asserts Care4C's Van Mael. “There is obviously good quality telemedicine available today but we are the only ones monitoring a number of vital cardio vascular and sleep related data on a semi–continuous and medically validated basis. Our data is collected with nonintrusive clinical sensors which allow for high quality predictive analysis and thus proactive risk management." “We have colleagues in onshore Mhealth technology showing a keen interest in what we have developed so far. The shipping related complexities we had to solve and the global reach opens many further opportunities for cooperation with other “shore based” applications.” That navy pilot I mention is Planck Aerosystems' CEO Josh Wells. COO Dave Twining explains that Wells: “realized the value of an aerial perspective in the maritime domain. He also understood the limitations of existing unmanned aerial assets, particularly that they required extensive installed hardware and required multiple dedicated personnel to operate. With Planck Aerosystems, those limitations were eliminated. Developing the technology required a team with expertise in controls, unmanned aircraft, maritime aviation, computer vision, and high reliability systems engineering.” Twining continues: “Planck Aerosystems has developed the technology to enable small drones to operate autonomously from moving vessels at sea. That means no need for a dedicated pilot or extensive installed hardware. It includes guidance, navigation, and control relative to the vessel, as well as computer vision to automatically detect and track objects on or near the water. It makes aircraft available for vessels of any size, and exponentially expands maritime situational awareness capabilities. We aim to deliver drones that provide actionable data in order to save maritime professionals time, money, and fuel. Without Planck's drones, some of this data is completely inaccessible, or requires a great deal of time and energy to collect.”
I saw a lot of room for improvement
"I decided to start Flexport after experiencing the inefficiencies in the industry first hand" says Ryan Petersen. "My brother and I ran a few small e-commerce sites, where we would import goods such as massage chairs and lawn mowers from China and resell them in the United States. Very little of the process was digital, so I saw a lot of room for improvement. When it quickly became apparent that this problem wasn’t unique to small companies, I knew there was a big opportunity for Flexport to add a lot of value to the industry." "The two things that distinguish Flexport from our competitors are the technology we use and the service we provide. Our technology plays a big role in enabling us to provide such great service, as it helps to increase efficiency across the board while reducing transaction costs and possibility of human error. Because we're a young company, we've had the opportunity to build our software on modern technology from the ground up. This confers a huge benefit because we can quickly iterate on our own technology as well as easily integrate with other third party systems. As a result, we can provide our customers with unprecedented control over and transparency into their supply chains, all through our dashboard." "The incumbents in the industry may also leverage technology, but they’ve been around for much longer so their systems are significantly older. Any new systems have to be merged into this old infrastructure, which significantly slows down adoption and makes it harder to utilize the data to its fullest extent."
Shipping is on an exponential growth curve, startups could well be its saving grace
The shipping industry is struggling to catch up with exponentially advancing technologies; agile shipping startups could well be the industry's saving grace. Care4C's Van Mael describes why his company created their product: ““We identified the maritime industry, with its harsh working conditions, isolated crew and high economical, ecological and human risks as a prime market for this technology. We started examining if such technological advances can be used to the benefit of seafarers, bringing them more safety and first world care anywhere, anytime. Most owners today have systems in place such as pre-med, telemedicine and corporate crew health and wellness programs often based on handbooks and leaflets. None however are data based and analytical, allowing for a preventive health and safety management. Care4C is a logical extension of external and internal safety and quality vetting systems based on data.” “Care4C Founders Paul Van Emmerick and Frederic Van Quickenborne have an entrepreneurial engineering IT background and a keen interest in the mobile health market, while I am a life long shipping entrepreneur. In addition we have brought together an exceptional group of highly motivated young people, all experts in their respective fields of IOT, big data analytics, wearables and communications.” "The exponential change of eHealth started outpacing most other areas of technology. Leaving the basic activity trackers behind, a world of much more advanced techniques and insights is coming to reality, leveraging high quality sensors and 'predictive analytics'. Radically changing healthcare empowers people to stay healthy and prevent illness and accidents." In a recent KNect365 Maritime article we discussed recent trends that have shown a drop in the quality of new seafarer applicants. We mentioned that Profile could be one tool shipping companies can utilize to find the right candidates. "The problem with online data is that it is passive and only as good as the last time it was updated" says Profile's Swift. "Profile goes substantially further, candidates own their profile on their phone in either Android or iOS and if a candidate profile is not kept up to date it won't return as a viable match to a hiring manager. Searches are automatic, instant and relevant and because interest in a matching vacancy is activated by the candidate via their phone a hiring manager only sees viable candidates that are interested and available now." "We are currently focused on the maritime industry as we work through 'Proof of Concept' however, Profile will work for pretty much any regulated industry. Profile is offered on a free basis to mariners and is positioned as a career management tool. Profile is also offered on a free basis for training providers during 'Proof of Concept' stage and offers the potential for training providers to be visible globally. The ultimate customer for Profile in the maritime sector is the ship owner because Profile has the potential to substantial reduce recruitment costs. Part of our international focus has been on the Philippines where around 30% of mariners come from. The Philippines has a proud maritime tradition and several maritime academies in the Philippines have joined the Profile platform."
Simplifying Complex Problems for the Maritime Industry with New Technologies
Artificial intelligence is set to be a $16 Billion Global dollar market in 5 years and a recent study shows "that 84% of companies see the use of AI as 'essential' to competitiveness". Most press about AI in maritime has been about Rolls-Royce and their plans to use AI in "future remote and autonomous shipping operations". SailRouter and VesselBot are also doing their part to bring shipping into the 21st century - and solve some very complex problems - with their AI powered solutions. VesselBot's Komodromos: "Having worked for a number of years within the Maritime industry I had personally experienced the inefficiencies and ineffectiveness of the Chartering process. Fragmented market data, inefficient way of collecting and transmitting it, while on the same time not utilizing almost at all technology. Taking into consideration a number of publications from renowned shipping analysts, as well as economists such as Dr. Stopford who predicted that sooner or later the Maritime industry would have to adjust and introduce technology in its business model, we decided that the timing was right to develop a technological solution to solve the problems related to the Chartering process. As such, we have developed a multisided platform which caters the needs of the Chartering process of the Bulk maritime industry. A platform that digitalizes the Chartering process and provides significant operational, financial, and strategical benefits to its users." "Our product offers an end to end solution in respect to the identification of the prospective matches based on Artificial Intelligence, taking into consideration in real time all the variables that should be considered during the selection process. Moreover, with the usage of our platform our users may choose with which of the matched counterparties we proposed them to negotiate with. They are able to negotiate the transaction Financial terms via a real time bidding mechanism (auction style bidding), as well as negotiate their Charter party terms via our online editor." SailRouter wants to make it easier for shipping companies to reduce fuel consumption. Mandić explains: “Since we recognized that in the maritime industry end users (usually people onboard) don’t like to use new software to optimize routes, we started to develop an automatic support system where software will automatically collect and analyze data during navigation and show to the end user only important analytics results – for example onboard decisions like changing route or ship speed. In this way, end-user can do his/her core business (taking care about ship/cargo and crew safety) and data analytics will be done automatically in the real time. Our main goal is to reduce fuel consumption in order to reduce CO2 emissions by using recorded data during navigation. Beside the automatic process of collecting and analyzing data, our main novelty is a system which can recognize sea waves by using collected data of ship motion during navigation so our data mining is based on all required inputs including sea state.”