5 megatrends shipping needs to know about before entering 2019
As 2018 is drawing to a close, we at KNect365 Maritime want to look forward to an exciting but equally challenging 2019.
Here, we want to discuss five global macroeconomic forces that will definitely impact shipping in 2019 and beyond.
Geo-political shifts and social trends
This year, the industry has kept a vigilant eye on geo-political matters like the US-China trade war and Brexit that are likely to have a huge impact in 2019.
“Shipping exists to serve global trade. And anything that impacts global trade is, by extension, going to impact shipping”, KD Adamson, CEO & Founder of Futurenautics, told us in an interview earlier this year.
There are also socio-economic trends that are driving change and innovation in all industries, including shipping.
Millennials are taking over the workplace, with 35% of them making up the US labour force, according to a Pew Research Center analysis. They are already an integral part of the maritime industry, but PTC Holdings Director of Business Innovation Alexander Avanth doubts the industry’s ability to keep millennials and younger generations interested in maritime.
“Millennials and Gen Z have very specific requirements and value structures that can be quite hard to accompany and quantify. There’s something about impact, diversity, and personal development that needs to be taken care of in order to keep them satisfied about their work, and probably more importantly their being”, Avanth told us in an interview.
Meanwhile, the world is becoming more connected, and a report from We Are Social and Hootsuite revealed that the number of internet users have passed the 4 billion mark! In 2019, digital natives like generation Z (born between the mid-1990s and mid-2000s) are entering the workplace for the first time with new expectations of innovation that will drive the industry forward.
The second wave of digitalisation: A new force awakens
At this year’s CrewConnect Global, Andreas Nordseth, Director General at the Danish Maritime Authority, told us that he is foreseeing a ‘possible technology jump’ that will change the way the industry works completely.
“I would guess that in the very near future – 3 months, 6 months, or one year from now – something will happen or something will be introduced which will be the first actual change that will lead to quicker change and then move at an exponential speed.”
Nordseth highlighted 3D printing in particular which is making a large impact on the industry.
“These things give us the opportunity to much better, smarter, safer, more efficient, cheaper… There are so many positive things to say about it. So I have no doubt that it’ll happen at some point in the future.”
But if there’s one thing we takeaway from 2018 is that innovation needs collaboration. Many industry stakeholders are already reaching out, but Despina Panayiotou Theodosiou, CEO of Tototheo Maritime, and President of WISTA International, told the Lloyd’s List 2019 Outlook Forum that “we should be more open”.
Another thing to keep in mind is that digitalisation is not the endgame. Mark O’Neil, President & CEO of Columbia Marlow Shipmanagement, told us that “digitalisation and technology are means to an end, but optimisation of what we do, reducing the costs, doing things more for less and better is what we’re all about”.
Cyber risks are still relevant and will stay relevant
Capt. Rahul Khanna, Global Head of Marine Risk Consulting at Allianz, told the Lloyd’s List 2019 Outlook Forum that while marine safety is moving in the right direction, the nature of risk is changing. One of the (not so) newcomers is, of course, cyber risk.
The shipping industry is not unfamiliar with cybersecurity concerns. In the past 2 years, there have been at least 5 cases of cyber incidents within this industry, many of which caused major disruptions in the companies’ operations.
Chronis Kapalidis, Fellow at the International Security Department of Chatham House, noted in an interview that the particular challenge shipping is facing it that “there are only a handful of tools in the market specifically designed for the maritime industry which assesses an organisation’s cyber security capability maturity, while other solutions in the industry focus on protecting the industry’s most valuable assets: the ships”.
According to the survey conducted at the Lloyd’s List forum, only 8% of the respondents saw cyber attack as the greatest threat in shipping over the next 5 years.
“Cyber attacks are underestimated because we haven’t seen a big loss from it”, Capt. Khanna said, but he also noted that cyber incidents have caused ships to be late, to lose propulsion, or to be unable to move forward due to a virus infected ECDIS.
Symantec’s Senior Vice President & Chief Technology Officer Dr Hugh Thompson and Senior Vice President and General Manager of Security, Analytics and Research Steve Trilling predict that in 2019, attacks exploiting the supply chain will grow in frequency and impact. They also expect attackers to become more sophisticated by utilising artificial intelligence.
Thompson and Trilling wrote: “Attackers […] will enlist AI techniques themselves to supercharge their own criminal activities. Automated systems powered by AI could probe networks and systems searching for undiscovered vulnerabilities that could be exploited. AI could also be used to make phishing and other social engineering attacks even more sophisticated by creating extremely realistic video and audio or well-crafted emails designed to fool targeted individuals. AI could also be used to launch realistic disinformation campaigns. For example, imagine a fake AI-created, realistic video of a company CEO announcing a large financial loss, a major security breach, or other major news. Widespread release of such a fake video could have a significant impact on the company before the true facts are understood.”
Security, therefore needs to step up.
The multifuel future of shipping begins
The elephant in the room for shipping is, of course, the 2020 sulphur cap. Come 2019, the industry stakeholders have only 1 year left to identify what compliance path to take.
In 2018, exhaust gas cleaning systems had an uptake, but scrubbers will only be fitted on a small portion of the global fleet. The same goes for ships running on LNG. Therefore, the majority of shipowners are likely to pay for more expensive fuels like MGO or VLSFO, as predicted earlier in the year.
During a webinar, Roger Strevens, Global Head of Sustainability at Wallenius Wilhelmsen, said: “The one which is actually going to be most important from a compliance perspective is very low sulphur fuel oil – our 0.5% fuel. There isn’t any information on what that is going to cost yet.”
The sulphur cap is only the first step towards the industry’s decarbonisation.
Michael Parker, Global Industry Head for the Shipping at Logistics and Offshore Industries Citigroup, told the Lloyd’s List 2019 Outlook Forum that “Maersk’s 2050 pledge is important” because the decisions made today impact the future.
Writing for Splash 24/7, Dr Tristan Smith from the UCL Energy Institute commended Maersk’s plan to become carbon neutral: “Our group has spent years trying to figure out how to reduce carbon intensity at the rates implicit in IMO’s Initial Strategy objectives, and we are confident that the only way to get there is adopting zero emissions fuels in 2030 and seeing them grow in share rapidly thereafter.”
Shipping’s decarbonisation would support the global effort to become more sustainable.
“Banks will not finance polluting shipowners”, Parker warned.
So will other companies come forward in 2019 with sweeping declarations and pledges to become more sustainable?
Empowering Women in the Maritime Community
Esben Poulsson, Chairman of the International Chamber of Shipping, and Karen Waltham, Managing Director of HR Consulting at Spinnaker Global and member of the Women in Maritime Taskforce both agree that the maritime industry is incredibly diverse.
“To me that is what makes shipping such a great industry, precisely for this very reason. It’s diverse and it’s global”, Poulsson said.
“One of the things that we ought to pat ourselves on the back for as an industry is that we are globally diverse. […] How many nationalities have we got? How many languages are spoken? The mix of people is very diverse”, Waltham commented.
Still, gender diversity is an issue that maritime is increasingly aware of. Other sectors are campaigning to encourage women to join their industries and businesses, so why not maritime?
“While women maintain a permanent presence in the maritime industry, their numbers have not paralleled the increasing proportion of women in other formerly male-dominated fields, especially medicine”, Sue Terpilowski, OBE, FCILT, President of WISTA UK and Chair of the Maritime UK – Women in Maritime Taskforce told us. “Women are recruited, and we have made progress, but there is a lot more to be done.”
“If you openly discount or disconnect from effectively half of the talent pool that society brings and offers, then you haven’t got your eyes open”, Waltham told us in an interview.
2019’s World Maritime Day is celebrating the women in this industry. But as Waltham told us, “this is just scratching the surface”, so as we move further into 2019, the industry might start a discourse on wider inclusion.