A BROADER VIEW
THE FUTURE OF SHIPPING
SAFER, SMARTER, GREENER
ACKNOWLEDGEMENTS Project Director Trond Hodne Lead Authors Tore Longva, Per Holmvang, Vebjørn J. Guttormsen Authors Nippin Anand, Océane Balland, Andreas Brandsæter, Christos Chryssakis, Dariusz Dabrowski, Eivind Dale, George Dimopoulos, Magnus Strandmyr Eide, Atle Ellefsen, Chara Georgopoulou, Etienne Gernez, Audun Grimstad, Sondre Henningsgård, Nikolaos Kakalis, Sastry Yagnanna Kandukuri, Eskil V. Kjemperud, Knut Erik Knutsen, Martin Lågstad, Gabriele Manno, Philippe Noury, Tore Relling, Shinta Y. Rotty, Rolf Skjong, Linda Stavland, Jason Stefanatos, Kay Erik Stokke, Hans Anton Tvete, Alexander Wardwell, Jan Weitzenböck, David Wendel, William Wright, Alexandros Zymaris, Kjersti Aalbu This initiative is a collaboration between DNV GL and Xyntéo, an advisory firm that works with global companies on projects that enable businesses to grow in a new way, fit for the climate, resource and demographic realities of the 21st century. www.xynteo.com Suggested reference: DNV GL: The Future of Shipping, Høvik, 2014 Photography: iStock.com
Foreword from Henrik O. Madsen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 A broader view . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Executive summary .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Introduction .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SUSTAINABLE SHIPPING – THE CHALLENGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY. . . . . . . . . . . . . . . . . . . . . .
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World population and economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Information and communication technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Climate change and environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
PATHWAYS TOWARDS SAFER, SMARTER AND GREENER SHIPPING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Safe operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Advanced ship design. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 The connected ship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Future materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Efficient shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Low carbon energy .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
THE WAY FORWARD – SHIPPING TOWARDS 2050 . . . . . . . . . . . . . . . . . . . . . . . .
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References .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
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THE FUTURE OF SHIPPING
MANAGING RISK, BUILDING TRUST DNV GL’S PAST, PRESENT AND FUTURE One hundred and fifty years ago, the world was in the midst of a profound transition. New technologies such as steam power, electricity and the telegraph led to an explosion in productivity and connectivity, reshaping the global economy in just a few short decades. Yet these shifts also introduced new risks to life, property and the environment and transformed the relationship between technology, business and society.
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It was this context into which Det Norske Veritas and Germanischer Lloyd were born. These companies, which have now merged into DNV GL, took on the role of verifying that vessels were seaworthy during a time when the convergence of new technology and business models caused an unacceptable number of ship accidents. By managing the increasingly complex risks associated with the rapidly evolving maritime sector, classification societies built trust among shipping stakeholders, contributing to the birth of a new era in international trade. Today, as DNV GL celebrates our 150th anniversary and our first year as a united company, the world is at another inflection point. The technologies, systems and institutions that have driven the most prolonged period of growth in our civilisation’s history are being tested by the new demands of the 21st century. And once again, our ability to manage risk and build trust will help us enable the changes the world needs.
In order to rise to this challenge, we have been exploring six themes of strategic relevance to our new organisation. Some of the themes, such as climate change adaptation, have taken us into newer territory; others, such as the future of shipping, have seen us re-evaluate more familiar ground. I believe that all of them, however, are absolutely central to our efforts to empower our customers and society to become safer, smarter and greener. I hope that we can use the themes’ findings, as well as the momentum of 2014, to engage a wide range of stakeholders in a forward-leaning discussion about how to achieve our vision – global impact for a safe and sustainable future. I look forward to the journey ahead.
Henrik O. Madsen President and CEO, DNV GL Group
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THE FUTURE OF SHIPPING
A BROADER VIEW
THEMES FOR THE FUTURE
As DNV GL turns 150, we are exploring six ‘themes for the future’ – areas where we can leverage our history and expertise to translate our vision into impact. We selected these themes as part of our efforts to take a broader view of the relationship between technology, business and society. On these pages you will find short introductions to each theme. To find out more, join us at: dnvgl.com/vision-to-impact
A SAFE AND SUSTAINABLE FUTURE
FROM TECHNOLOGY TO TRANSFORMATION
The future is not what it used to be. Rising global temperatures, diminishing natural resources and deepening inequality threaten everyone’s prospects, including those yet to be born. Yet alongside these new global challenges are new innovations, solutions and opportunities that make a safe and sustainable future possible: a world where nine billion people can thrive while living within the environmental limits of the planet. In this theme, we set a vision towards this future. We analyse the barriers to change and detail the concrete actions that governments, business and civil society must take together if the obstacles are to be overcome and the opportunities for safer, smarter and greener growth are to be seized.
Technology has always been an enabler of societal change and we can expect that it will play a pivotal role in our transition to a safe and sustainable future. Indeed, existing technology is already unlocking safer, smarter, greener solutions for powering our economy, transporting our goods, caring for our sick and feeding our growing population. But history shows that transformative technologies – from the automobile to the internet – can take decades to reach scale. And time is one resource we do not have. How can we accelerate the deployment and commercialisation of sustainable technologies while ensuring that they are introduced safely into society? In this theme, we investigate this question, analysing the barriers to technological uptake and providing insights from past and present technologies.
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THE FUTURE OF SHIPPING Shipping is the lifeblood of our economy and the lowest-carbon mode of transport available to a world with ever-rising consumption. It therefore has a crucial part to play in a safe and sustainable future. But the industry faces a challenging climate: more intense public scrutiny of safety and security, tightening restrictions on environmental impacts and a revolution in digital technology. To meet these challenges, we have analysed six technology pathways that can help us achieve three ambitions for 2050: reduce the sector’s fatality rates 90 per cent and reduce fleet-wide CO2 emissions 60 per cent, all without increasing the costs of shipping.
ELECTRIFYING THE FUTURE Electricity has already revolutionised the way we power our operations, fuel our vehicles, and light and heat our buildings - and it will have an even bigger role to play in the decades to come. Many emerging technologies can provide cleaner, smarter, affordable and reliable energy. Floating offshore wind can provide emissions-free power at scale by 2050. And a suite of smart grid technologies will provide households and communities with leaner, more local power. In this theme, we take a closer look at these technologies, and examine the contributions they can make to providing low-carbon power to future generations.
ARCTIC: THE NEXT RISK FRONTIER The Arctic offers a preview of a new paradigm for business: harsher environments, higher public scrutiny and a greater need to engage with stakeholders. As industries enter the Arctic, understanding, communicating and managing risks will be essential both to earning social licence to operate and minimising the impacts of their activities. With such high stakes, the Arctic will be a defining frontier – not just of operations, but of safer, smarter, greener technologies and standards. The Arctic is rich with resources and dilemmas. And while there are no easy answers to these dilemmas, we must tackle questions about its development step by step, based on a common understanding of the risks. In this theme, we examine the complex Arctic risk picture and explore its implications for shipping, oil and gas, and oil spill response.
ADAPTATION TO A CHANGING CLIMATE Climate change mitigation remains essential for our work to build a safe and sustainable future. But the greenhouse gases that have accumulated in the atmosphere over the past century and a half have already set changes in motion. Infrastructure and communities around the world urgently need to adapt to a climate characterised by more frequent and more severe storms, droughts and floods. And given the interdependence between business and society, business has a strong interest and critical role to play in these efforts. In this theme we have been developing tools to help both businesses and communities adapt to this new risk reality: a web-based platform for sharing information and best practices; a risk-based framework to help decision-makers prioritise their adaptation investments; and a new protocol to equip leaders to measure and manage community resilience to climate change.
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THE FUTURE OF SHIPPING
EXECUTIVE SUMMARY The purpose of this report is to look into the future of shipping and preview the technologies, systems and practices that we believe will play a role in achieving a worthwhile ambition: to create a truly sustainable shipping industry by 2050. The shipping industry moves about 80 per cent of world trade volume, making it an integral part of the global economy. Shipping is an extremely efficient mode of transport and has steadily improved safety and environmental performance over the past few decades. However, there are still significant challenges ahead. In this report, we focus on three key sustainability challenges for the shipping industry and establish ambitions for the future. These ambitions are based on internationally recognised climate targets and current best safety practice in land based industries: Lives lost at sea – reduce fatality rates 90 per cent below present levels CO2 emissions – reduce fleet CO2 emissions 60 per cent below present levels Freight cost – maintain or reduce present freight cost levels In our view, achieving these ambitions will have the most profound impact on sustainability, and will help clarify what the industry must do to achieve sustainable shipping.
Ambition: Reduce fatality rates by 90 per cent below present levels Achieving this target will require a new safety mindset and continuous focus on multiple issues related to technologies and how organisations are structured and function . Building a robust safety culture where humans, organisations and regulators systematically gather information and learn from failures will be critical to achieving a 90 per cent reduction in fatalities. Today, more and more systems are controlled and integrated by software, which introduces new challenges for operations, maintenance, testing and verification – a trend likely to continue. At the same time, advances in digital technology will play a greater role in the design phase, allowing for more accurate modelling of hull forms. The further development of automated systems and advanced decision support tools will contribute significantly to on-board safety. In the subsea industry, remote operations are already a reality. Systems with proven marine applications are likely to be adopted by merchant shipping. In time, the development of fully automated, unmanned vessels could become reality. Combined with advances in materials requiring limited maintenance, autonomous shipping would eliminate occupational risks on-board. While the unmanned vessel concept would likely face significant public scepticism,
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we believe that many on-board systems will be autonomous, which will improve the industry’s safety performance.
Ambition: Reduce fleet CO2 emissions 60 per cent below present levels Currently, no single solution can ensure the industry achieves a 60 per cent reduction of CO2 emissions, especially considering the expected increase in transport demand. Energy efficiency is certainly part of the solution, but the target cannot be reached unless the industry shifts to low carbon solutions. We are entering the age of alternative fuels. The first stage will see more vessels powered by LNG, a process driven by high oil prices and regulations on NOx and SOx. Over time, other low-carbon solutions, such as ship electrification, biofuels, batteries and fuel cells powered by renewable energy sources will be adopted, increasing the diversity of the industry’s fuel mix. The technologies are there, but the barriers are significant – the lack of adequate infrastructure and security of energy supply act as a drag on development of a number of alternative fuels.
Ambition: Maintain or reduce present freight cost levels The future holds tremendous opportunities for companies able to take advantage of new technologies and develop competitive business models. To capture potentials to reduce costs and increase reliability that the industry must get smarter. Owners will have to increase investment in systems to enhance safety and reduce emissions, but by applying technologies and solutions to become more efficient, they can keep freight costs at present levels. Increased connectivity has already changed the shipping industry. With more ships connected to the internet via broadband satellite networks, and more on-board
systems connected to each other and the internet, merchant shipping is becoming a more data-centric industry. Increasingly, on-board systems are being integrated, automated and controlled through software. Communications and data analysis can improve logistics operations with a focus on the total value chain. More powerful computers will be able to model realistic conditions a vessel may face at sea and in different weather conditions, and be used to design more optimal hull and machinery systems. Advances in sensor technology will enable improved condition-based monitoring and maintenance procedures and allow owners to run remote diagnostics and, when necessary, recommend fixes.
The way forward Three forces are acting on the shipping industry to drive change: increased regulations, which set more stringent minimum safety and environmental performance requirements; competitive pressure, which encourages more cost-efficient operations; and public demand for more transparency and sustainability. This societal pressure is not only directed at government authorities and ship owners, but also at cargo owners, who are under increased pressure to do business with owners who operate vessels beyond compliance. Regulations will continue to be an important driver for sustainability in three critical areas: safety, efficiency and the environment. However, regulators should be sensitive to the financial impact of these requirements and work with the industry to find workable solutions. As we gain more knowledge about the impact of shipping on the environment, the industry will be in a better position to evaluate various regulatory solutions that both create value for society and provide a level playing field for various segments and companies.
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INTRODUCTION The purpose of this report is to look into the future of shipping and preview the technologies, systems and practices that we believe will play a role in achieving a worthwhile ambition: to create a truly sustainable shipping industry by 2050. To frame this challenge, we had to consider a number of difficult questions, namely: Where is the shipping industry heading now, given current developments and trends? What targets should the industry set for itself in the years ahead? What are the gaps between the industry’s current path and a more sustainable future, and what can be done to close these gaps? Answering these questions requires that we not only identify likely drivers and barriers to change, but suggest a number of solutions to improve sustainability. We have identified a broad range of available and future technologies and defined the work that needs to be done to develop these technologies further. The result is a report that challenges existing formats. Unlike many forwardlooking studies that start with a set of assumptions and then offer different future scenarios, we have instead chosen to broaden our focus to include not only the likely outcomes, but also possible and preferable ones. At the same time, we have limited our scope to the design and operations of commercial ships, and did not include sections devoted to shipbuilding and ship recycling – both critically important segments that also must adapt to a changing world. While these and other industry stakeholders (e.g. suppliers, cargo owners and regulators) will be impacted by the changes described in this report, our focus remains on the merchant fleet.
As such, this report should not be confused with an industry forecast – we recognise that it is impossible to predict how the world, or the shipping industry, will change by 2050. Rather, we hope this report will be a catalyst for dialogue and a challenge to the industry to pursue ambitious goals. This report explores the following topics: Our definition of sustainable shipping, indicators that we can use to measure our progress, and concrete ambitions for 2050 An overview of global-, macro-economic and environmental trends, and potential gamechangers that could impact shipping in the next four decades Descriptions of six technology pathways likely to play a role in achieving sustainability Profiles of trends, drivers and barriers, and how these forces will shape shipping’s future, and impact the industry’s ability to reach the sustainability ambitions. We hope this report will encourage owners to embrace new technologies and inspire various industry stakeholders to think in a new way about how an old industry, steeped in tradition, can adapt to a rapidly changing world. Change begins with conversation, and DNV GL looks forward to being an active participant in the dialogue to achieve a more sustainable industry.
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SUSTAINABLE SHIPPING THE CHALLENGE
SUSTAINABLE SHIPPING – THE CHALLENGE 13
Š Shutterstock
The shipping industry moves about 80 per cent of world trade by volume, making it an integral part of the global economy. And with the world fleet expected to expand to keep pace with global economic development, the shipping industry will be under increasing pressure to improve its safety and environmental performance. Even as marine transportation is recognised as the most efficient way to move goods, the shipping industry must balance its vital role as an enabler of global trade and prosperity with its obligation to contribute to a more sustainable future.
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"...the shipping industry must balance its vital role as an enabler of global trade and prosperity with its obligation to contribute to a sustainable future"
What does a sustainable future mean? Sustainability is commonly defined by three interdependent dimensions: the environment, society and economy. Environmental sustainability supports the social and economic conditions by which humans can live in productive harmony with nature to meet the needs of present and future generations. Social sustainability refers to the ability of a social system (such as a nation or state) to effectively serve the needs and provide for the safety of a group of individuals. The sustainability of a social system can be determined by how effectively it provides access to basic human needs, such as stability, social equity and security, among others. For the shipping industry, safety is a critical part of social sustainability. The International Maritime Organization (IMO) defines safety as: “The absence of unacceptable levels of risk to life, limb and health (from non-wilful acts)”. Economic sustainability is measured by how well a system allocates resources in a way that benefits society in the short and long term. According to the World Business Council for Sustainable Development, economic sustainability is defined as “…an economy where economic growth has been de-coupled from ecosystem destruction and material consumption, and re-coupled with sustainable economic development and societal well-being.”
The sustainability challenge Sustainability in the shipping industry has steadily improved over the years. Moving goods on ships is highly efficient; the industry has significantly increased safety at sea; and environmental performance is starting to improve with new regulations in place. However, despite significant improvements in safety, working on a vessel remains a dangerous occupation. Also, ships often operate
in sensitive ecological zones and most load and unload cargo in proximity to densely populated costal urban centres, contributing to a variety of atmospheric and oceanic environmental damage. These issues are currently being managed by various regulatory bodies, including the IMO, which recently presented a model for a sustainable maritime transportation concept that outlined goals and actions the industry can undertake to provide safe, efficient and environmentally friendly transport systems. Some industry players have taken the initiative to improve safety and environmental performance beyond compliance by investing in a broad range of innovative systems and technologies. However, with the expected increase in global shipping in the next four decades, it is clear that more work needs to be done.
Measuring sustainability In order to measure the level of sustainability, we have selected a list of key indicators to track shipping’s progress towards becoming a more sustainable industrial sector. The selected indicators present the most relevant challenges for shipping within the three sustainability dimensions. It should be noted that the indicators listed do not reflect all of the environmental, social and economic aspects of shipping. The selected environmental indicators reflect only the most important challenges we recognise today. Over the next decades, we may identify other pollutants that represent a significant threat to the environment. Likewise, this report does not examine shipbuilding and ship recycling – both critically important parts of the value chain that also must adapt to a changing world. However, by focusing on key indicators relevant to the way the world fleet operates, we can provide an overview of how shipping impacts environmental, social and economic sustainability.
SUSTAINABLE SHIPPING – THE CHALLENGE 15
©DNV-GL
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SUSTAINABILITY INDICATORS CURRENT STATUS FOR SHIPPING Sources: Buhaug, Ø., Corbett, J. J., Endresen, Ø., Eyring, V., Faber, J., Hanayama, S., Lee, D. S., Lee, D., Lindstad, H., Markowska, A. Z., Mjelde, A., Nelissen, D., Nilsen, J., Pålsson, C., Winebrake, J. J., Wu, W.-Q. And Yoshida, K., 2009, Second IMO GHG Study 2009, International Maritime Organization (IMO) London, UK, April 2009. Ballast water: http://www.emsa.europa.eu/implementation-tasks/environment/ ballast-water.html. A similar number is assumed for organism carrier outside the hull: John M. Drake and David M. Lodge: Aquatic Invasions (2007) Volume 2, Issue 2: 121-131, doi: http://dx.doi.org/10.3391/ai.2007.2.2.7. The International Tanker Owners Pollution Federation ltd. – Statistics, http://www.itopf.com/information-services/data-and-statistics/statistics/ Updated 2013 Ecorys: The Ship Recycling Fund, Financing environmentally sound scrapping and recycling of sea-going ships, 2005. IHS Fairplay World Casualty Statistics: Includes all vessels excluding fishing and miscellaneous ships. Average for the period between 2003 and 2012 is used. Freight cost: Review of Maritime Transport, 2012, UNCTAD. Insurance claim: 2012 CEFOR Annual Report, CEFOR – Covering about 20% of the world fleet.
Accidental oil spills
5000
tonnes per year Average 2010 – 2012
Recycling
90% of the ship recycled
Invasive species
20 000 marine organisms introduced per day
SUSTAINABLE SHIPPING – THE CHALLENGE 17
CO2 emissions
NOx emissions
SOx emissions
900
22
12
million tonnes per year
Lives lost at sea
900
ship accident fatalities per year Average 2003 – 2012
million tonnes per year
Insurance claim costs
0.23% of insured value Average 2010 – 2012
million tonnes per year
Freight cost
7-11% of cargo value
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FUTURE AMBITIONS FOR SUSTAINABLE SHIPPING
LIVES LOST AT SEA
90%
below present levels Shipping is an extremely efficient mode of transport and has steadily improved safety and environmental performance. Because the industry is already taking action to address SOx and NOx emissions and put in place legislation to manage the introduction of alien species, these topics will not be directly addressed in this report. Instead, we focus on three key sustainability challenges for the shipping industry, and establish ambitions for 2050. These ambitions are based on internationally recognised climate targets and current best safety practice in land based industries: Lives lost at sea - reduce fatality rates 90 per cent below present levels CO2 emissions - reduce fleet CO2 emissions 60 per cent below present levels Freight cost - maintain or reduce present freight cost levels In our view, meeting these ambitions will have the most profound impact on sustainability, and will help clarify what the industry must do to achieve sustainable shipping.
STATUS Lives lost at sea include fatalities due to ship and occupational accidents in international shipping. Based on statistics from IHS Fairplay for the period 2003-2012, there were on average 900 crew and passenger fatalities per year, corresponding to 1.6 crew fatalities per 100 ship-years. In addition, several studies report that the number of fatalities due to occupational accidents is approximately the same as for ship-related accidents. Based on available data, we estimate that about six crew fatalities occur per 100 million work hours.
AMBITION
Reduce fatality rates 90 per cent below present levels The current crew fatality rate in shipping is 10 times higher than for industry workers in OECD countries (Organisation for Economic Co-operation and Development), which is 0.6 fatalities per 100 million work hours. Seafarers have the right to a safe workplace and passengers have a right to safe transportation. The shipping industry should set targets to achieve parity with safety levels in land-based industries by 2050.
SUSTAINABLE SHIPPING – THE CHALLENGE 19
CO2 EMISSIONS
FREIGHT COST
60%
Maintain
STATUS
STATUS
Shipping is responsible for approximately three per cent of total anthropogenic (manmade) CO2 emissions, or about 900 million tonnes per year in 2008, according to the International Maritime Organisation. Most scenarios for shipping towards 2050 predict significant growth in the demand for seaborne trade and a corresponding growth in the world fleet, which is likely to generate more CO2 emissions.
Over the past decades, shipping freight costs have steadily declined, relative to the value of goods shipped. The United Nations Conference on Trade and Development (UNCTAD) recently reported that freight costs are down to seven per cent (relative to the value of goods) for developed countries and down to eight to 11 per cent for developing countries. This indicator varies widely depending on transport distance, volume and the value of goods. For example, although economy of scale is one of the big advantages of shipping as a mode of transport, this advantage cannot be fully exploited in all regions due to the lack of land-to-shore infrastructure and low trade volumes.
below present levels
AMBITION
Reduce fleet CO2 emissions 60 per cent below present levels Reductions in shipping’s contribution to global CO2 emissions must be seen in the context of global warming. If the global target is to limit global temperature increase to 2°C, then the shipping industry must reduce emissions by the same share (calculated at 60 per cent, according to the UN Environmental Programme) as other industrial segments. With the expected growth in transport demand, shipping must cut emissions per transported unit by 80 per cent in 2050, to achieve emissions at least 60 per cent below present levels.
present levels
AMBITION
Maintain or reduce present freight cost levels (as a percentage of the value of goods) This indicator is provided to ensure that improving safety performance and reducing CO2 emissions do not significantly increase freight cost. The shipping industry facilitates global trade and development and is therefore an important part of a sustainable future. Using cleaner and more expensive fuels and other technologies may increase cost, but competition and profitability will continue to be powerful drivers for cost reduction in shipping.
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GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY
GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 21
ŠShutterstock
Over the next four decades, we believe developments in the following four areas will significantly impact the shipping industry: world population and economy, information and communications technology, energy, and climate change and the environment. Within each of these areas, we will describe specific trends and possible game-changers likely to influence the development of the shipping industry. Game-changers are notoriously hard to predict, but by analysing dramatic changes in the past, we can gain a better understanding of their nature.
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WORLD POPULATION AND ECONOMY World population and the global economy are projected to expand rapidly in the next four decades. While this growth will be uneven across countries and the risks and opportunities for different shipping segments will vary, these macro-economic and demographic changes are likely to have a dramatic effect on global trade flows and the direction and structure of the shipping industry.
Exceeding nine billion people The world economy is projected to grow at around three per cent per year on average to 2050, doubling in size by 2030 and nearly doubling again by 2050. At the same time, the global population is expected to exceed nine billion in 2050. While the population in more developed regions is expected to remain stable, the population of today’s developing countries is projected to increase from 5.7 billion in 2011 to eight billion in 2050. At present, the population of the 48 least developed countries is the fastest growing in the world at 2.5 per cent per year.
The global population will age Assuming that global fertility rates continue to decline, the median age of most countries is expected to rise, except for countries in Sub-Saharan
Africa. The population aged 60 or over is growing rapidly in both developed and developing regions. Globally, the number of individuals aged 60 or over will increase from 784 million in 2011 to 2 billion in 2050. By 2050, the number of older people in developed countries will be almost twice the number of children. Mismanagement of this changing demographic represents a significant risk to longterm economic growth in developed countries with ageing populations.
Urbanisation and mega-regions Population growth is very much an urban phenomenon. Indeed, urban areas are expected to absorb almost all population growth, especially in less developed regions. By some estimates, 67 per cent of the world’s population will be concentrated
GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 23
in urban centres by 2050. If so, the world’s urban population is expected to grow from 3.6 billion in 2011 to 6.3 billion in 2050. Today, there are 23 megacities of 10 million or more inhabitants. By 2025, it is projected that there will be 37 megacities, accounting for 13.6 per cent of the world’s urban population.
Global growth will be powered by emerging markets Towards 2050 there will be significant changes in the relative size of economies. Emerging economies are expected to grow at a faster pace than advanced economies, and will sustain global growth. A large portion of global growth will take place in Asia. China is expected to surpass the US as the largest economic power a few years before 2030. In 2050, China, India, Indonesia, Japan, Republic of Korea, Malaysia and Thailand are projected to account for 90 per cent of Asian GDP and 45 per cent of global GDP. However, a study commissioned by the Asian Development Bank cautions that Asia’s rise is not inevitable. Risks related to income inequality, social and political instability and the “middleincome trap” (a condition where a country lags behind advanced economies capable of producing high value goods but is unable to successfully compete against lowcost export countries), may disrupt future economic development and growth.
A shift in the geography of global consumption For the first time in history, a majority of the world's population will not be impoverished by 2050. Almost three billion people, more than 40 per cent of today’s population, will join the middle class by 2050,
and almost all will live in regions now classified as emerging markets. As has occurred in developed countries, these economies will transition away from export oriented/manufacturing heavy growth towards customer driven/service sector growth. A new class of emerging consumers will revolutionise global demand, acting as an internal growth engine. Initially, these consumers will seek more affordable manufactured goods, often produced by other emerging markets. As a result, trade between emerging markets is expected to grow rapidly. At the same time, improved living standards often result in demand for better environmental protection, safer labour conditions, and a higher level of transparency in how government operates.
Inequality will persist The gap in living standards between emerging markets and advanced economies will narrow, but large cross-country differences will still persist. The average income per capita will still be considerably higher in advanced economies than those found in emerging economies. Assuming growth follows a predictable path, China will see more than a seven-fold increase in per capita income over the coming half century. However, living standards in China will still only be 60 per cent of that in the leading countries in 2060. India will experience similar growth, but its per capita income will only be about 25 per cent of that in advanced countries. Inequality will also still be a significant issue within countries.
THE FUTURE OF SHIPPING
Africa
Latin America and the Caribbean
Europe
Asia
Northern America
Oceania
3 500 000
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2 500 000
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1 000 000
500 000
1950
1970
1960
1980
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Figure 1. Urban population by major regions: 1950 - 2050 Source: United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revison
India
USA
China
EU (27)
29 28 Window of economic opportunity
27 26 25 24 23 22 21 20 19 18 17 16 15
Figure 2. "Most active" population age 20-34 years. Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision, Volume II: Demographic profiles. ST/ESA/SER.A/317.
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GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 25
Implications for shipping Demand for seaborne transport Population and economic growth increases demand for seaborne transport. Towards 2050, demand for energy will increase deep-sea transport of LNG, crude oil and coal. Growing industrial capacity will demand increasing volumes of input materials, such as iron ore and bauxite. A larger global middle class will increase demand for food-stuffs and consumer goods and create demand for passenger ferries and cruise ships, as spending on leisure and travel increases. Changing trade patterns Changes in the global economy and demographics will continue to influence trade patterns in deep-sea and coastal shipping – including growing intra-Asian trade and south-south trade. New sources of energy and new locations for existing types of energy will likely impact energy transportation patterns. For example, more gas carriers may load cargoes in the US than in the Middle East. New areas of activity for offshore supply shipping may also influence the global shipping infrastructure.
While the emergence of a growing urban middle class suggests increased demand for seaborne transportation, it is not a given for all segments. For example, as China’s export-driven economy shifts towards internal consumption, growth in export volumes will decrease while inland and coastal shipping will increase. New geography of shipping services A new distribution of world economic activity will have consequences for the geography of shipping services such as technical management and ship building. Currently, the construction of vessels in many segments (tankers, bulk carriers, containerships) has shifted from the US and Europe to Asia, while the expertise required for advanced shipbuilding, such as cruise ships and offshore supply vessels, remains concentrated in the advanced economies. By 2050, shipyards in Asia and South America will have the expertise to capture a growing share of contracts for advanced ships. At the same time, shipping services, such as ship management and crewing, will also be distributed more widely.
THE FUTURE OF SHIPPING
Medium
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20 15 10 5 0 1950
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Figure 3. Population of the world, 1950-2100, according to different projections and variants Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat (2011). World Population Prospects: The 2010 Revision. New York: United Nations.
Emerging maritime clusters in countries such as Brazil and China will provide strong competition for traditional maritime clusters. Social acceptance criteria As the global population becomes more educated and wealthy, acceptance criteria for safety and sustainability performance will change. Tolerance for accidents at sea – which today far exceed accident rates in the offshore sector and land-based industries – will fall, placing pressure on owners and ship managers to improve safety performance. At the same time, public concerns regarding local air pollution in densely populated areas and climate change will force the industry to adhere to more stringent environmental standards.
Potential game changers Increased regionalism could make IMO an irrelevant organisation Over the next decades, states and regional organisations may take on a larger role in regulating international shipping independent of the system
now managed by the International Maritime Organisation (IMO). States may develop and enforce regional emissions control areas with different requirements, as we have seen in the US and the EU. Other actors, such as charterers and NGOs could also play a significant role by setting more rigorous standards and requirements for shipping companies. If the IMO is unable to take a leading role and fulfil the expectations of its members, it risks losing legitimacy and may become irrelevant by 2050. Collapse in the demand for seaborne transport Most studies project a continued increase. However, a major global economic crisis could result in a sudden and catastrophic collapse in the demand. Other factors, driven by a global event (such as a series of natural disasters) could also lead to trade collapse. Disruptive technologies may also impact trade. For example, local 3D printing could remove the need to transport certain goods, causing a significant drop in some shipping segments.
GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 27
2011 China 17% United States 23% India 17%
LESSONS FROM HISTORY
Japan 7% Euro area 17% Other non-OECD 12% Other OECD 18%
2030 China 28% United States 18% India 11% Japan 4% Euro area 12% Other non-OECD 12% Other OECD 15%
Globalisation Acceleration and reversal While the shipping industry has enjoyed decades of trade liberalisation and economic globalisation in the post-war period, history teaches us that the global economy is cyclical, influenced by policy shifts that swing between protectionism and trade liberalisation. As a rule, the shipping industry thrives during periods of globalisation and contracts during periods of protectionism. Consider that world trade declined by around 66 per cent between 1929 and 1934 during the inter-war period. During periods of economic uncertainty, “creeping protectionism� is a risk to globalisation, as governments enact defensive trade policies to mitigate domestic economic crises.
2060 China 28% United States 16% India 18% Japan 3% Euro area 9% Other non-OECD 12% Other OECD 14%
Figure 4. Major changes in the composition of global GDP - percentage of global GDP in 2005 PPPs. Source: Looking to 2060: Long-term global growth prospects. A going for growth report. OECD Economic Policy Papers, No. 03, 2012
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THE FUTURE OF SHIPPING
INFORMATION AND COMMUNICATION TECHNOLOGY The pace of change in information and communication technology (ICT) will continue to accelerate towards 2050. Over the next few decades, developments in ICT will revolutionise shipping, creating a more connected and efficient industry more closely integrated with global supply chain networks. Future developments in ICT will allow more data to be collected, analysed and integrated into the decision-making process at all levels.
Data explosion The volume of digitalised data is growing exponentially. In 2006, roughly 161 billion GB of new data was stored. By 2010, stored data had increased by a factor of six. In this period, growth was driven primarily by a shift from analogue (paper-based) record keeping to faster and more cost effective digital systems. Today, ICT is being increasingly applied to new areas, both private (recreational, gaming, personal relationships) and industrial (healthcare, tourism, simulation). By 2020, it is expected that 200 times more data will be generated annually than in 2008.
Advances in storage technology will give tenfold increase in storage capacity roughly every four years. Furthermore, developments in miniaturisation and embedding software, together with expanded social media platforms, will accelerate the generation of vast amounts of data. However only three per cent of potentially useful data is tagged, and even less is analysed. To capitalise on this phenomenon (known as “big data�), researchers will need to develop advanced capabilities for search, analytics and decision support.
GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 29
Powering up Computer processing power has developed in parallel with rapid developments in data storage and management. Consider that today’s mobile phones have the processing power of desktop computers 10 years ago. If this trend continues, mobile phones will have the processing power of today’s PCs – and in time, affordable and small, distributed sensors will have the ability of today’s mobile phones. This growth in processing power will impact data collection and allow intelligent monitoring and control. Local, real-time data processing will highlight the need for new data formats and process models. Power computing will give rise to new requirements for programs and programming languages.
Increased connectivity “Connectivity” is a term used to describe not just internet access but developments within mobile telephony and other wirelessly connected devices. In 2008, China surpassed the US in number of Internet subscribers. As only 42 per cent of China’s population currently has internet access (in contrast with 81 per cent of the population of the US), a further increase in Chinese internet users is expected. A growing proportion of information (news, books, real-time data, TV, entertainment, etc.) will be accessed via various handheld devices. Another intriguing change likely to occur is that developing countries, which previously lagged behind industrialised countries in terms of wired communications infrastructure, will leapfrog the developed world in the use of mobile telephony.
Software everywhere An ever-increasing number of products contain embedded software. Mechanical control has been replaced by digital control systems in many areas such as in kitchen appliances, washing machines and telephones to name a few. Consider that in 2000, automobile control systems contained about one million lines of code. Today, this number is closer to 100 times that many. More autonomous, decentralised software applications (e.g. inhabitant software) combined with more powerful processors will make central control of systems more difficult. As humans become more dependent on software, ensuring security, user identity, and reliability will be of growing concern. Electronic devices containing inhabitant software will become a part of, and utilise, cloud computing and grid networking.
Implications for shipping Automation and remote control ICT developments allow for the increased use of automated systems to improve operational performance and reduce costs and risks associated with human error. Today, sensors installed on ships have allowed the monitoring of certain operating parameters – a trend likely to apply to more aspects of operations. Digital technologies will influence business operations, regulatory/bureaucratic procedures, navigation, maintenance and operations. Shipping may also adopt technologies developed for the oil and gas industry, such as systems for remote operations, diagnostics and data mining.
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THE FUTURE OF SHIPPING
Share what you measure The use of sensors and systematic monitoring systems will enable greater transparency in shipping, from “tell me” to “show me”. That is, stakeholders such as charterers and cargo owners will require that shipping companies provide measured and verified information about a ship’s performance. In addition, the flow of information between different actors in the shipping industry will be increasingly digitalised. For example, electronic port compliance and e-customs are likely to become the norm. Shipping companies may also change how they interact with customers and suppliers. The introduction of more automation on-board and rapidly expanding data volumes will require new approaches to data storage, processing and transfer. Advanced modelling and simulation tools for design Ship design will help owners manage challenges related to technical issues, market specificities, future energy prices, climate change, and existing and upcoming regulations. New computational capabilities will enable the development of advanced modelling and simulation tools for design and optimisation of new hull designs, propulsion, and complex machinery systems, etc. These technologies allow for improvements in service delivery, virtual prototyping, and next-generation energy management. Seafarer welfare ICT developments in shipping can also have a positive effect on crew retention. Making broadband available on vessels significantly improves the lives of seafarers, who can more easily communicate with family and stay connected to world events.
LESSONS FROM HISTORY
Potential game changers Unmanned vessels By 2050, we may see the development of unmanned vessels. With advanced ICT, vessels can be designed to be remotely-operated from shore. Unmanned vessels would benefit from lower operational costs compared to convention vessels, due to the elimination of on-board crew costs, risks associated with human error, and threats to crew safety. Unmanned vessels may also revolutionise supply chain logistics, which would have wide-reaching impacts on the industry. As there would be no human restrictions on how much time a vessel can spend at sea, ships that do not carry time-sensitive cargoes (such as perishable goods) could in theory drift with sea currents when possible to move as energy-efficiently as possible. Hijacking incident It should be noted that ships equipped with autonomous systems may be more vulnerable to hijacking than manned vessels. For example, by hacking into the unmanned vessel’s control system, a group or individual could highjack an oil tanker from a remote location and hold it for ransom, or worse, use the tanker in a terrorist attack. An incident like this could have a deterring effect on autonomous systems and uptake of ICT development in the shipping industry. However, due to its proven benefits, the level of ICT uptake to enable more automation in shipping is likely to continue.
Deep-sea cables: a communication revolution The first successful transatlantic cable was laid in 1865. Within a decade, a network of cables linking major cities around the world was in place. By 1897, there were 162,000 nautical miles of cable, with London at the centre of the network. This communications network revolutionised communications and fundamentally transformed the shipping industry. Previously, vessels would lie idle in port for weeks waiting for orders on what to take on-board as return cargo. The use of telegraph messages allowed voyages to be planned and optimised. More innovative use of ICT is expected to have a similar, transformative effect on the shipping industry, improving safety and efficiency in the coming decades.
18.86 billion GB Paper, film, audiotape and vinly: 6.2% Analog videotapes: 93.8% Other digital media: 0.8% Portable media players, flash drives: 2% Portable hard disks: 2.4%
In gigabytes or estimated equiavalent.
CDs and minidisks: 8.8%
2000 Digital tapes: 11.8% 1986 ANALOG 2.62 billion
1993 ANALOG
DIGITAL
DVD/Blu-ray: 22.8%
DIGITAL 0.02 billion
PC hard disks: 44.5% 123 billion GB *Other includes chip cards, memory cards, floppy disks, mobile phones/PDAs, cameras/camcorders, video games
Computing power In 1986, pocket calculators accounted for much of the world’s data-processing power.
2007 DIGITAL 276.12 billion GB
Percentage of available processing by device:
Pocket calculators 1986 2007
41%
Personal computers
Video game consoles
33%
9%
66%
25%
Servers, mainframes
17% 3 6
Mobile phones, FDAs
Supercomputers (0.3%)
Figure 5. The world's capacity to store information. Source: Todd Lindeman and Brian Vastag/ The Washington Post, http://www.washingtonpost.com/wp-dyn/content/graphic/2011/02/11/GR2011021100614.html
DIGITAL
2007 ANALOG
This charts shows the world´s growth in storage capacity for both analog data (books, newspapers, videotapes etc.) and digital (CDs, DVDs, computer hard drives, smartphone drives etc.)
ANALOG
THE WORLD'S CAPACITY TO STORE INFORMATION
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THE FUTURE OF SHIPPING
ENERGY Economic growth will drive demand for energy, while increasing efficiency will help mitigate demand. A number of studies predict increasing use of fossil fuel towards 2050. While there will most likely be an available supply to meet the demand, this will have a severe impact on the earth’s climate. As established energy sources dwindle and new alternative fuel sources become viable, the world will move towards a more sustainable, low-carbon energy supply.
Despite efficiency gains, global energy demand will increase Population growth and economic development are projected to result in a global economy four times larger than today, requiring 80 per cent more energy in 2050. The assumed 1.3 per cent annual growth in the world’s total primary energy demand will add 40 per cent to consumption by 2040. In OECD countries low population growth rates, aging, technological progress and energy saving practices will result in relatively modest increases in energy demand. However, for non-OECD states, energy demand is expected to rise almost 70 per cent by 2040 compared to 2010, reflecting population growth, industrialisation and growing prosperity.
The demand for different energy sources will grow at very different speeds, ranging from 0.5 per cent to 9.0 per cent per year, with select renewables increasing most rapidly. Differences in the availability of other energy types will continue to play a large part in accounting for inter-regional energy mixes.
Fossil fuels will continue to dominate Despite advances in renewable energy, many analysts forecast that the global energy mix in 2050 will not differ significantly from today. The OECD predicts that fossil energy will meet 85 per cent of energy demand, while renewables, including biofuels, will account for only 10 per cent. The remainder is likely to be covered by nuclear energy.
GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 33
Due to its availability, flexibility and low emissions (relative to coal), natural gas will become an increasingly important fuel. Gas demand will grow rapidly in China, with India, the Middle East and Africa following. In North America and Europe, natural gas will overtake oil as the largest source of energy. Coal displacement is expected to take place nearly everywhere, but at different speeds in different regions. We expect coal use to decline sharply in OECD countries. In China, overall coal demand is expected to be almost 60 per cent higher in 2040 than today, although its market share is expected to go down. Oil use in China will increase by the same percentage, and gas by close to 400 per cent.
The growth of non-fossil fuels will vary between regions Non-fossil fuels are expected to grow at around 2.6 per cent annually, driven by a universal desire to mitigate local pollution issues, combat climate change and secure energy supply. In some developing countries, renewables will also be used to bring electricity to the rural areas. Growth patterns will vary from region to region. The OECD countries will prioritise wind and solar, while many non-OECD countries will press ahead with hydro and nuclear power as well. In any event, solar, wind and geothermal energy will continue to capture market share in the generation of electricity. We assume that policy support will remain in place to drive the deployment of renewables and reduce costs. In China, hydro power will grow by more than 100 per cent from today’s levels, and nuclear and other
renewables will increase more than 10-fold during the forecast period.
Implications for shipping Change in the energy mix The change in fuel mix for shipping will be strongly affected by the future global energy mix, as well as fuel price and infrastructure development. Geographical availability of different fuels, coupled with energy security issues, will also influence the energy mix. For example, the exploitation of shale oil and gas could have a significant impact on energy prices. Different cargoes, new ship types, and new transport patterns Changes in the global energy mix will lead to changes in the types of cargoes transported by ships. There will be an increased demand for transportation of natural gas, biofuels, and other alternative energy types. Shale gas production has soared in the US in recent years, and is projected to continue growing at a rapid pace. The US will likely become a large LNG exporter, and traditional gas routes from the Middle East to Asia will compete with new routes connecting the US to Asia. Most analysts agree that increased demand for gas will require an expansion of the current gas carrier fleet. Demand for clean energy will spur growth in renewable energy investments, requiring specialised tonnage to transport and install offshore renewables (e.g. wind, solar) facilities. Shift in marine activities The search for alternative energy sources will lead to a shift from traditional offshore marine activities to activities related to both deep-sea operations
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THE FUTURE OF SHIPPING
400
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Figure 6. Energy intensity of the world economy tonnes of oil equivalent /million 2005-USD
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Source: IEA/IHS Global Insight (history), Statoil (forecast)
0 1990
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and offshore renewable facilities. New types of offshore support vessels will need to be designed to install, maintain and decommission offshore wind or solar facilities. It should also be noted that the development of offshore resources, including offshore power grids, will likely result in more congested sea lanes, which increase the risk of collisions and groundings, which represent safety risks.
Potential game changers Technological breakthrough If the threat of GHG emissions could be managed by the development of some, as yet unknown technological breakthrough, the shipping industry would change rapidly. Such a breakthrough may be achieved through the discovery and introduction of a new, cheap clean fuel type or a simple, affordable carbon capture and storage solution, a technology which would allow the continued use of fossil fuels.
LESSONS FROM HISTORY
2030
2040
A new energy crisis Export bans, or conflicts in energy-producing countries, could result in a lasting global energy crisis, leading to sky-high fuel prices for shipping. A longterm energy crisis could dwarf the price hikes the industry experienced in the 1970s, forcing shipping companies to rethink existing business models, ship design and operation. Acceptance of nuclear-fuelled ships After an extended setback resulting from the Fukushima incident, nuclear power has re-emerged as a viable energy alternative. Although several hundred nuclear-powered navy vessels exist, few nuclear-powered merchant ships have been built. Land-based prototypes offer compact reactors comparable to large marine diesel engines. The main barriers to nuclear shipping relate to uncontrolled proliferation of nuclear material, decommissioning and storage of radioactive waste, the significant investment costs and limited societal acceptance.
Fuel shifts can happen fast Maritime history shows that the shipping industry is quick to adapt to new fuels, if the right incentives are in place. For example, in the period between 1914 and 1922, the percentage of vessels using oil rather than coal in their boilers increased from three per cent to 24 per cent. While the speed of this shift was abetted by the fact that owners could use existing machinery with minimal modifications, it shows that the industry can move quickly if a better solution is available. However, history also shows that fuels that demand new types of machinery, such as the transition from coal to oil via the combustion engine, slows the migration to new energy sources.
WORLD PRIMARY ENERGY DEMAND BY REGION (MTOE) 8000
America Europe
7000 Million tonnes of oil equivalents
Asia Oceania 6000
E. Europe/Eurasia Asia
5000
Middle East Africa
4000
Latin America 3000 2000 1000 0 1990
2000
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Figure 7. World primary energy demand by region (Mtoe). Source: IEA (2013). World Energy Outlook 2013.
SHARE OF TOTAL PRIMARY ENERGY DEMAND
100 %
Other renewables Bioenergy Hydro Nuclear Gas Oil Coal
90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0% 1990
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2020
Figure 8. Share of total primary energy demand. Source: IEA (2013). World Energy Outlook 2013
2025
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THE FUTURE OF SHIPPING
CLIMATE CHANGE AND ENVIRONMENT According to an OECD baseline scenario, pressures on the environment from population growth and rising living standards will outpace progress in pollution abatement and resource efficiency. Already, signs of climate change, a growing scarcity of natural resources and threats to the environment have resulted in a renewed focus on environmental sustainability.
A more hostile natural environment Assuming greenhouse gas emissions continue to drive global temperatures upward, we can predict a broad range of consequences likely to occur. These include rising sea levels, increased frequency and severity of heat waves and droughts, storm surges, river flooding and a higher frequency of wildfires. These consequences will have significant regional differences. For example, wet areas will become wetter and dry zones will become more arid. By mid-century, the availability of water is projected to increase at high latitudes (and in some tropical wet areas) and decrease, or become unstable, in dry regions in the mid-latitudes and tropics. It is also projected that many semi-arid areas (e.g. Mediterranean Basin, western United States, southern Africa and north-eastern Brazil) will suffer a decrease in water resources due to climate change.
Unusual and unprecedented heat extremes are expected to occur far more frequently and cover greater land areas. Finally, sea levels have risen more rapidly than previously projected. A rise of as much as 50 cm by the 2050s may be unavoidable as a result of past emissions.
Strained resources: water and food Climate change will affect the availability of food, water and energy. These effects will vary widely by region. Combined with a growing population and dietary changes, the stress on available resources – especially water – will intensify. Unless action is taken, hundreds of millions of people could be exposed to increased water stress. By 2030, nearly half the world's population will live in areas with severe water stress.
GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 37
Today, agriculture uses 70 per cent of global freshwater resources – a disproportionate share of this figure is used for livestock husbandry. Nevertheless, between 2000 and 2050, global cereal demand is projected to increase by 70 to 75 per cent, while meat consumption is expected to double. With more people flocking to big cities, water will be increasingly concentrated in urban areas. At the same time, overfishing has decimated global fish stocks, an event exacerbated by destructive fisheries and ocean acidification. Climate change could mean decreased cereal productivity in low latitudes, countered by increased cereal productivity at mid-to high latitudes. If not affecting total volumes, there will at least be shifts in production sites/trade patterns.
Pollution and public health Air pollution will become the world’s top environmental cause of premature mortality, overtaking dirty water and lack of sanitation. By 2050, air quality will still be above WHO guidelines in most developing countries. Particulate matter and ground level ozone are the two most important air quality components, which typically rise in concentration as the result of power generation (e.g. coal) from industry and from transport. Already by 2030, five to eight per cent of the population will live without safe drinking water and 17-28 per cent of the population will live without improved sanitation. These challenges may grow more complex as we get closer to 2050. In addition, climate change will adversely affect human health in populations with low adaptive capacity. Climate change could also create new
social and economic tension and competition for resources that could lead to civil and political conflict.
Implications for shipping Reduction of shipping footprint While shipping is one of the most efficient modes of transportation, the industry still contributes to environmental damage. Like all industries, shipping will be expected to reduce its environmental footprint and is likely to be subject to stricter regulations, especially on greenhouse gas emissions. In addition to international regulations on emissions, it is likely that stakeholders such as charterers, banks, insurance companies, and investors will set stricter requirements for owners to improve energy efficiency and reduce GHG emissions. Shipping companies will also likely be required to reduce their material footprint. In a world characterised by increasingly scarce resources and rising public concerns regarding the environment, recycling of materials will become both a requirement and a norm. Climate change adaptation Ships, yards and ports are all vulnerable to climate change and should expect to take action to adapt. For example, the expected shift in wave patterns, increased wave heights, and more severe weather conditions in the medium and long term, will call for improved design and operational safety standards. Likewise, increased intensity of rainfall, heat waves, wind speeds, storms and storm surges, all represent different risks to yards and port infrastructure and operations.
2010
2030
Figure 9. Global premature deaths from selected environmental risks: Baseline, 2010 to 2050
2050
Particulate matter
Source: OECD (2012). Environmental outlook to 2050: The consequences of inaction
Ground-level ozone Unsafe water supply and sanitation Indoor air pollution
Malaria 0
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Arctic shipping Climate change will unlock the Arctic, leading to increased activity in ice-covered waters. This includes destination shipping, shipping activities related to offshore oil and gas extraction and transit shipping. There are a series of hazards and uncertainties related to sailing in the Arctic, such as sea ice, harsh weather conditions, and the availability (and operational costs) of icebreakers. Challenges include winterisation to combat icing on the ship and cargo, freezing in ballast tanks, and wind chills affecting the crew. Ships sailing in the Arctic will need to be iceclassed and have technologies in place to prevent environmental damage and mitigate risk to fragile marine eco-systems found above the Arctic Circle.
and other foods will change, based on how climate change impacts production and import demand.
New cargoes and trade patterns Countries will continue to depend on international trade to ensure food security in 2050. The Food and Agriculture Organization estimates that net imports of cereals from developing countries will more than double from 135 million metric tonnes in 2008/2009 to 300 million in 2050. However, the pattern of cereals
Many vessel types are designed to either transport fossil fuels or support the exploration and production of fossil fuels. A ban on fossil fuels could make these ship types obsolete. For example, a ban would stop oil and gas offshore activities, making offshore supply and other offshore special vessels irrelevant. Oil tankers would also find themselves out of work.
LESSONS FROM HISTORY
We may also see new types of cargoes, such as water. Water scarcity will be a serious issue towards 2050, and large oil tankers can provide temporary solutions in areas that have acute water shortages.
Potential game changers A ban on the use of fossil fuels If the impact of climate change is more severe than predicted, humanity may be forced to ban the use of fossil fuels. This would have dramatic consequences for all industries, including the shipping industry.
Shipping can adapt to new cargoes History shows that the shipping industry is used to adapting to new types of cargoes when there is a need in the market. Over time, vessels have become more and more specialised to adapt to different cargo types. This includes the development of oil tankers to meet the need for bulk transport of oil, the development of specialised parcel tankers to transport different types of chemicals, and the development of passenger liners and cruise ships to meet the demand for personal travel.
Figure 10. Emissions to air in international shipping from 1990 to 2050.
SOx emissions from international shipping from 1990 to 2050
SOx emissions (million tons SOx / year)
30
25
Source: IMO Second GHG study, extrapolated by DNV GL and Bazari Z. and Longva T., Estimated CO2 reduction from introduction of mandatory technical and operational energy efficiency measures for ships, LR and DNV, 2011.
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With MARPOL Annex VI
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NOx emissions from international shipping from 1990 to 2050
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2010
2020
With MARPOL Annex VI
2030
2040
2050
Business as usual
CO2 emissions from international shipping from 1990 to 2050 CO2 emissions (million tons CO2 / year)
2500 2000 1500 1000 500 0 1990
2000
Historic
2010
2020
Business as usual
2030
2040
2050
With MARPOL Annex VI (EEDI & SEEMP)
40
THE FUTURE OF SHIPPING
PATHWAYS
TOWARDS SAFER, SMARTER AND GREENER SHIPPING
PATHWAYS towards safer, smarter And greener shipping 41
ŠMariko Hagaki
Meeting the ambitions to make shipping a sustainable industry by 2050 will require the industry to mobilise new technologies and solutions and learn to rethink differently about how its business and operations function. We have outlined six pathways that we think will have the largest impact on achieving a more sustainable industry: safe operations of ships, advanced ship design, the connected ship, future materials, efficient shipping and low carbon energy.
42
THE FUTURE OF SHIPPING
SAFE OPERATIONS Despite genuine progress, the shipping industry lags well behind many other industries when it comes to safety. While the industry’s relatively high rate of fatalities and accidents can be attributed in part to risks associated with operations in challenging environments, the public has become increasingly critical of accidents that result in injury or loss of life. How will the industry respond and what tools are available to improve the industry’s safety record? In the past, the industry has turned to technology for answers, but increasingly, owners are recognising the value of embracing a broader, more holistic approach to safety.
PATHWAYS towards safer, smarter And greener shipping 43
While an increased focus on safety in the shipping industry has helped reduce fatalities at sea over the past two decades, more work needs to be done. The crew fatality rate is 10 times higher than the current level in land-based industries in OECD-countries. To improve its safety record, the industry must address a number of issues. First, the industry has allocated more resources to mitigate individual accident risk than major accident risk, which is rare but leads to far more serious consequences. Second, owners tend to place too much confidence in safety procedures, excluding focus on more complex, holistic safety methodologies. Third, the bridge remains mostly an autocratic work environment, one that hinders effective communication. Fourth, owners too often blame individuals for causing accidents, instead of looking at the underlying causes. And finally, the industry’s approach to safety has been reactive rather than proactive, re-enforcing an industry culture that relies on accidents to drive change, rather than focus on prevention.
Managing complexity Avoiding accidents and ensuring the safety of on-board personnel represents one of the most complex challenges faced by owners and ship managers. Unlike mechanical or technical systems, safety systems must account for the seemingly infinite variables of human behaviour. On-board personnel regularly interact with each other, heavy machinery and a broad range of control and data systems in a floating workplace far from land-based resources, and often impacted by severe weather and harsh conditions.
Knowledge drives safety For owners and managers, there are both internal and external drivers to improve safety. Internally, owners assume responsibility for safeguarding the life and welfare of their personnel and the integrity and safety of assets and cargo. Externally, shipping companies have regulatory, commercial and reputational incentives to improve on safety performance. However, like many industries, accidents remain the prime driver of changes in safe operations. We live in an increasingly connected world, where news of maritime disasters travels quickly. Public outrage in response to fatal accidents at sea has
placed the industry under increased scrutiny, pressuring regulators to introduce new requirements to improve safety and owners to take steps to reduce risks. In addition to the human cost of fatalities and injuries at sea, owners, managers, officers and crew are increasingly subject to criminal prosecution, civil suits and compensatory damage claims. Also, accidents often result in costly insurance claims, and can do significant harm to a company’s reputation. While these risks would seem to act as powerful incentives for owners to take a more proactive approach to safety, improvements in performance have generally followed accidents. Consider that the sinking of the Titanic, one of the industry’s most memorable catastrophes, not only lead to the introduction of the SOLAS Convention and (eventually) the IMO, but triggered a number of safety-related innovations in for example materials, hull integrity and stress testing.
Solutions for safe operations To bring accidents in shipping into alignment with land-based industries, owners and managers must embrace a new mindset on safety. While new technologies will play a role in this process, they cannot be viewed as a substitute for a more proactive, holistic approach to safety. By focusing on underlying causes, and how organisations should be structured to support safety systems, the industry will have a better understanding of how humans interact with each other and technology, and how different forces and stakeholders impact operations and risk management. This section will examine three solutions most likely to impact safe operations in the following decades: dynamic risk management, which maps out links between operations and strategy and how various stakeholders affect safety performance; organising for safety, which is focused on elements crucial to building an effective safety culture; and system resilience, which offers solutions to get the best out of technology and personnel to achieve improved operational safety and efficiency.
44
THE FUTURE OF SHIPPING
PATHWAYS
SAFE OPERATIONS
Dynamic risk management Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Safety improvements in shipping have generally followed accidents. However, the shipping industry has also been influenced by accidents in other industries. In the 1970s, accident investigations in the aviation industry resulted in a shift away from assigning blame to mechanical systems towards a greater focus on human error, which led to improved training programmes. In the 1990s, other aviation accident investigations resulted in the development of a more holistic approach that broadened the scope of safety prevention to include not only individual factors, but also environmental and organisational factors. In other words, rather than focus on searching for the “bad apple� or assigning blame to individuals, this new approach to safety focuses on underlying causes. Today, accidents in both the aviation and nuclear industries have driven research on how humans, technology and organisations (HTO) interact. Although the shipping industry has learned some of these lessons, it has a long way to go.
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Humans, technologies and organisations are barriers to accidents. Dynamic Risk Management (DRM) is a system used to control, apply and maintain these barriers and ensure the integrity of the entire system. Unlike the more linear, static risk management tools that seek to identify causal links and isolate specifics gaps in safety (often after an accident occurs), DRM is focused on prevention. By taking a more comprehensive view of risk parameters to include interacting systems and strategies, DRM continuously assesses risk throughout the valuechain, both on land and at sea. And because DRM employs inductive methodologies to assess risks, it is proactive not reactive. In brief, rather than develop new safety procedures in response to accidents, DRM will allow the industry to anticipate and eliminate potential risks.
Enabling technologies To be effective, a DRM system must assess operational risk on a continuous basis. However, we must stress that the value of DRM is not based on data and
PATHWAYS towards safer, smarter And greener shipping 45
technology alone. Rather, what makes DRM a powerful solution has more to do with a mindset than any specific technology. To be effective, this new mindset must include a pro-active approach to safety, barrier thinking and what forces impact safety barriers. One useful DRM tool is the “Bow Tie” risk management method, a methodology that plots the links between undesired events and barriers. This method helps users to visualise the events that triggered an event, the consequences of that event, and identifies barriers that may have reduced both the probability and impact of the event. Often, the action of an individual is necessary for a technical barrier to function. In such cases, there is also a need to identify factors that shape or affect human interaction with the barriers.
Expected developments The field of risk management and assessment is developing rapidly. While the aviation, aerospace and nuclear energy industries continue to be the primary drivers of DRM tools and methodologies,
the shipping industry is also likely to benefit from advances in the offshore industry, which is developing risk management systems that can be more readily adapted to the maritime industry. Other developments likely to shape dynamic risk management solutions are related to “smart barriers”. Apart from prevention and mitigation of risks, smart barriers (based on a complex network of barriers) will be designed with the ability to anticipate and act on information gathered and analysed as part of the methodology. Such smart barriers will be highly sensitive to performance variability, able to interact within the barrier networks, and send notifications and alerts well in advance. Understanding current challenges and successful practices will enable improved anticipation of undesired events, and allow companies the necessary time to allocate resources, improve performance and prevent accidents.
Technologies and tools
Benefits
Pro-active approach to safety, barrier thinking and identification of forces that impact safety barriers
Improved learning from accidents
Risk management methods such as “Bow Tie” “Smart barriers” - a complex network of barriers designed with the ability to anticipate and act on information gathered and analysed
Better understanding of the dynamic nature of risk Applying proactive measures through anticipation of risk Reduced risk level from increased understanding of risks and barriers
46
THE FUTURE OF SHIPPING
PATHWAYS
SAFE OPERATIONS
Organising for safety Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
To improve its safety performance, the shipping industry must overcome a number of hurdles related to systems complexity, inadequate training, and organisational challenges. Despite improved training regimes and increasingly reliable systems, accidents remain all too common. In response, companies have turned to procedures (e.g. checklists, documentation, reporting systems) to manage safety risk. Yet studies indicate that dependence on systems in the absence of a robust safety culture erodes trust, encourages complacency, and has led to fundamental misinterpretations of the purpose and objectives of safety management systems. If so, the underlying reasons for commercial losses, accidents and incidents cannot be attributed to individuals or insufficient technologies, but to a lack of management control of systems and a failure of management to understand the importance of a robust safety culture. A safety culture refers to how an organisation operates with regard to safety and its ability to
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manage unpredictable and undesired events. Building a robust and mature safety culture is critical for identifying potential risks, sharing information and learning from past experiences. As such, companies can reduce risk and be in a better position to anticipate, avoid and manage crises. Building a safety culture is a continuous long-term process, and because the industry is constantly exposed to new risks, the task is never completed. Companies must identify and update safety trends, establish and maintain clear benchmarks and KPIs, and support these efforts with face-to-face meetings, workshops and seminars. Creating a structured and inclusive environment where safetyrelated information is freely shared increases an organisation’s ability to select the best systems and tools and achieve the optimum safety return on investment. At the same time, owners must build a company culture that is just and fair, one that clearly defines the line between acceptable and unacceptable behaviour.
PATHWAYS towards safer, smarter And greener shipping 47
Enabling technologies Much of the thinking behind building a safety culture originates from the growing field of organisational behaviour, which studies how the relationship between individuals, groups and structures within an organisation impact its effectiveness. Improving safety culture begins with top management, who must identify and define organisational strengths and weaknesses, prioritise focus areas and invest in systems and tools to support the culture. At sea, improved safety performance is enabled by effective cooperation between officers and crew, a process facilitated by the leader’s behaviour, leadership style, and ability to communicate effectively. Together with a modern approach to selection and development of personnel, this will give a strong impact on team functionality.
Expected developments The benefits of building a strong safety culture are already recognised by a number of shipping companies, but in terms of development, the industry still lags behind many industries on land. Today, some owners have developed more sophisticated reporting and monitoring systems, a trend that is likely to continue. Also, advances in training, competence development and human resource management are likely to support efforts to build more robust safety cultures. We also expect that public demand for more transparency will encourage owners to share more information, which may lead to more standardised systems and enable the sharing of safety culture “best practices.” At the same time, the direct correlation between improved safety performance and operational efficiency will be increasingly seen as a competitive advantage.
Technologies and tools
Benefits
Identify and understand the positive and negative drivers of the safety culture
Quality depends on total team competence, not only individual competence
Effective cooperation between officers and crew to utilise the total competence of the team Formal and informal arenas for experience exchange Selection, training and career development to ensure the right competence for the organization and the right development for the individual
A culture of sharing experiences Better learning from success and failures Improved teamwork and leadership increases motivation and awareness The right people in important positions
48
THE FUTURE OF SHIPPING
PATHWAYS
SAFE OPERATIONS
System resilience Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
System resilience refers to the capacity of a system to adapt to different circumstances and the capabilities of different users while remaining within defined operational thresholds. A resilient system accounts for the human element and enables the seamless integration of equipment and control systems. For the shipping industry, this solution applies to a number of areas, such as the design of working space where operations are conducted and solutions to improve interaction between vessels operating in high-density traffic areas, among others.
Enabling technologies Systems resilience relies on a broad range of technologies. Today, increasingly ergonomic and integrated bridge control systems are available. The development of global standards and principles covering ergonomics and improved integration of bridge controls is already underway, helping to ensure better correlation between design and operations. Also, a more standardised bridge will reduce the time needed for personnel to familiarise
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themselves with bridge controls and eventually lead to the development of best practices that can be applied throughout the industry. At the same time, technologies developed by other industries (e.g. aviation) are being applied to shipping to help reduce port congestion and collision risk. Today, some of the world’s busiest ports utilise satellite technologies to track and monitor vessel traffic, and we expect these technologies will develop further.
Expected developments Next generation bridge control systems will further enhance the interface between users and control systems, making an important contribution to safety. In the future, the working environment on the bridge will be designed to handle both low and high-intensity operations and planned and unplanned events. In critical situations, safety risks increase due to the number of stakeholders involved, rapidly changing circumstances and insufficient time to gather and
PATHWAYS towards safer, smarter And greener shipping 49
"Next-generation bridge control systems will further enhance the interface between users and control systems, making an important contribution to safety"
Closer to ports, the industry may also benefit from a traffic control system, modelled on systems now in use by the aviation industry. Such a Sea Traffic Control (STC) system could provide clearance through congested areas on assigned routings, or provide The design will provide the decision-maker spare capacity to assess the situation, keep his/her situational recommendations to alter heading and speed, when appropriate. The STC would be responsible awareness and enact decisions based on the “big for helping vessels maintain a safe distance from picture”. Furthermore, a more standardised bridge land and other marine traffic. This system increases will increase training efficiency and help identify best the efficiency and safety in high-density areas and practices. could also be used to direct traffic in vulnerable or environmentally sensitive areas. Developments in system resilience will also help the industry with collision avoidance in increasingly crowded ports and congested sea lanes. The industry can mitigate these risks by improved utilisation of onboard planning, lookout and navigation systems. process the information required to make the correct decisions. By mapping all known stakeholders, these issues will be considered in the design process.
Technologies and tools
Benefits
Ergonomic and integrated bridge control systems based on global standards
Increased effect and precision of safety and efficiency performance
Satellite and communication technology to track and monitor vessel traffic Surveillance and navigation technologies (monitoring, AIS, radar, laser, electronic maps) Sea Traffic Control (STC) system
Increased feed-back loop with regards to integrating human and organisational elements in design and improvements Increased awareness of tasks and operations that are being performed Reduced disruptions in operation
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THE FUTURE OF SHIPPING
SAFE OPERATIONS
A POSSIBLE FUTURE Increased focus on the underlying causes in accident investigations
New safety management methods introduced including understanding of barriers
Debriefing sessions to learn from both success and failures
Increased understanding of difference between major accident risk and individual risk
TODAY Due to public demand for improved safety, regulatory pressure, and the application of new technologies, developments in safe operations are likely to accelerate rapidly in the next four decades. By 2020, owners and managers will increasingly adopt a more proactive and preventative approach to safety, implement systems to facilitate learning from mistakes and have a better understanding of what issues affect safety barriers. Advances in the science of human resource development will enable the industry to have access to a more skilled workforce. The workforce will likely include more women, have lower turnover of personnel, and improved quality of leadership – both at sea and on land. Attention will shift from
individual mistakes to organisational issues, which will help companies devote more resources to improving organisational systems that better support safety. As new technologies and advanced risk methodologies are applied, a safety culture will be seen as a critical indicator of safety performance. Owners and managers will take a more comprehensive approach to risk management, working to prevent both individual and major accidents. By 2030 user-centric bridge control systems will be the industry standard, and bridge teams will benefit from improved communication between personnel of various ranks on the bridge. The IMO is also likely to require that all maritime
PATHWAYS towards safer, smarter And greener shipping 51
ŠShutterstock
The bridge is designed around the user, and gives just the right information in the right situation
Safety is a strategic goal of all involved organisations
International focus on reporting, analysing accidents and learning from near misses
Traffic control is further developed, including shift of control from ship to land if necessary
2050 nations report accidents and near misses and issue recommendations to improve learning. At the same time, sea traffic control systems in some ports will migrate from just tracking vessels to offering routing advice. In 2050, the application of innovative risk management models will result in a new, industrywide safety mindset that will combine both strategic and operational issues to improve performance. Regulators will put in place rules requiring the industry to be more transparent, so that owners and managers will share critical data on accidents and near misses, allowing the industry to develop best practices. Sea traffic control systems will become more sophisticated to include vectoring, speed
allocation and data collection, and have the authority to intervene if a vessel does not comply with recommended routes. Unlike other pathways towards sustainable shipping described in this report, safe operations will not be driven, or achievable, by the introduction of new technologies. In fact, the introduction of new technologies can represent a risk to safety by increasing systems complexity. Rather, safety at sea can only be achieved by gaining a better understanding of human behaviour, and how people interact with technology, systems and each other in groups, both large and small.
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THE FUTURE OF SHIPPING
ADVANCED SHIP DESIGN What if a ship owner could develop, test and evaluate new hull forms and technologies under diverse conditions – well before work is ordered at the yard? How would the industry change if owners had access to next-generation emulation systems capable of mimicking on-board conditions? Thanks to recent developments in software engineering and advanced computing, the industry will soon be able to produce a new generation of vessels that will minimise risk and significantly improve performance in safety, and operational and energy efficiency.
PATHWAYS towards safer, smarter And greener shipping 53
"...the question is not if these tools will be available, but how fast they will develop and how quickly the shipping industry adopts them"
It is difficult to overstate the importance of ship design to next-generation shipping. After all, ship design marks the first step in a vessel’s life and impacts the development, installation and utilisation all new technologies and solutions for the lifetime of the vessel. Indeed, ship design is fundamental to optimising performance – a key driver for an industry seeking to produce safer, greener and smarter vessels in the years to come.
Managing complexity Shipping is becoming more complex due to new regulations, fierce competition, the introduction of new technologies and fuel sources. To manage the increasing complexity of systems and operations both on land and at sea, owners are seeking new tools for ship design to enable more cost effective operations, increase their competitive advantage and stay in compliance with new and expected regulations. Key drivers for developments in advanced ship design include the rapid developments in information technology, the digitalisation of information and increasingly powerful computers and processors. Indeed, many of the enabling technologies related to advanced ship design are already in use by other industrial segments (e.g. aviation, automotive, aerospace, etc.), where their potential has been demonstrated. If so, the question is not if these tools will be available, but how fast they will develop and how quickly the shipping industry adopts them.
Multidisciplinary design The application of advanced computing and software engineering tools to ship design has been slowed by a number of barriers. First, these highly sophisticated tools are expensive and, to reach their full potential, will require more robust computing
capabilities. Second, advanced ship design will compete with existing ship design processes. If so, migrating from legacy systems to a new way of thinking about ship design represents a complex organisational challenge. Furthermore, the absence of common standards, inter-disciplinary competence and data-sharing may act as a drag on optimising the ship design process. At present, the potential development of advanced ship design is limited by computing power and inadequate software. However, the greater challenge appears to be related to how quickly and to what extent the industry adapts to this new technology. And since advanced ship design is connected to other parts of the value chain (e.g. shipbuilding, procurement, maintenance, etc.), it will require coordination between different stakeholders to achieve its full potential. Nevertheless, advanced ship design represents a significant opportunity for the industry to become safer, smarter and greener.
Advanced ship design solutions Advanced ship design refers to a number of innovations set to revolutionise the industry in the coming years. This new approach to ship design will act as a key enabler for the implementation of a broad range of solutions and new technologies, including new materials, digitalisation, connectivity, low carbon energy solutions and related innovations in equipment and systems. Because these subjects are covered in other areas of this report, we have chosen to focus on three primary areas: virtual ship laboratory, energy efficient design and nextgeneration emulation.
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THE FUTURE OF SHIPPING
PATHWAYS
ADVANCED SHIP DESIGN
Virtual ship laboratory Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
The virtual ship laboratory refers to a computerenabled virtual design environment. Thanks to existing and expected advances in computeraided engineering, methods and tools, a virtual environment can be created for testing performance under diverse conditions, evaluating solutions, introducing new technologies and assessing different production, operational and design features. This computer-aided model has the ability to create a new, global ship design paradigm, whereby all challenges and solutions can be simultaneously addressed. Future ship design tools will enable a shift from the traditional segmented design process, where different vessel features and components are designed in isolation, to a more holistic, multidisciplinary and integrated design process. In addition, virtual ship design will provide owners with access to a “virtual model” for each individual ship. This model will be retained through a vessel’s entire lifecycle, allowing for improved maintenance; easier retrofitting and modification work; and operational optimisation, among other benefits.
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Enabling technologies Model-Based Systems Engineering (MBSE) represents a new approach to the design, implementation and operation of complex technical systems, one that takes into account how different systems interact and influence the end product (the ship). By utilising MBSE, the ship can be approached as a modular system of inter-related sub-systems and processes where each inter-relating element can be assessed and optimised for the lifecycle of the vessel, enabling optimisation of the design under both nominal performance (design point) and the intended operational characteristics. Computational Fluid Dynamics (CFD) will also play a role in the virtual ship laboratory. CFD is the preferred method for studying and analysing ship hydrodynamics. It can be applied for optimising hull shapes, analysing motions and loads in waves, manoeuvring, the assessment of hydrodynamic improvement devices, and steps forward in propulsion design. While the industry has already benefitted from advances in computational fluid dynamics, most
PATHWAYS towards safer, smarter And greener shipping 55
calculations today are limited to still or calm waters. However, as CFD becomes more advanced, ship designers will have access to more precise wind and wave calculations, enabling the simulation of actual conditions in variable environments. All stakeholders within ship design are also likely to make use of multidisciplinary collaboration platforms. The platforms are computer tools that facilitate co-operation and data exchange between teams of engineers and software packages, and enable improved co-operation between various stakeholders across disciplines to produce the optimal results. By sharing a common platform, teams of specialists working on different areas, such as hull design or machinery engineering, are brought under a single umbrella, facilitating better results. In addition, such platforms will allow experts in different disciplines to access a single computer model, enabling a more efficient and faster design process. This also allows for the creation of a virtual model identity for each individual ship, which can be followed through its entire lifecycle. At the same time, virtual and rapid prototyping tools will allow teams to assess prototype designs before their physical creation, in “a virtual realm”. This enables significant cost and saves time when working on complex, large-scale design projects. These tools are already a reality and will become more widespread with advances in software, more computing power and the growing availability of suitable multidisciplinary collaboration platforms.
Finally, developments in Life Cycle Assessment, a standardised method for assessing the environmental impact of a product, will allow design teams to account for the entire life-cycle of each vessel in the design phase, providing a unique insight into each phase of the ship’s existence – from production, to operation and its eventual recycling.
Expected developments At present, Model-Based Systems Engineering is used in the design of ship machinery and is a key enabler for the introduction of new technologies. In the future, the influence of MBSE will expand in scope to include other areas of ship design, such as structural and hydrodynamic elements. At the same time, developments in computational fluid dynamics represent enormous potential in ship design, pending advances in software and computing power. In the future, CFD will be able not only produce hydrodynamic calculations for calm waters, but to simulate actual wind/wave conditions. By 2050, we expect all individual design aspects to be coordinated and managed via multi-disciplinary collaboration computer environments, and between 2020 and 2030, virtual and rapid prototyping tools will become a standard module in the overall design process, seamlessly integrated to all aspects of ship design.
Technologies and tools
Benefits
High performance computing
Reduced emissions to air
Model-based systems engineering
Reduced impact on natural environment
Multidisciplinary collaboration platforms
Lower risk of environmental damage
Virtual identities of ships and systems Tools for virtual and rapid prototyping Computational Fluid Dynamics (CFD) and Virtual towing tanks Standardised Life Cycle Assessment
Improved safety, transport cost and cost of material damage Lifecycle model for operational optimisation and maintenance
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THE FUTURE OF SHIPPING
PATHWAYS
ADVANCED SHIP DESIGN
Energy efficient design Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Energy efficiency will continue to be a principal driver for the evolution of ship design. The introduction of new technologies, which will be facilitated by virtual ship laboratories, will play a major role in improving vessel energy efficiency. At present, there are two technology categories that will impact upon energy efficient design: technologies that minimise fuel consumption, and technologies that minimise the overall energy demand of the vessel. The first category usually involves machineryrelated technologies, while the latter is related to the hull. Traditional ship design practices will undergo a dramatic change as new technologies are adopted, leading to modifications in hull forms, new types of propellers, the disposition of machinery and how ships are outfitted, among other benefits. Key technologies used to optimise energy efficiency are expected to emerge in the areas of vessel hull and hydrodynamics, bio-inspired processes and components, electrification, as well as energy harvesting, recovery and storage.
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Enabling technologies It is expected that electric propulsion will be commonplace for many ship types by 2020. While challenges related to safety, reliability, initial capital outlays and electric power train efficiency have slowed the uptake of electric propulsion, the further development of direct current (DC) grids on-board vessels, which will allow generators to operate at a variable speeds delivering optimal fuel consumption, will help to address some of these issues. Likewise, energy storage provides benefits in relation to power availability, emergency power and redundancy as well enabling easier utilisation of renewable energy sources. At present, electricity storage in batteries has had few marine applications, with the exception of a few smaller passenger ferries, which use electricity as their principal power source. So far, the cost, life cycle and size of the batteries have restricted their use. But with prices expected to fall by approximately 50 per cent per kWh by 2020, this could change, and we could see larger vessels incorporating them as part of a hybrid power
PATHWAYS towards safer, smarter And greener shipping 57
"...developments in energy harvesting and recovery are expected to facilitate more energy efficient vessel designs, capable of utilising every possible energy source on-board..."
solution. Super-capacitors, which store energy by static charge and provide faster charging times, longer life cycles and increased safety, are another intriguing development in electric propulsion, assuming their cost and size can be brought down enough to make them viable.
Finally, a broad range of hull and hydrodynamic improvement devices will increase in scope and distribution, becoming standard features in most future ship designs. By improving water flow around vessels, resistance and power needs can be reduced, significantly improving energy efficiency.
At the same time, developments in energy harvesting and recovery are expected to facilitate more energy efficient vessel designs, capable of utilising every possible energy source on-board while minimising energy loss – a key step towards sustainable shipping. Energy can be harvested from thermal, solar, wind and mechanical energy sources and stored for later use. Also, by utilising the waste energy of a power production system, owners can improve energy efficiency. The most common method of recovering energy today is waste heat recovery systems, but in time, low temperature recovery systems will be also become available.
Expected developments As systems for electrification and DC grids are improved, we anticipate that such systems will apply to a growing percentage of the world fleet in the years ahead. In addition to existing energy storage systems, heat storage technologies, already implemented on land, could also become an option. For energy recovery, both high and low temperature heat recovery should be integrated to ship machinery as standard features, leading to expected efficiency gains of around 8 to 15 per cent. Energy harvesting technologies will gradually appear in ships.
Technologies and tools
Benefits
Ergonomic and integrated bridge control systems based on global standards
Increased effect and precision of safety and efficiency performance
Satellite and communication technology to track and monitor vessel traffic Surveillance and navigation technologies (monitoring, AIS, radar, laser, electronic maps) Sea Traffic Control (STC) system
Increased feed-back loop with regards to integrating human and organisational elements in design and improvements Increased awareness of tasks and operations that are being performed Reduced disruptions in operation
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THE FUTURE OF SHIPPING
PATHWAYS
ADVANCED SHIP DESIGN
Next generation emulation Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Emulation is the ability of a programme or device to mimic the behaviour of another device or system, recreating its “look and feel” in a controlled, virtual environment. In the maritime industry, emulation is currently used mainly for bridge operations and machinery room training. An ideal next-generation emulator would provide the user with identical conditions to those that they would experience on a vessel during its operation, survey or repair. This could encompass visual identification (e.g. cracks, corrosion), risky areas (e.g. open manhole), realistic sound conditions (e.g. engine malfunction), realistic light (e.g. tank inspections), smell, and so on. Such technology could be used for various purposes, including monitoring, maintenance and crew training, with each aspect taken into account early in the vessel design phase.
Enabling technologies Next generation emulation will require more advanced virtual reality systems, a technology that creates a 3-D computer-generated environment that
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a user can explore and interact with. These virtual environments can be projected on screen, or through a head-mounted-display, allowing complete sensory immersion. To date, virtual reality technologies have seen limited use in some maritime simulators, allowing trainees to acquire virtual experience across the whole range of vessel operations and maintenance, normal operation, repairing, surveying as well as risk management, emergency and evacuation procedures. Information from such applications can be used as input in the design phase, optimising the safety, ergonomics and efficiency of vessels. In addition, emulators of the future will be equipped with haptic technologies, which provide tactile sensations for a user through the application of mechanical load (forces, rotation, motion, etc.). This enables the user to connect an action to a consequence not just visually, but through touch, enhancing the user’s sense of realism in virtual environments. A maritime application would not only give trainees a sense of realism, but also provide a
PATHWAYS towards safer, smarter And greener shipping 59
"Emulation is the ability of a programme or device to mimic the behaviour of another device or system, recreating its 'look and feel' in a controlled, virtual environment"
better experience when identifying degraded material through physical control (e.g. knocking), or in avoiding areas, such as corroded floors, where potential accidents could occur. Haptic technologies will also be applied in real bridge designs to provide feedback to the operator. Virtual reality systems equipped with haptic technologies will rely on 3D graphics, which render objects in three-dimensional graphics. The process involves 3D modelling (making an object’s shape), animation (the motion of the object), and 3D rendering (the calculations required to provide the final image, taking into account surface material properties, light and other parameters). All of these areas have undergone huge advances over recent years, with systems now capable of incorporating any variable to focus on the intended application, such as the effect of corrosion on marine structures for virtual survey software.
Expected developments Today’s virtual reality technology caters for only two human senses (sight and hearing). By improving this sensual interaction and introducing more senses, such as touch (haptic technologies) and even smell, the virtual reality experience can be greatly enhanced to create a “real world” environment. Meanwhile, the proliferation of 3D-scanning technology will allow for simplified vessel 3D modelling, resulting in usable representations of actual working environments.
Technologies and tools
Benefits
Advanced three-dimensional graphics (modelling, rendering and animation)
Improved training of crew under a broader spectrum of extreme and adverse conditions
Tools for exploration and interaction Soft-sensing and augmented reality (smell, sound, light etc) Haptic technologies (forces, rotation, motion, etc) 3D-scanning technology
Improved safety Reduced costs related to damages
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THE FUTURE OF SHIPPING
ADVANCED SHIP DESIGN
A POSSIBLE FUTURE Collaborative design efforts across geography and diciplines
CFD siginificantly affecting advanced ship design including modelling of wind and waves
Electrification and DC-grid technologies for short sea and offshore vessels
Next generation hull and hydrodynamic improvement. Bio-inspired prototypes
TODAY Advanced ship design is expected to play a large role in future marine technology development. Already, the ship design process has benefitted from developments in advanced computing and software engineering. Many of the technologies profiled in this pathway are being used by other industry segments and are likely to be adopted by the shipping industry within the next decade. We believe that the virtual ship laboratory will not only have an impact on how ships are built, but how the industry functions. Already, different stakeholders, such as shipyards, manufacturers, system integrators, ship designers, operators and class societies are working together to develop systems to enable the virtual ship laboratory.
Increasing systems complexity requires a shift to multidisciplinary collaboration in ship design. If the development process continues as expected, the virtual ship laboratory will gain full maturity by 2030, becoming the standard work process for designing ships. The future development of energy efficient design solutions will be more varied. Some of the energy efficiency improvement technologies have already been embraced by the shipping industry, while others are expected to have a longer incubation period. Specifically, electrification, electric storage and hull hydrodynamic improvement technologies are likely to develop rapidly, with the first commercially available solutions emerging by 2020
PATHWAYS towards safer, smarter And greener shipping 61
ŠShutterstock
Gradually introduction of technologies for energy harvesting, recovery and storage
Emulation using virtual reality techniques widely used in shipping
Virtual ship laboratory as an integrated approach to design of vessels
Full DC electric propulsion concepts in short sea and offshore
2050 and more mature systems available by 2030. On the other hand, energy harvesting and recovery (as well as bio-inspired technologies) will enter a prolonged experimental development phase. Limited numbers of full-scale prototypes are not expected to appear before 2030 and mature systems will probably not be available until 2040. Emulation technologies already play an important role in many industrial segments, and have broad applications for shipping. Similarly to the virtual ship laboratory, advances in both computer software and hardware will accelerate the uptake of emulation technologies. We expect the first full-scale integrated emulators will not appear before 2030, and will not reach maximum maturity until 2050.
These technologies will develop at different speeds, but they will all contribute both directly and indirectly to a more sustainable industry. The virtual ship laboratory and energy efficient design solutions will help the industry reduce its environmental footprint, and by increasing efficiency, will help to keep transport costs per unit within acceptable boundaries. The technologies required to develop virtual ship laboratories and emulation will also have a significant impact on both safety (safe-bydesign solutions) and costs related to damages. Assuming these technologies develop as expected, we are confident that advance ship design will have an enormous impact on almost every aspect of shipping.
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THE FUTURE OF SHIPPING
THE CONNECTED SHIP Developments in ICT will have a profound effect on the shipping industry. Data-driven, Internet-based models will mirror physical assets, providing new ways for owners and managers to analyse ship functions to significantly improve efficiency and safety performance. Similarly, advances in automation and remote operations will shape the ways ships are designed, built, and operated. Sensor technologies and monitoring systems, combined with seamless ship-shore connectivity and software-enabled decision support tools, will create a more data-centric, responsive and flexible industry that is fully integrated with global transportation networks.
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Today, we live in a world that is continuously becoming more data-driven and automated, where physical systems and people are increasingly connected and mirrored into a virtual space. Key developments in ICT include sensor technologies, improved ship-shore connectivity, advanced software tools and algorithms, increased computing power and faster processing times. ICT has also enabled more far-reaching concepts (e.g. big data, “Internet of Things”, cloud computing, etc.) which will provide the shipping industry with new ways to collect, store and process valuable data.
Technology drives innovation Advances in ICT have occurred so rapidly that they have outpaced existing systems used by the shipping industry to manage a broad range of challenges. Indeed, as more and more land-based industries adopt ICT systems to improve performance, the shipping industry will be compelled to do the same. In this way, the technology – not the demand – will drive change in the shipping industry. ICT will have a dramatic effect on how the industry manages information. Most systems and components will be linked to the Internet, making them accessible from almost any location. This connection enables a virtual reality made up of data, models, and algorithms, embedded in software, databases and information management systems. At the same time, by combining data streams from multiple sources, the sheer volume of information available will enable the industry to make more informed decisions, faster, leading to more efficient and responsive organisations. In time, these databases will be accessible through vast information management systems combined with fast computing and advanced software via distributed networks. The application of ICT on ships will also have a positive impact on safety at sea. In fact, ICT solutions can provide control over the status of degradable systems, increase situational awareness and human reliability, support in the definition of corrective actions, and the reduction of operational risk. More automated operation will help reduce human errors, while remote operations may lead to a reduction of the number of people serving at sea. Finally, while enhancing safety and efficiency, ICT will also answer the need for more transparent operations and help build trust and collaboration between various industry stakeholders, based on the collection of objective facts.
Growing complexity To realise the potential of the connected ship, different stakeholders must manage a broad range of challenges, including the growing complexity of systems, data networks, sensor technologies, systems integration, tools to manage increasingly large volumes of data, and processes to ensure software integrity and data security. Furthermore, the adoption of any new technology requires users to change existing behaviours and develop the right competencies. In our view, the impact of ICT will be far-reaching and develop quickly. However, it will most likely take some time before legacy systems now used by the shipping industry are replaced. ICT may also challenge traditional competitive business models, which often act as a barrier to the sharing of information. Certainly, owners will have to invest in systems to protect and secure sensitive data and the integrity of software systems, but the full benefits of this technology cannot be fully realised unless the industry learns to be more transparent and cooperative.
Towards smarter operations For the shipping industry, ICT will change how ships are designed and built, what materials are used, how ships are operated and how shipping fits into the global supply-chain logistics network. These issues are covered in other parts of this report. In this section, we will focus on two other areas where we believe ICT is likely to have a big impact: smart maintenance and automation and remote operations. As advanced real-time condition monitoring becomes a reality, asset maintenance will broaden to allow owners to assess vessels in a life-cycle perspective. Today, some engine manufacturers have systems in place to collect maintenance data, which they can analyse and use to recommend actions. In time, manufacturers, system integrators and related service providers will be able to support owners with real-time critical diagnostic and prognostic information about the conditions of various on-board systems, providing specific guidance to maintenance crews via virtual-space software and hardware. As sensor technologies and connectivity become more robust, remotely operated vessels, or even unmanned vessels, could become a reality. We are also likely to see many of the traditional activities performed on-board shifted to shore-based centres, responsible for vessel condition monitoring, control and logistics.
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THE CONNECTED SHIP
Smart maintenance Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Smart maintenance systems will enable owners to reduce the number and frequency of inspections and repairs and allow them to anticipate and replace damaged and worn parts with minimal resources and downtime. With real-time access to a vessel’s current and future status, maintenance personnel will have more accurate information on system capabilities, allowing for timely action to increase reliability, safety and efficiency. Smart maintenance systems support efficient fault detection and proactive planning in order to optimise the maintenance processes. They also serve as valuable decision support tools, enabling owners to make more intelligent, informed decisions based on the assessment of the present, and future, condition of the vessel. Furthermore, by sharing information, owners and suppliers alike can reduce supply chain costs.
Connectivity –fast computing, big data and the cloud To achieve the full potential of smart maintenance,
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further development of a number of technologies is necessary. In many ways, smart maintenance is a function of predictive data that can indicate a developing failure. Therefore, smart sensor networks will be critical, as their ability to work together offers a detailed and accurate picture of various systems. Moreover, these sensors will be able to react to changes in their surrounding environments and reconfigure themselves in order to perform multiple types of functionalities. When linked together, sensors can automatically organise to form a collaborative network that provides more accurate and detailed information. In turn, smart maintenance will rely not only on how sensors are configured and linked, but also on the quality of ship-shore connectivity. That is, due to limited storage and processing power, data cannot be stored indefinitely on-board. Rather, data must be sent to shore, where it will be managed by increasingly sophisticated software tools. These tools will provide full range analytics and visualisation capabilities, and be seamlessly linked to on-board sensor and actuation devices via the internet.
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"...advances in algorithms and software tools to effectively manage vast amounts of data will enable a dramatic shift in how the industry approaches maintenance"
Data analysis systems may also rely on other technologies, such as cloud computing, (the ability to run software on many connected computers at the same time) and algorithms for the analysis of big data, which require new forms of processing to extract timely and valuable information. Cloud computing and big data will revolutionise vessel operations and how decisions are executed, allowing different stakeholders to access vital information in a fraction of the time needed today and answer increasingly complex questions. While all these technologies exist, more work is required to adapt them to the maritime environment.
Migrating to real-time, risk-based maintenance The development of smart sensors, ship-shore connectivity, databases and information management systems will be essential enablers for smart maintenance. That is, moving from the existing
scheduled maintenance approach, a process often driven by supplier recommendations, to conditionbased maintenance, a process driven by the actual condition of on-board components and systems, will significantly reduce costs related to maintenance and improve safety performance. Condition-based maintenance will enable relevant personnel to more effectively address the correct timing and quantity of maintenance for specific monitored components. And as experience with such systems grows and more data is collected on failure processes, the accuracy of both diagnostic and prognostic algorithms will improve significantly. In time, these improvements will enable more proactive risk-based maintenance, where the health status of components is evaluated in real-time, allowing personnel to take action to maintain or reduce the system’s risk level.
Technologies and tools
Benefits
Satellite and communication technology
Diagnostics, prognostics and risk tools
Condition monitoring technologies , smart sensors networks and actuators Data storage and software algorithms to process large amounts of data for decision support Distributed and cloud computing, (the ability to run software on many connected computers at the same time)
Increased safety and reliability and industry transparency Reduced number and frequency of inspections and repairs Improved spare parts exchange and logistics Reduced costs related to maintenance and downtime and to preserve asset value Improved design
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THE CONNECTED SHIP
Automation and remote operations Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Over the last decade, expanding computing power and faster processing times have outpaced the ability of humans to manage complex systems effectively. Indeed, computers are much more effective at managing low-level intensity situations (e.g. monitoring engine performance), than humans, and have proven effective in supporting personnel during high-intensity events (e.g. anchor handling). In other industries, more and more systems are automated or controlled from remote locations. Over the next decade, it seems likely that the shipping industry will increasingly look to the offshore industry, which has developed a number of automated systems with marine applications, to improve performance. And while the idea of remotely operated vessels remains controversial, the development of such systems will not be limited by technology. Rather, the industry will have to weigh the benefits of remote operation, which include reduced manning costs, increased safety and improved vessel condition, against their perceived risks.
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The ship gets a nervous system The use of sophisticated robotics and automation is now commonplace for many land-based industries, particularly in manufacturing. In the past decade, we have seen the deployment of a number of unmanned autonomous and remotely operated vehicles, including Unmanned Aerial Vehicles (UAVs), Remote Operated Vehicles (ROVs), and the development of driverless trucks and autonomous cars. For shipping, remote operations will require automation of the engine and other integrated systems, alongside advanced navigation systems and sophisticated software that can manage smart sensor and actuator networks, maintain a vessel’s course in changing sea and weather conditions, avoid collisions, and operate the ship efficiently, within specified safety parameters. This system will also rely on robust and secure communications via satellite and land-based systems. The on-board ship control and decision management system can be adjusted to allow different levels of autonomy, but with further advances in these enabling technologies, we can imagine a completely autonomous ship that reports to shore-
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"Over the last decade, expanding computing power and faster processing times have outpaced the ability of humans to manage complex systems effectively"
based operators only when human input is needed or if emergency situations arise.
The advent of onshore control centres Shipping will benefit from developments in the offshore, aviation, aerospace, and automotive industries which have been the primary drivers for advances in automation and remote operations. Shipping will likely apply these technologies to instrumented machinery first and then gradually to vessel navigation, which will be operated remotely from shore-based centres. These solutions will increasingly rely on sensor technologies and computers to manage on-board systems from remote locations. As more on-board systems become automated, the number of on-board personnel will be reduced, and more decisions will be made from shore-based control centres.
Onshore control centres will be responsible for the condition management of the ship and risk related to the failure of on-board equipment or broken communication links. These control centres will be responsible for operating vessels in congested sea lanes, or in proximity to ports and terminals, and in emergency situations. To manage these tasks, control centres will be equipped with system simulators designed to select optimal routing procedures and interfaces with land-based supply chain networks. As with many emerging technologies, the ability of the system to manage the interaction between man and machine will be critical. Such systems should provide accurate representations of risk and allow humans to take full control of vessels from a remote location, when necessary.
Technologies and tools
Benefits
Satellite and communication technology
Improved safety performance
Sensors, automation and monitoring technologies Surveillance and navigation technologies (monitoring, AIS, radar, laser, electronic maps) Software algorithms for analytics and decision support Robotics, smart materials and automated maintenance
Reduced manning costs, fatigue and routine tasks workload Improved operational efficiency Improved quality management, monitoring and reporting Increased reliability, risk awareness and responsiveness
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THE FUTURE OF SHIPPING
THE CONNECTED SHIP
A POSSIBLE FUTURE Monitoring of ship machinery components by sensors enabling condition based maintenance
Maintenance data gathered from operations as part of input to the design phase
Introduction of performance-based agreements where OEMs take responsibility for maintenance
Use of prognostics for maintenance scheduling and to determine the remaining useful life of components
TODAY The steady advance of ICT and access to vast amounts of data will continue to drive unprecedented human connectivity. For the shipping industry, the digital age will open up a new landscape of opportunities to “get smarter�. In the short term, several relatively minor subsystems in ships are expected to grow more automated. One such important system is instrumented machinery, which can be monitored from a centralised, shorebased data centre. At first, maintenance and logistics planning may be performed by human analysts, but over time, these tasks will increasingly be handled by computers, which will make decisions on maintenance, ordering parts and scheduling work. Today, some manufacturers offer systems to monitor on-board conditions. This process is likely to become
more mainstream in the next decade and, by 2020, data collection from machinery will be performed on advanced ships, such as offshore vessels. Data collected on-board will be used for diagnostic testing to determine the condition of various components and if they need to be inspected, overhauled, or replaced. The first prototype of a fully autonomous ship may appear as early as 2015, with fully automated ships entering the market by 2025. In 2035, many types of ships may routinely be delivered with autonomous operation capabilities. At the same time, ports will have more automated systems for the loading and unloading of cargo. If so, it is conceivable that some segments, like container transportation, may be fully automated by 2050.
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Risk based maintenance based on accurate real-time data integrated into risk models
Design for maintainability will be integrated into the lifecycle design of ships
Robots will be used for many maintenance tasks, like painting and faulty components substitution
Introduction of remotely controlled ships and in some cases fully autonomous ships
2050 Other expected developments include collaborative software tools to enable seamless co-ordination between various stakeholders, on-board robots, modular designs, autonomous decision support systems, and tools for virtual operations, such as virtual surveys, virtual guidance from land-based operators, etc. While the deployment of ICT in shipping is likely to reshape established business models through more data-centric and more collaborative, extended value chains, we believe that these technologies will enable safer, smarter and greener operations and maintenance procedures.
"In 2035, many types of ships may routinely be delivered with autonomous operation capabilities"
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THE FUTURE OF SHIPPING
FUTURE MATERIALS Imagine a ship with self-healing skin, capable of continuously adjusting to changing sea and wind conditions, one that can generate its own energy and is equipped with embedded sensors that can provide real-time information to the bridge and shore-based facilities. Thanks to the developments in materials technology, these and other benefits will have an enormous impact on shipping, enabling new vessel concepts, saving energy, minimising maintenance, and extending the life cycle of vessels by decades.
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Today, many new materials are rare and expensive, but further research and development as well as introduction of new manufacturing methods will bring these costs down, making these materials available to the shipping industry in the decades to come. The revolution in materials technologies will have an enormous impact on ships, allowing them to carry more payload at the same displacement as today, and at higher speeds using less energy. These capabilities are not science fiction; such a ship could almost be built today with existing technology, budget permitting.
Beyond steel Since the late 19th century, steel has been the primary material for shipbuilding. This essential material is cheap and readily available. With a global recovery rate of more than 70 per cent, steel is also the most recycled material on the planet. However, history suggests that significant developments in materials technology can have a dramatic transformative impact on the industry. Just as steel replaced wood and the microchip replaced the electron tube, emerging materials technology will enable owners to produce safer, lighter and maintenance-free vessels. The shipping industry is increasingly looking towards technology to manage stricter regulations, rising fuel costs, tighter margins and increased maintenance costs. At the same time, the industry is expanding into deeper waters and operating in colder, harsher climates, exposing their personnel and assets to greater risk. Indeed, sub-sea activities are already pushing the material properties of steel to their limits. In order to take the next step within shipping operations, new materials may be the only solution.
High cost, high reward At present, new materials tend to be expensive to develop and produce, and therefore require significant capital to utilise. In addition, new materials must compete with the steel industry, which continues to produce steel with more strength and less weight. Steel is cost-effective, versatile and easily recycled, and because it remains a preferred material for shipbuilding, it will take some time before new materials can begin to replace or augment it. At the
same time, shipyards are configured for steel massproduction, and there are no signs indicating that the mainstay of ship structures for most segments will change in the foreseeable future. As with many other technologies adopted by the shipping industry, future materials are likely to be developed, tested and used by other industries (e.g. aviation, aerospace and automotive) before being applied to the merchant fleet. Innovation in the shipping industry is often slowed by high unit investment costs, uncertainties related to the global availability of new material, competence necessary for maintenance, short ownership horizons and asset play in a compliance-driven industry.
Future materials solutions Materials impact upon safety, the environment and commercial sustainability. For example, dangerous materials, such as asbestos, PCB and lead are today banned or strictly controlled to minimise risk to seafarers. Materials with special properties are also important to ensue hull integrity and therefore the safety of the crew. Environmental performance can be influenced by the properties of various materials and surface quality, helping to reduce fuel usage and extending the life of a ship. Issues such as insulation, heat absorption, energy generation and preservation are all related to materials technologies. The industry continues to seek alternatives to steel to produce lightweight ships, which reduce fuel consumption, corresponding emissions and speed, impacting upon competitiveness. Developments in composites and aluminium have been utilised in some segments, but these materials currently have no viable application for deep-sea shipping. For example, the use of glass fibre reinforced composites is currently very limited in deep-sea shipping, due to SOLAS’ requirements on fire performance. However, as equivalent fire safety measures are applied to composites, we may see more interest among owners. In this section, we have identified three promising future materials, and how they might be applied to the shipping industry: lightweight materials, intelligent materials and powerful materials.
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FUTURE MATERIALS
Lightweight materials Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Ultra-strong, lightweight materials will ensure safer, lighter and more robust structures that will improve range, payload, fuel consumption and operational expenses for ships at sea. As we have seen in the defence industry, Glass Fibre Reinforced Plastics (GRP) and aluminium are being used on increasingly larger warships, subject to strict naval regulations and standards, and increasingly on major components in the civil maritime industry. Further developments in lightweight materials will allow for operations in more extreme conditions and extend the lifetime of a vessel significantly.
Enabling technologies Graphene, the first ever two-dimensional material, was discovered around 10 years ago. Made up of one-atom thick layers of carbon, a single strand of graphene is the thinnest material ever observed. Up to 200 times stronger than common steel, graphene is flexible, light, nearly transparent and an excellent conductor of heat and electricity. As it is both stronger and stiffer than any known material, it could be used to manufacture products and structures that would
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be a fraction of the weight and exponentially stronger than anything produced today. Graphene could also be used to strengthen polymer or metal composites. Another exciting development within the field of lightweight materials is 3D woven fabrics. Until recently, the increasing application of composites to make structures lighter and more corrosion-resistant has been slowed by the inefficient manual joining processes used today. Improving the reliability and efficiency of composite joining processes requires replacing traditional hand-lay-up processes with new 3D weaving technologies. The new approach to joining structures significantly simplifies the complexity of parts and reduces the number of components used, dramatically improving the viability of composite lightweight solutions. Aluminium oxynitride or AlON represents another promising development in lightweight materials. Once considered science fiction, lightweight transparent alumina is now a reality. AION is a transparent polycrystalline ceramic that is optically transparent and about three times harder than steel of the same
PATHWAYS towards safer, smarter And greener shipping 73
thickness. The material remains solid up to 1200°C, and has good resistance to corrosion and damage from radiation and oxidation. Typical applications are domes, tubes, transparent windows, rods and plates. Finally, the introduction of metal foam will change how ships are designed, constructed and operated. Metal foam dramatically improves the weight-to-stiffness ratio, energy dissipation and it will have a positive effect on a vessel’s vibration, thermal, and acoustic performance. Another advantage is the mitigation of buckling, both for rods and plates, which will help improve safety and reduce maintenance costs. Metal foam decreases density and weight while increasing apparent thickness - a new design variable in steel material selection. By controlling density, the properties of steel components can be significantly modified, expanding design space for steel applications towards more collision resistant structures. Properly constructed, foamed components can have higher bending stiffness and weigh less than solid steel. A sandwich panel with steel faces of one millimetre with a 14 mm metal foam core has a comparable bending stiffness of a 10 mm solid steel plate, at merely 35 per cent of the weight.
Expected developments In less than 10 years, graphene has gone from the lab into pilot products all over the world. Recent developments in graphene production methods indicate the feasibility of mass production from numerous raw materials, including environmentally friendly and relatively low-cost chemicals. For joining technology, adhesive bonding is common today, but one should see more widespread use in lightweight structures – not only for composite structures but also steel. Weaving technology, perhaps in combination with 3D printing, will also be used to find solutions for structural damage repair. Future applications for AION include sensor windows, transparent armour, insulators and heat radiation plates, opto-electronic devices, metal matrix composites, and translucent ceramics. In the future, cruise ships may have large structures made of transparent alumina to provide passengers with better views while staying in compliance with strength integrity regulations.
Technologies and tools
Benefits
Glass Fibre Reinforced Plastics (GRP)
Lighter structures and reduced fuel consumption
Aluminium Graphene (one-atom thick layers of carbon) 3D weaving technologies for composites Aluminium oxynitride, AlON (transparent alumina) Metal foam
Less need for ballast Increased speed Safer structures Improved noise and vibration properties Improved corrosion-resistance and reduced maintenance Extended lifetime Allow operations in more extreme conditions
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FUTURE MATERIALS
Intelligent materials Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Intelligent materials offer a broad range of benefits to the shipping industry. Structures embedded with millions of miniaturised “smart” sensors can generate vast amounts of information, which can be streamed to relevant onshore personnel. Friction-reducing riblet technologies not only reduce drag, but also help to mitigate risks associated with the transportation of invasive species from one ecosystem to another. Some intelligent materials are self-healing, able to sense cracks or failures before damage occurs, while functionally graded materials will contribute to the increased lifetime of vessels by eliminating corrosion and metal fatigue.
Enabling technologies Self-healing materials are defined by their ability to detect, heal and repair damage automatically. Different types of materials, such as plastics, polymers, paints, coatings, metals, alloys, ceramics and concrete have their own self-healing mechanisms. Some materials may include healing agents, which are released into the crack-plane through capillary action. When a crack ruptures the embedded microcapsules, a polymerization process is triggered, bonding the
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crack faces. This technology can be utilised on any surface on a ship, including tanks and hard-to-reach structural areas. Materials of the future will also have sensing capabilities that will allow them to provide information about their immediate environment and their own condition. Relevant sensing technologies include laser-based interferometry, LED-based optical sensors, spectroscopy and spectrophotometry. Advances in production will allow sensors to be manufactured on a microscopic scale. Today, sensors can measure as small as 0.05 mm by 0.05 mm, but as new manufacturing techniques are developed, they will become even smaller. Intelligent materials also include smart coatings, which incorporate functional ingredients such as nanoparticles, micro-electromechanical systems (MEMS) and Radio-Frequency Identification (RFIDs), among others. These technologies enable self-repair, selfhealing and sensing. In the future, smart coatings may incorporate pH sensitive microcapsules for corrosion monitoring and deliver corrosion inhibitors. Likewise, work to develop and produce “smart dust” – a network
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of microscopic wireless MEMS sensors – may provide a whole range of benefits to the shipping industry. These microscopic sensors act like computers that function together as a wireless network. Applications related to the maritime industry include tracking of sea surface temperatures and circulating currents, or monitoring of the corrosion rate of hull structures. Over the past decade, researchers have turned to the natural world for inspiration in developing smart materials. For example, studies have shown that the unique properties of shark skin not only reduce drag by 10 per cent, they also hinder microscopic aquatic organisms from adhering to the shark. Riblet surfaces are made up of very small grooves with sharp ridges aligned with the mean flow. Reducing friction is achieved by the reduction of the turbulent span-wise motion near the wall. Developments on mimicking the properties of shark skin riblets may soon lead to coatings that would reduce drag and limit the bio-fouling on surfaces, and prevent transportation of biological substances. The industry is also likely to benefit from developments in functionally graded materials. These types of materials have properties that change with location, e.g. surface properties are different to core material properties. Functionally graded materials may be used to inhibit the
development of cracks, which can occur in engines, hulls or other vital parts of the ship. They can also have a unique ability to act as a thermal barrier, ideal for use on structures or engine parts exposed to high extreme temperatures.
Expected developments While many smart materials already exist, further research and development is required to reduce manufacturing costs. For example, functionally graded materials remain prohibitively expensive due to existing limitations of the powder processing and fabrication methods. Solid, freeform fabrication techniques such as 3D printing offer greater advantages for producing functionally graded materials, but more work needs to be done. Advances in sensing technologies will allow more sensors to be manufactured on a microscopic scale. While it is still unclear when these technologies will be commercially viable, future materials will have sensing capabilities allowing them to provide information about their condition and the immediate environment. In this context, the two technologies that have the potential to be used on a global scale, regardless of material, are smart coatings and smart dust.
Technologies and tools
Benefits
Self-healing properties
Reduced hull friction and fuel consumption
Sensing capabilities (microscopic sensors, LED-based optical sensors, MEMS, RFID) Nano-technology “Smart dust” – a network of microscopic wireless sensors Functionally graded materials (properties that change with location)
Increased lifetime Reduced maintenance Improved safety Reduced transportation of invasive species between ecosystems
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PATHWAYS
FUTURE MATERIALS
Powerful materials Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Developments in this field will turn composite structures into huge capacitors, powering a ship using printable photovoltaic cells that cover the entire ship exterior. Electric carbon nanotubes will carry an immense amount of current and minimise energy loss. Likewise, stricter environmental regulations may encourage the development of both electrical energy storage and on-board solar energy production, such as printable plastic solar cells that can significantly reduce energy consumption and reduce emissions. Work is being focused on increasing the efficiency of the organic thin film cells, while keeping the cost of mass production low.
Enabling technologies Developments in carbon fibre and specially formulated polymers have enabled light electrical energy storage. The charge is stored electro-statically, rather than as a chemical reaction. The energy device then behaves more like a capacitor, or ultra-capacitor, than a battery. The device can store and discharge electrical energy in addition to being strong and lightweight, suitable for use in structures.
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For power generation, the industry may turn to printable plastic solar cells. Solar cells can be printed directly onto steel or other surfaces, acting as photovoltaic material made from semi-conducting polymers and nano-engineered materials. The active material absorbs photons to trigger the release of electrons, which are then transported to create electricity. Photo-reactive materials can be printed or coated inexpensively onto flexible substrates using roll-to-roll manufacturing, similar to the way newspaper is printed on large rolls. The process is non-toxic and environmentally friendly, and because it’s conducted at low temperatures, it is less energy intensive than other production technologies. The process is five times more affordable than producing traditional solar panels and has the added benefits of being lightweight, versatile and flexible. In the future, we may see large areas of ship structures covered with printable solar cells. For the storage and transfer of energy, the shipping industry will welcome developments in carbon nanotubes. Unlike copper wires, these hexagonal strand formations are 40,000 times thinner than a
PATHWAYS towards safer, smarter And greener shipping 77
human hair. Carbon nanotubes are ideal for use with high voltage power lines. Mechanically strong, yet flexible enough to be knotted or woven together into long lengths of wire, they are capable of carrying about 100,000 amps of current per square centimetre of material – about the same amount as copper wires, but at one sixth of the weight. Carbon nanotubes are able to carry more electricity over longer distances without losing energy to heat - a problem with today’s electrical grid and with computer chips. Since the nanotubes are made of carbon and not metal, they don’t corrode.
"Solar cells can be printed directly onto steel or other surfaces, acting as photovoltaic material made from semi-conducting polymers and nano-engineered materials"
Expected developments Electricity storage, solar cells and carbon nanotubes are existing technologies, but more work is required before they can be applied to the shipping industry. However, it is likely that photovoltaic and battery technology will soon be available to help power hybrid engines. Also, the industry is likely to adopt reflective coatings for ships operating in temperate climates, which will help reduce energy consumption and corresponding emissions.
Technologies and tools
Benefits
Composites for electrical energy storage
Reduction in fuel consumption
Printable plastic solar cells
Improved on-board power management
Carbon nanotubes (for transfer of energy) Reflective coatings
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FUTURE MATERIALS
A POSSIBLE FUTURE Composite superstructures common in offshore and short sea shipping
Reflective coatings for cruise ships in hot climates to reduce energy consumption
Printable photovoltaic cells covering an entire superstructure and hull
First secondary structures made of hybrid construction and metal foamed sandwich structures
TODAY Developments in materials technology are likely to have a profound impact on shipping. New material solutions are needed to meet future environmental regulations and to replace fossil fuels with renewable energies. Due to the number, diversity and complexity of materials now being developed, it is difficult to predict which, and in what order, solutions will be available to the shipping industry in the decades to come. However, by 2020 we expect the introduction of lightweight structures and metal foamed sandwich structures, nanotech coatings for the prevention of marine growth on the outside of the hull, and photovoltaic and battery technology development for hybrid engines.
In 2030, we are likely to see very large, lightweight superstructures built on some ships (e.g. cruise ships), while small and medium sized vessels made entirely out of composites will begin to be more common. Maintenance will be optimised using massively distributed sensor networks, and more ships will be equipped with carbon nanotubes and micro-turbines with advanced alloys to reduce fuel consumption. Also, spray-painted or printable micro batteries will be available to generate energy and supply energy to smart grids. By 2050, the first large all-composite commercial ships will be constructed, while the use of hybrid and metal foam sandwich structures will become
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ŠShutterstock
Composite structures are inherent capacitors that will act as huge batteries
Introduction of cables with conducting electric carbon nano-tubes
Super-smooth, bubble-emitting riblet coatings repel marine species and ice, and decimate hull friction
Sensing and self-healing technology introduced
2050 more common. Smart materials will develop to the point where vessels can be customised, designed and fabricated in a fully digital value chain. More and more ships will have spray-painted or printable micro-batteries to generate energy and supply energy to a smart grid. Nano-technology fuel cells and high-density energy storage materials will enable ships to run entirely on renewable energy and create zero emissions.
"New material solutions are needed to meet future environmental regulations and to replace fossil fuels with renewable energies"
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THE FUTURE OF SHIPPING
EFFICIENT SHIPPING We can see how developments in alternative fuels, ICT, materials technology and advanced ship design will enable more efficient ships. But until the industry works with other stakeholders to address inefficient value chains and logistics networks, it cannot capture the full benefit of any individual technology. To meet its sustainability targets, the shipping industry must optimise shipping’s role in global transportation networks by reducing costs per transported unit, increasing asset utilisation and adopting new technologies and operating practices.
PATHWAYS towards safer, smarter And greener shipping 81
"Demand for seaborne transport is projected to increase, especially in intra-regional trades"
Shipping has capitalised on economies of scale (cargo capacity) to become the most efficient form of transport available to man. Yet a comprehensive view of today’s land-sea transportation networks reveals significant potential to improve efficiencies throughout the value chain. For the industry to capitalise on this potential, the size, operations and functionality of ships must be aligned with landbased infrastructure and solutions, logistics systems and supply chain management. Furthermore, with rapid growth in inter-regional trade expected, the industry can capture significant efficiency gains in short-sea shipping. Today, short-sea shipping is highly fragmented, but with the development of improved ICT solutions and industry consolidation, future supply chains will be far more integrated. To achieve efficiency gains in this segment, the industry and related stakeholders must work together to reduce transhipment time and costs through efficient terminal operations and portand hinterland structures.
The pressure to perform Demand for seaborne transport is projected to increase, especially in intra-regional trades. At the same time, pressure from society on the shipping industry to improve environmental performance will grow. Efficient shipping will thus have a double objective: To remain competitive, each player must strive to reduce costs per transported unit. And to satisfy sustainability requirements, more efficient value chains for new and existing trades must be developed, asset utilisation must be increased and new technology and operating practices must be adopted.
Breaking barriers It won’t be easy. The scale and complexity of global transportation networks - a system that has developed over many decades (if not centuries) makes it difficult and expensive to change. Legacy industry practices, culture, and established supply chains resist a quick fix, and for a system that
involves so many stakeholders, coordinated action or synchronised behaviour represents a significant challenge. Moreover, efficient shipping solutions often rely on advanced ICT systems to optimise logistics through the value chain. Yet today’s systems are fragmented, characterised by proprietary or legacy systems, limited standardisation of data formats, inadequate data sharing and poor systems integration. Today, individual players are more likely to adopt minimum standards due to regulation and competitive pressure in the absence of industry-level requirements and incentives to improve efficiency. As such, triggering the overall efficiency potentials, a process that will require concerted efforts by multiple stakeholders, will be difficult, as the valuecapture mechanisms for each player are complex and uncertain. In many cases “the greater good” will also require that certain stakeholders sacrifice some of their profits or benefits (or bargaining power/control), which will of course not happen without some kind of pressure or regulation. Finally, improving logistics and value chain networks will often also require the construction or expansion of costly land-based infrastructure that may face local opposition.
Harmonising the value chain Assuming a continuation of the status quo (e.g. that the industry is not subject to any systemic upheavals or radical shifts), we believe that efficiency improvements are still achievable by focusing on the following aspects: economies of scale, which refers to size of vessels, operational organisations and supply chain networks, value chain efficiency, which refers to improved operational flexibility and optimisation, improved value chain integration and information flow, and more efficient and integrated supply chain networks, and short-sea shipping, which has a large potential for improvement through improved cargo handling and modal shift efficiency, local issues related to contract structures, and further integration of supply chains.
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PATHWAYS
EFFICIENT SHIPPING
Economies of scale Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Economies of scale apply to multiple areas of the supply chain network. In brief, by “rightsizing” throughout the value chain, the industry can reduce unit costs and transaction costs, increase bargaining power and asset utilisation, achieve improved supply chain integration, and capture efficiency benefits with expanded logistics networks. As we have seen in the past, ship transport is an area that scales well, meaning that costs of constructing and operating larger vessels does not increase in proportion to the capacity. Furthermore, studies have shown that even the largest vessels constructed in any given segment are well under the maximum physical or practical limits of existing design and technical or structural parameters. However, the advantages of increasing vessel capacity vary from segment to segment. For example, while increasing the size of bulk carriers and crude oil tankers may generally offer lower sea freight unit costs, history shows that vessels larger than the established “market standard” will not be able to capitalise on their theoretical advantage. This is due
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to issues such as restricted port and terminal capacity, inventory cost optimisation, limits to commercial trading lots and systems, and the physical barriers encountered by large ships transiting narrow canals or straits. On the other hand, container shipping has probably not reached the point of maturity with a maximum size. Indeed, upsizing cargo capacity has represented a tremendous value to container shipping, where the deployment of ever-larger container ships on primary trades has improved the efficiency throughout the entire value chain. The industry would also benefit from larger organisational units, both on a corporate level and through pooling of resources, as we see in container “alliances”. “Horizontal integration” increases efficiency by improving organisational efficiency and scale-effects in operations. Furthermore, larger organisational units will have increased bargaining power, a higher degree of integration and harmonisation between different business and systems, and it will also be more flexible, thanks to
PATHWAYS towards safer, smarter And greener shipping 83
"We expect significant increases in ship sizes employed in regional trades: as volumes grow, larger vessels will be employed"
the ability to create a larger pool of assets that can be marshalled to meet the specific transportation requirements of certain goods. Economies of scale may also be achieved via the “vertical integration” in value chains. Vertical integration increases efficiency by allowing one organisation to take control of more than one link in the chain, such as owning or operating both ships and terminals or the logistics operations and warehousing and terminal facilities, thereby reducing transaction costs. Vertical integration is supported by advances in ICT systems and Supply Chain Management (SCM) systems, which also improve competitiveness by offering more diverse services. Vertical integration may also be combined with efforts to achieve volume increases to release “regular” scale efficiencies, which will in turn produce larger value chains.
Technologies to develop and improve organisational and supply chain integration economies of scale will require the further development of ICT and SCM systems. Such systems will enable a higher degree of automation of terminal and port operations, the ability to track and trace goods, delivery of forecasts, synchronisation of logistics processes and modes to achieve “lean and agile logistics”.
Expected developments We expect significant increases in ship sizes employed in regional trades: as volumes grow, larger vessels will be employed. For deep-sea trades, the anticipated development is different: The dry bulk and container segments will continue to see everlarger vessels entering into service. And as the scale of these vessels grows, it will drive the development of expanded port and terminal infrastructure, which will in turn encourage the upsizing of land-based infrastructure. Further consolidation will increase the Enabling technologies size of organisations, while larger and more complex At present, the physical/technical constraints on the and integrated value chains will play an increasingly size of ships have not been reached, although as noted, limited port and terminal capacity (among other important role, particularly in the box trade and for issues) acts as a cap on vessel sizes in many segments. finished goods.
Technologies and tools Port and terminal capacity Further development of ICT and supply chain management systems
Benefits Improved local air quality and lower pollution Reduced freight costs per unit
Consolidation and pooling of ships
Increased reliability of service
Containerisation of semi-finished goods and high value raw materials
Higher asset utilisation in all parts of the value chain
Automation of terminal and port operations
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THE FUTURE OF SHIPPING
PATHWAYS
EFFICIENT SHIPPING
Value chain efficiency Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Efficiency potentials in existing or new transport chains can be realised by implementing systems to improve how the different links in the chain interact. Optimising value chain efficiency will require an improved utilisation of ships and other infrastructure, including reduction/elimination of waiting time, removal of established practices and behaviours that act as barriers for change, a reduction of transaction costs and interface costs via ICT system compatibility, supply chain management systems, terminal operations and modal shifts. While the total cost savings are difficult to estimate, some studies indicate that the energy savings potential associated with such logistics and supply chain improvements could reach 20 to 30 per cent.
Enabling technologies While many of the systems, technologies and solutions required to achieve improved value chain efficiency are available, they will be difficult to implement due to the number of stakeholders, legacy
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systems and a perceived reluctance by value chain owners to abandon existing practices. Nevertheless, systems for the “virtual arrival� of vessels and for pre-assigning slots would allow all vessels to sail at the most economical speed instead of dashing to the port to secure a spot in the queue. The direct fuel savings from such an approach are substantial. Also, such systems would allow cargo owners to reduce warehousing costs and improve planning efficiency. At the same time, further development of ICT systems will address inefficiency related to transaction costs, transit time, transparency, tracking and punctuality. An enabler to this development will be the availability of common standards for transparent supply chain information available to all stakeholders. Finally, more robust on-board ICT systems can provide verified and trusted data related to vessel operations that may form the basis for performance-based energy efficient operations and practices, contractual clauses that stimulate and reward energy savings, and accurate documentation of deviations that result in lost time or higher costs.
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"The capability to manage larger and more complex supply chains will increase substantially due to the continued, rapid development of ICT and supply chain management solutions"
Expected developments We expect that the capability to manage larger and more complex supply chains will increase substantially due to the continued, rapid development of ICT and supply chain management solutions. This capability will be a strong incentive to realise economy of scale benefits by increasing the vertical integration and develop leaner supply chains. Naturally, the players with the largest potential benefit will have the largest incentives. If so, we anticipate that it will be the owner of the value chain who drives this development. It should be noted that characteristics of supply chains vary considerably between shipping segments, so whereas best-practice solutions will be outlined or identified, the actual application will vary, depending on the needs of specific segments.
Technologies and tools
Benefits
Pre-assigned port slots
Significant energy savings
ICT and supply chain management solutions
Reduced emissions
Sensor and communication technologies for tracking and identification of vessel and goods Contractual clauses that stimulate and reward energy savings
Improved local air quality Reduced unit freight costs Improved reliability of service Improved utilisation of assets
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THE FUTURE OF SHIPPING
PATHWAYS
EFFICIENT SHIPPING
Efficient short-sea shipping Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Perhaps more than any other segment, short-sea shipping stands to gain by improving efficiency along the lines described above. Towards 2050, global seaborne trade will see a rapid growth of intraregional trade and (in relative terms), this will be much higher than the growth in the deep-sea transport. This trend will lead to new trade patterns and a growing demand for new efficient shipping solutions, including more efficient interaction between short-sea and deep-sea shipping, inland shipping and rail and road transport. Efficient short-sea shipping of unitised cargo relies on the integration with other transport systems in the value chain, from origin to final destination. These networks must factor in total lead time, frequency and capacity of the transportation adapted to the cargo volumes and capacity of hinterland infrastructure, reliability of on-time delivery, efficient port terminals, efficient pick-up and delivery hinterland distribution networks from/to the ports and cargo carriers (e.g. containers, pallets, trailers and other standard units).
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Enabling systems and technologies Short-sea shipping can benefit from the utilisation of a number of systems and technologies to improve efficiency. These include technologies for more effective modal shift (such as automated cargo handling systems between ships and rail/truck, or via a depot or port terminal), improved contract structures that enable the integration of the supply chain both through consolidation and vertical integration, and more advanced ICT systems, including supply chain planning and optimisation tools. However, unless the infrastructure to support increased volumes is in place, specifically referring to upgraded ports, terminals and road and rail networks, these solutions will have a limited total impact.
Expected developments Development will be driven by competitive pressure from road transportation, further developments in
PATHWAYS towards safer, smarter And greener shipping 87
"Efficient short-sea shipping of unitised cargo relies on the integration with other transport systems in the value chain, from origin to final destination"
technology and government-driven regulations, schemes and incentives. We expect that development will mainly occur in regions with large economic and population growth, densely populated countries with inadequate inland infrastructure (e.g. India, Vietnam) and in areas with pressure on their hinterland infrastructure driving schemes to change transport structure (e.g. Europe). As many short-sea vessels trade in ECAs, we expect the segment to be the first to embrace new, low emissions fuel sources such as batteries, fuel cells and LNG. The segment will also employ more efficient cargo handling systems, and new terminal and crane solutions will allow for considerably higher loading/unloading capacities, automated mooring and in some ports, fully automated cargo handling. We could also see the emergence of new solutions for reducing costs and transit times via direct ship-toship and ship-to-road transfer.
Technologies and tools
Benefits
Technologies for more effective modal shift such as automated cargo handling systems, and new terminal and crane solutions
Reduced local pollution and lower emissions
Improved contract structures ICT systems including supply chain planning and optimisation tools
Reduced freight costs per unit both for sea transport leg and total supply chain Reduced lead time and increased reliability Higher utilisation of ships and other assets in the supply chain More “fit for purpose”, flexible ships Increase asset utilisation, lower unit costs
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THE FUTURE OF SHIPPING
ŠShutterstock
EFFICIENT SHIPPING
A POSSIBLE FUTURE New contracts and incentive schemes between owner and charterer
Increased consolidation, pooling ships in order to increase bargaining power
Regional shipping growing rapidly with rising demand for feeder-size vessels
Integrated supply chains with transparent information for all players in the chain
TODAY Significant shipping efficiency improvements are attainable without radical systemic changes to the industry, utilising technologies and solutions that are either available today, or that will be shortly. Over the next decades, we expect the structure of shipping to gradually shift towards a higher focus on regional shipping, driven by continued economic growth in Asia, leading to growing trade volumes in the region. Port and hinterland infrastructure will require huge investments; without these upgrades the shipping efficiency improvements will be severely limited. In our view, the largest efficiency improvement potential is related not only to the relative size of the value chain, but how it is structured. By 2020, we expect to see more consolidation, pooling of ships and other resources among ship
owners in order to reduce costs, and increase flexibility and bargaining power. While port development and investment projects will continue to be slowed by politics and public opposition from interest groups (particularly in Europe and the US), development of test installations of highly automated cargo handling systems will gain pace. Massive investments in port and distribution infrastructure to support the development of trade and consumption, particularly in Asia and Africa, will emerge towards 2030. New terminal facilities will apply automated cargo handling and terminal equipment. Meanwhile, regional changes in economy and production, consumption and transport of resources will result in rapid growth in intra-regional shipping, creating increased demand for vessels in all
PATHWAYS towards safer, smarter And greener shipping 89
Massive investments in port and distribution infrastructure, particularly in Asia and Africa
New solutions allow handling of multiple containers or mega-boxes in one move
Equatorial trunk lines with megaships (30-35000 TEU) between trans-shipment hubs
Container and break-bulk terminals and distribution network heavily automated
2050 segments operating within the regional logistics networks. Also, we expect more containerisation of semi-finished goods and high value raw materials, which will lead to development of new solutions, based on standard container formats, to allow handling of multiple containers or mega-boxes. Due to the superior efficiency of large and fully integrated supply chains, huge logistics networks will emerge by 2050, requiring a higher degree of specialisation in all ship segments. As ships are more specifically tied to value chains, this will take much of the volatility out of the shipping markets, and will also shrink the market for traditional asset players. Regional and short-sea shipping will see a much larger growth (both in volume and number of vessels) than deep-sea.
Large-scale consolidation will give highly automated and efficient logistics networks, driven by the intra-regional development in Asia, requiring new specialised vessel types in all major segments. Efficient shipping is perhaps the most challenging and complex pathway to sustainable shipping, but if the industry and other stakeholders are committed to reducing the environmental impact of the entire transportation sector, it is a logical place to start.
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THE FUTURE OF SHIPPING
LOW CARBON ENERGY For more than a century, the shipping industry has relied almost exclusively on heavy fuel oil. But with the introduction of strict environmental regulations, rising fuel prices and concerns regarding the security of energy supply, the industry is on the brink of a revolution in marine fuels. What will fuel the ships of tomorrow to help the industry reach the CO2 reduction ambition?
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To ensure a sustainable planet, humanity must limit global temperature increases to 2°C, achievable primarily by lowering carbon emissions. The shipping industry can be expected to reduce its total carbon output by at least 60 per cent below present levels. Achieving this ambition will not be easy. Consider that the world fleet is expected to expand over the next four decades to meet expected growth in global trade. And while improving on-board energy efficiency certainly plays a role in meeting carbon reduction targets, such measures alone will only go so far in reducing emissions. If so, the development of low carbon sources of energy represents the industry’s best option for lowering its total carbon output.
Moving away from fossil fuels There are two primary trends driving developments in low carbon energy. First, growing public concerns regarding the industry’s impact on health and the coastal environment has led to increasingly strict regulations on emissions – a trend likely to continue. At present, regulators have introduced stringent SOx and NOx emission limits in some regions, and the IMO has introduced mandatory efficiency standards (EEDI and SEEMP) to help address CO2 emissions. In the future, we may see shipping included in additional state-sponsored CO2 reduction agreements, such as a carbon tax or an emissions trading scheme. If so, these regulatory requirements could drive the introduction of various alternative fuels. Second, the growing scarcity of fossil fuels has resulted in the steady rise in bunkering costs, concerns related to energy security and the longterm availability of fossil fuels. At the same time, sustained political unrest in energy producing countries could lead to an extended global energy crisis, driving oil prices up further. Indeed, a long-term energy crisis would likely trigger rapid developments in technologies to manage shortages of fossil fuels – especially alternative fuels. On the other hand, high oil prices have led to the development of unconventional fossil fuels, such as shale gas and shale oil, which may help stabilise energy prices over time.
Breaking the deadlock New fuels require new on-board systems and machinery, so changing from one fuel (HFO, MDO) to another (e.g. LNG) will take some time.
For pioneers – owners who take the risk to invest in new solutions – unforeseen technical issues often result in significant delays, requiring additional capital. At the same time, bunker costs for certain shipping segments are paid for by the charterer, removing incentives for owners to explore alternative fuels. Patchwork regulations, enforced by different government bodies that often apply different standards, have also slowed coordinated action. Lack of appropriate infrastructure, such as bunkering facilities and supply chain networks, and the longterm availability of certain fuel types are additional barriers for the introduction of any new fuel. That is, owners will not start using new fuels if the infrastructure is not available, and energy providers will not finance expensive infrastructure without first securing customers. Breaking this deadlock will require a coordinated, industry-wide effort and the political will to invest in the development of new infrastructure.
Low carbon energy solutions Over the next four decades, it is likely that the energy mix will be characterised by a high degree of diversification. LNG has the potential to become the fuel of choice for all shipping segments, provided the infrastructure is in place, while liquid biofuels could gradually also replace oil-based fuels. Electricity from the grid will most likely be used more and more to charge batteries for ship operations in ports, but also for propulsion. Renewable electricity could also be used to produce hydrogen, which can in turn be used to power fuel cells, providing auxiliary or propulsion power. If drastic reductions of greenhouse gas emissions are required and appropriate alternative fuels are not readily available, carbon capture systems could provide a radical solution for substantial reduction of CO2. Expectations for a broader application of nuclear power for commercial vessels are limited. While a proven solution, uranium-based nuclear power is currently considered too controversial to be a viable alternative for ships. That being said, a shift in opinion may happen. We could see fossil fuels being banned or heavily regulated, to the point of forcing the public and politicians to reconsider their attitude towards nuclear powered ships. Developments in thorium-based nuclear power, which remove many of the security and waste disposal risks associated with uranium-based systems, may progress to the point where marine applications are possible and acceptable.
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LOW CARBON ENERGY
Liquefied natural gas Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Using LNG as fuel offers clear environmental benefits: elimination of SOx emissions and particulate matter; significant reductions of NOx and about 20% reduction of CO2 emissions. While LNG fuel cannot reduce CO2 emissions to the required levels, it remains an attractive option to meet current emission requirements. Furthermore, the number of LNG-fuelled ships is rapidly increasing, encouraging investment and construction of infrastructure projects along the main shipping lanes in the world, making LNG the leading short-term alternative fuel.
Enabling technologies LNG as fuel is now a proven and available solution, with gas engines being produced covering a broad range of power outputs. Engine concepts include gas-only engines, dual fuel four-stroke and two-stroke engines. Some of the latest two-stroke engines help avoid “methane slip” (release of methane) during combustion, and further reductions are expected from four-stroke engines. On the production side,
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the recent boom in non-traditional gas (shale) has had a dramatic effect on the market for gas, particularly in North America. Exploitation of shale gas in other parts of the world could also prove to be significant for a more rapid uptake of LNG as fuel for ships. However, the extraction process (hydraulic fracturing or “fracking”) remains a controversial technology, due to growing public concerns over its impact on public health and the environment.
Expected developments Rapid LNG uptake is expected in the next five to 10 years, first on short sea ships operating in areas with developed gas bunkering infrastructure, followed by larger ocean-going vessels when bunkering infrastructure becomes available around the world.
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©DNV-GL
Technologies and tools
Benefits
Gas engines (gas-only, dual fuel four-stroke and two-stroke engines)
20% CO2 reduction
Fuel tanks Production of non-traditional gas (shale gas)
Up to 90% NOx reduction Eliminated SOx and PM emissions Eliminated oil spills
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THE FUTURE OF SHIPPING
PATHWAYS
LOW CARBON ENERGY
Ship electrification and renewables Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Oil spill
Lives lost at sea
Freight cost
Insurance claims
Recent developments in ship electrification hold significant promise for more efficient use of energy. Renewable power production can be exploited to produce electricity in order to power ships at berth and to charge batteries for fully electric and hybrid ships. Enhancing the role of electricity on ships will contribute towards improved energy management and fuel efficiency on larger vessels. For example, shifting from AC to on-board DC grids allows engines to operate at variable speeds, helping to reduce energy usage. Additional benefits include power redundancy and noise and vibration reduction.
cryogenic storage in well-insulated tanks at very low temperatures (-253째C) can be used, but this process is associated with large energy losses.
Renewable electricity can also be used to produce hydrogen, which can power fuel cells on-board ships. This solution will also help owners manage challenges related to the intermittent nature of many renewable energy sources. Indeed, hydrogen is the lightest of all gas molecules, thus offering the best energy-toweight storage ratio of all fuels. However, hydrogen as fuel can be difficult and costly to produce, resulting in the significant loss of energy. Compressed hydrogen has a very low energy density by volume, requiring six to seven times more space than HFO. Alternatively,
Enabling technologies Energy storage is critical both for the use of electricity for ship propulsion and to optimise the use of energy on hybrid ships. At present, there are a number of energy storage technologies available. Battery powered propulsion systems are already being engineered for smaller ships and for larger vessels, with engine manufacturers focussed on hybrid battery solutions. Challenges related to safety and the availability of some materials must be addressed to ensure that a battery driven vessel is as safe as
If renewable energy from the sun or wind is not readily available, conventional power plants can be used. If so, greenhouse gases and other pollutants will still be emitted, but they can be reduced through exhaust gas cleaning systems or carbon capture and storage. Alternatively, nuclear power on shore could be used for emissions-free electricity production.
PATHWAYS towards safer, smarter And greener shipping 95
an ordinary vessel, but the pace of technology is advancing rapidly and solutions to these issues are likely to be developed. Fuel cells are commonly used to convert the chemical energy of hydrogen into electricity. When a fuel reformer is available, other fuels, such as natural gas or methanol, can power a fuel cell. Although research has indicated that fuel cell technology can be applied successfully to the maritime environment, further R&D is necessary before fuel cells can be used to complement existing power systems on ships. Challenges with fuel cell technology include high investment costs, the dimensions and weight of fuel cell installations and the expected lifetime of the system. Also, more work must be done to ensure the safe storage of hydrogen on-board ships.
Expected developments For ship types with frequent load variations such as harbour tugs, offshore service vessels, and ferries,
electrification is increasingly seen as an effective means to reduce fuel usage and corresponding emissions. At the same time, the construction of more hybrid ships is expected to be common towards 2020. After 2020, improvements in energy storage technology will enable some degree of hybridisation for most ships. For large, deep sea vessels, the hybrid architecture will be utilised for manoeuvring and port operations to reduce local emissions when in populated areas. Significant reduction in costs is required if fuel cell technologies are to become a viable solution for maritime transport. With the recent commercialisation of certain land-based fuel cell applications, there is reason to believe that costs will fall. For ship applications, a reduction of the size and weight of fuel cells is critical. However, fuel cells are likely to play a larger role in future power production on ships. In the short-term, it might be possible to see successful niche applications for fuel cells on some specialised ships, particularly in combination with hybrid systems.
Technologies and tools
Benefits
Battery technology
Significant reductions of CO2, NOx and SOx, depending on how electricity/ hydrogen is generated
DC grid Fuel cell (based on hydrogen) Storage of hydrogen Land based renewable energy production (wind, solar, etc)
Opportunity to use renewable power production Reduced transport cost Reduced maintenance Power redundancy Noise and vibration reduction Elimination of oil spills
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PATHWAYS
LOW CARBON ENERGY
Biofuels Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
Biofuels can be derived from three primary sources: edible crops, non-edible crops (waste, or crops harvested on marginal land) and algae, which can grow in water. In addition to having the potential to contribute to a substantial reduction in overall greenhouse gas emissions, biofuels derived from plants or organisms also biodegrade rapidly, posing less of a risk to the marine environment in the event of a spill. Biofuels are also flexible: they can be mixed with conventional fossil fuels to power everything from city buses to larger power trains, while biogas produced from waste can be used to replace LNG.
Enabling technologies Biofuels derived from waste have many benefits, but securing the necessary production volume is a challenge. Consider that the land required for production of biofuel supplying the shipping industry (300 MT per year) based on today’s first-generation biofuels technology is equal to the size of Norway and Sweden combined – or about five per cent of the current agricultural land in the world. While second
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and third-generation biofuels will not compete with agricultural land, more research is required before these next-generation biofuels will be viable. Algae-based biofuels seem to be the most efficient and have the added benefit of not competing with arable land, while consuming significant quantities of CO2, but more work needs to be done to identify algae strains that would be suitable for efficient large scale production. Concerns related to long-term storage of biofuels on-board ships also need to be addressed.
Expected developments Experimentation with biofuels has already started on large vessels, and preliminary results are encouraging. However, advances in the development of biofuels derived from waste or algae will depend on the price of oil and gas. As a result, biofuels will have only limited penetration in the marine fuels market in the next decade. However by 2030, biofuels are set to play a larger role, provided that significant quantities can be produced sustainably and at an attractive price.
PATHWAYS towards safer, smarter And greener shipping 97
Technologies and tools
Benefits
Second and third-generation biofuels
20-80 % reduction of CO2
Technologies for long-term storage of biofuels
Eliminated SOx emissions Oil spills less dangerous, due to biodegradable fuels
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LOW CARBON ENERGY
Carbon capture and storage Impact level:
CO2 emissions
None
SO x emissions
Low
Medium
NO x emissions
High
Invasive species
Recycled materials
While not an alternative fuel, carbon capture and storage (CCS) tackles carbon emissions at its source: exhaust gas. CCS systems are a proven solution, having been used since the 1970s mainly for enhanced oil recovery, but few commercial plants are in operation for the sole purpose of emission reduction. As for marine applications of CCS, only simulation studies have been carried out so far. The results are promising, but the process consumes a lot of fuel.
Enabling technologies Currently, three different types of carbon capture technologies exist: Chemical absorption, which uses a chemical solvent to absorb the CO2 from the exhaust gas; membrane separation, which involves passing the exhaust gas stream through a set of membranes which separate various components in the gas from each other; and pressure swing absorption, which exploits the tendency of gasses to be attracted to solid surfaces under high pressure, allowing for the separation of CO2 from exhaust gas. These
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systems are energy-intensive and can be expensive to operate, and researchers are working to mitigate the environmental risks of storing carbon on land or sea, but if carbon is commercialised into a tradable product, developments in CCS technologies could potentially accelerate rapidly.
Expected developments Developments in carbon capture technologies have slowed down in recent years, due to high capital requirements, operating cost, and lack of incentives or of a CO2 market. The cost of installing and operating CCS systems on-board ships will be prohibitive, unless an appropriate carbon market is established in the future with prices making these operations attractive. Otherwise, the introduction of this technology would only take place in response to increasingly strict regulations on targeting greenhouse gas emissions. Alternatively, CCS could be used on land based power plants to produce carbon neutral fuels.
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Technologies and tools
Benefits
Carbon capture technologies (Chemical absorption, membrane separation, pressure swing absorption)
At least 50% reduction of CO2
Storage of CO2
Assuming carbon is commercialised, CCS could provide an additional revenue stream
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THE FUTURE OF SHIPPING
LOW CARBON ENERGY
A POSSIBLE FUTURE Testing of methanol, ethanol, DME, biodiesel and biogas
LNG bunkering infrastructure improving High uptake in short sea segment
Hybrid systems in deep sea for auxiliary systems during cargo operations
LNG penetrating the deep sea shipping segment
TODAY Initially, the introduction of any alternative energy source will take place at a very slow pace, as technologies mature and necessary infrastructure becomes available. In addition, the introduction of any new fuel will most likely take place first in regions where the fuel supply will be secure in the longterm. Due to uncertainty related to the financing development of appropriate infrastructure, the new energy carriers will first be utilised in smaller vessels designed for short-sea trade. As technologies mature and the infrastructure starts to develop, each new fuel can be used in larger vessels, and eventually on ocean going ships, provided that global infrastructure becomes available. Renewable energy sources, such as solar and wind power, are not seen as a viable alternative
for propulsion on commercial ships at this time. Certainly, vessels equipped with sails, wind kites or solar panels may be able to supplement existing power generating systems, but the relative unreliability of these energy sources make them illsuited for deep sea transport or operations in some latitudes at certain times of the year and/or seasonal weather conditions. At present, LNG represents the first and most likely alternative fuel to be seen as a genuine replacement for HFO for ships constructed after 2020. The adoption of LNG will be driven by regulation, increased availability of gas and the construction of the appropriate infrastructure. The introduction of batteries in ships for assisting propulsion and auxiliary power demands is also a promising
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Piloting of fuel cells running on hydrogen as auxiliary propulsion power
Biofuels and biogas part of the fuel mix for niche trades and regional use
A diverse fuel mix with LNG, biofuels, batteries and hydrogen in use
Fuel cell with hydrogen fuel produced from renewables
2050 source of low carbon energy. Ship types involved in frequent transient operations (such as dynamic positioning, frequent manoeuvring, etc.) can benefit most from the introduction of batteries. Cold ironing will probably become a standard procedure in many ports around the world, helping to reduce harmful local emissions. The pace of development for other alternative fuels, particularly biofuels produced from locally available biomass, will accelerate, and may soon complement – or challenge – LNG and electrification. Indeed, it is likely that a number of different biofuels could become the norm in different parts of the world after 2030. However, acceptance of biofuels in deep-sea transportation can only take place if these fuels can be produced in large volumes and at a competitive price around the world.
There are many possible solutions the industry can adopt to achieve the sustainability ambitions for shipping in 2050, but no alternative fuel solution has yet emerged as the most likely candidate. Therefore, there will be a more diverse fuel mix where biofuels, hydrogen and batteries are the main energy carriers. Electrification and energy storage will enable a broader range of energy sources, while renewable energy, such as wind and solar, will be produced on land and stored for use on ships either using batteries or as hydrogen. While HFO and MDO will likely be a (declining) part of the maritime energy mix for decades to come, the development of alternative fuels represents the future of a more sustainable industry.
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THE WAY FORWARD SHIPPING TOWARDS 2050
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Rising public demand for sustainability and more transparency is re- writing the rules for all industries. For shipping, the future will be characterised by tougher regulations and fierce competition, as owners seek to gain a competitive advantage by investing in systems to increase efficiency, flexibility and reliability. But to become truly sustainable, the industry must embrace new technologies and practices to improve safety performance and reduce its carbon footprint.
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Sustainability – a game-changer for shipping The growing frequency of natural disasters associated with climate change and increased public awareness of the impact of local pollution on health, have resulted in a rapid decline in public tolerance for environmental damage. Over the past two decades, environmental awareness has become a public policy issue that is re-shaping business, politics and individual businesses all over the world. The trends are clear: The world population will grow, and an expected increase in economic activity and global trade will lift millions of people out of poverty. An expanding, educated middle class will have access to technologies that will enable them to learn, gather and share information about everything, including the degradation of the environment. As our world becomes smaller and increasingly interconnected, public awareness of environmental issues will rise, leading to more vocal and organised demand for transparency and sustainability from all industries, including shipping. The industry must rise to this challenge by taking action to improve its safety and environmental performance.
A whole new safety mindset By 2050, we can expect the shipping industry to embrace a new safety mindset, resulting in a stepchange in how the industry understands human psychology and the interplay between humans and machines. Dramatic advances in information and communication technologies, materials and design will demand a holistic approach to developing systems that align technologies, organisations and strategies with human behaviour. At present, about 900 people die in ship-related accidents per year in international shipping. If we include occupational accidents, the crew fatality rate is 10 times higher than “best-practice” rates for industries in OECD countries. Major accidents, especially those in the ferry and cruise segments that involve many passengers and events resulting in significant environmental damage, remain a particular concern. In addition to the human cost of fatalities at sea and the long-term impact of environmental damage, accidents attract extensive and negative media coverage, which can represent an existential threat to a shipping company following a disaster.
Avoiding accidents and ensuring the safety of on-board personnel represents one of the most complex challenges faced by owners and ship managers. Unlike mechanical or technical systems, safety systems must account for the seemingly infinite variables of human behaviour. On-board personnel regularly interact with each other, heavy machinery and a broad range of control and data systems in a floating workplace, often subject to severe weather and harsh conditions far from land. Rather than focusing on individual components, the industry would benefit by embracing a more comprehensive approach to safety, one that establishes effective barriers that prevent or mitigate the impact of accidents. Today, more and more systems are controlled and integrated by software, which introduces new challenges for operations, maintenance, testing and verification – a trend likely to continue. These increasingly complex on-board systems will require a new safety mindset. At the same time, advances in digital technology will play a greater role in the design phase, allowing for more accurate modelling of hull forms that take into account wind, weather and the vessel’s operating profile. Virtual emulation (or “mirroring”) will enable on-board personnel to acquire virtual experience across the entire range of vessel operations, from normal operations to maintenance, repairs to surveys, risk management to emergency and evacuation procedures. The further development of automated systems and advanced decision support tools will contribute significantly to on-board safety. In the subsea industry, remote operations are already a reality, and systems with proven marine applications are likely to be adopted by merchant shipping. In time, the development of fully automated, unmanned, remotely operated vessels could be a reality. Combined with advances in materials requiring limited maintenance, autonomous shipping would eliminate occupational risks on-board. While the unmanned vessel concept would likely face significant public scepticism, we believe that many on-board systems will be autonomous by 2050, reducing the number of on-board personnel and therefore improving the industry’s safety performance.
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PATHWAYS TO SUSTAINABILITY Organising for safety Dynamic risk management System resilience
Safe operation
Virtual ship laboratory Energy efficient design Next generation emulation
Advanced ship design
Smart maintenance Automation and remote operations
Safety
Lightweight material Intelligent material
The connected ship Efficiency
Powerful material Economies of scale Efficient short sea shipping
Future materials Environment
Value chain efficiency LNG Biofuels
Efficient shipping
Ship electrification and renewables Carbon capture and storage
Low carbon energy
Figure 11. The figure shows an overview of the solutions and pathways and how they contribute towards a sustainable shipping industry
AMBITION
AMBITION
AMBITION
REDUCE FATALITY RATES 90 % BELOW PRESENT LEVELS
REDUCE FLEET CO2 EMISSIONS 60 % BELOW PRESENT LEVELS
Achieving this target requires a new safety mindset and continuous focus on multiple issues related to technologies and how organisations are structured and function. Building a robust safety culture where humans, organisations and regulators systematically gather information and learn from failures will be critical to achieving a 90 per cent reduction in fatalities.
Currently, no single solution can ensure the industry achieves a 60 per cent reduction of CO2 emissions, especially considering the expected increase in transport demand. Energy efficiency is certainly part of the solution, but the target cannot be reached unless the industry shifts to low carbon solutions. The technologies are there, but the barriers are significant – the lack of adequate infrastructure and security of energy supply
MAINTAIN OR REDUCE PRESENT FREIGHT COST LEVELS
Carbon-neutral shipping Shipping is the most climate-friendly form of freight transport, yet the fuel that powers the industry is a cocktail of pollutants, emitting not only climatewarming carbon to the atmosphere but also SOx and NOx which represent a significant public health hazard. Growing awareness of these issues will put increasing pressure on regulators and industry to take action. To ensure a sustainable planet, humanity must limit global temperature increases to 2°C, achievable primarily by lowering carbon emissions. Today, shipping contributes to three per cent of global anthropogenic CO2 emissions and is a major contributor to local pollution in densely populated coastal areas. For shipping to do its part, the industry must reduce emissions by 60 per cent of today’s emission levels. Incremental wins in energy efficiency will not be enough; the industry will have to seek alternative solutions to power vessels. We are entering the age of alternative fuels. The first stage will see more vessels powered by LNG, a process driven by high oil prices and regulations
The potential for the shipping industry to reduce costs and increase reliability by embracing smarter solutions is vast. Owners will have to increase investments in systems to enhance safety and reduce emissions, but to maintain cost levels they can apply new technologies and solutions to become more efficient, thereby keeping freight costs within acceptable limits.
on NOx and SOx. Over time, other low-carbon solutions, such as ship electrification, biofuels, batteries and fuel cells powered by renewable energy sources will be adopted, increasing the diversity of the industry’s fuel mix. More controversial solutions, such as nuclear power and carbon capture and storage, are not likely to be seen aboard merchant vessels anytime soon, but given advances in technology and the introduction of more emissions regulations, these solutions may gain wider acceptance.
Digital technology – a catalyst for smarter shipping A sustainable world will also be a digital world. The steady advance of communications technology and access to ever increasing amounts of data will continue to drive unprecedented human connectivity. For the shipping industry, the Digital Age will open up a new landscape of opportunities for the industry to “get smarter” – from ultraefficient supply chain coordination to virtual design laboratories capable of producing next-generation vessels with radically reduced operating costs and energy consumption.
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Increased connectivity has already changed the shipping industry. With more ships connected to the Internet via broadband satellite networks, and more on-board systems connected to each other and the Internet, merchant shipping is becoming a more data-centric industry. Increasingly, on-board systems are being integrated, automated and controlled through software. At the same time, the ability to collect, store, manage and utilise large volumes of data has improved. Communications and data analysis can improve logistics operations with a focus on the total value chain. More powerful computers will be able to model realistic conditions a vessel may face at sea and in different weather conditions, and be used to design more optimal hull and machinery systems. Advances in sensor technology will enable improved condition-based monitoring and maintenance procedures and allow owners to run remote diagnostics and, when necessary, recommend fixes.
Understanding the barriers to change The most common barrier for the introduction of any new technology is the capital investment required. Research has indicated that owners are reluctant to invest in cost reduction measures and technologies, even in those with a relatively short payback time. Many owners often struggle to find the capital resources internally to invest in new systems, and those seeking external financing are often disappointed. Likewise, owners operating tonnage in segments where the charter pays for the fuel may have few incentives to explore alternative fuels or invest in energy efficient measures. Many owners are wary of implementing new technologies that represent a financial risk. Unforeseen technical issues often result in significant operational problems, requiring additional capital to remedy, and causing loss of revenue. At the same time, new systems require additional training of personnel to ensure that the operation of new technologies will actually meet future regulations and requirements. Likewise, the introduction of certain alternative fuels has raised reasonable concerns among owners regarding how inadequate infrastructure and uncertain security of future fuel supply will impact operations. In addition, the introduction of new technologies often requires new regulations, standards and software tools. Finally, deep-seated industry practices, established supply chains, legacy IT systems and organisational inertia may slow adoption of low carbon solutions.
The way forward Three forces are acting on the shipping industry to drive change: increased regulations, which set more stringent minimum safety and environmental performance requirements; competitive pressure, which encourages more cost-efficient operations; and public demand for more transparency and sustainability. This societal pressure is not only directed at government authorities and ship owners, but also at cargo owners, who are under increased pressure to do business with owners who operate vessels beyond compliance. Regulations will continue to be an important driver for sustainability in three critical areas: safety, efficiency and the environment. However, regulators should be sensitive to the financial impact of these requirements and work with the industry to find workable solutions. As we gain more knowledge about the impact of shipping on the environment, the industry will be in a better position to evaluate various regulatory solutions that both create value for society and provide a level playing field for various segments and companies. Shipping companies and cargo owners may also adopt new financial models where both parties share the benefits of fuel savings and investments in energy efficiency. By incentivising the entire value chain, the industry can act decisively, creating a more efficient and sustainable fleet. Government also has a role. By funding research in co-operation with shipping companies and cargo owners to manage technical issues, and investing in the construction of required infrastructure, the shift towards a low carbon industry will occur at a faster rate. We recognise that the pathways towards a more sustainable industry will occur incrementally and that not all the solutions described in this report are available today. Likewise, we are aware that, as in the past, game-changing events could impact shipping in ways impossible to foresee. As noted, this report is not intended to forecast the future of shipping, but rather to offer a set of achievable ambitions the industry can and should pursue. Looking ahead to 2050, we are confident that the impact of tougher regulations, competitive pressure and advances in technology will create new opportunities for the industry to become safer, smarter and greener. Those players that lead the way will define the new competitive landscape. After all, the future does not start tomorrow – it starts today.
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