In her final column for 2017, Dr Anna Marie Antoniou examines the trends likely to influence the shipping industry in 2018
Shipping is a business that influences the world economy and is influenced by it. Future trends are therefore somewhat difficult to predict, but there are some key features of 2018 that one can envisage. Staying ahead of others is crucial and no doubt analysts all over the world are already looking at industry indicators to get a sense of the future. Trends are linked to current developments and some of those identified here are the increasing digitalisation of shipping, the increase of LNG as a marine fuel to control environmental damage, the Brexit negotiations, and weathering the overcapacity storm through consolidation.
Safety of life at sea has been a much talked about issue ever since the sinking of the Titanic in 1912, but a big step forward was taken in 1979 when the IMO decided to set up an organisation to establish a satellite communication system. That organisation, INMARSAT, was founded to provide vessels with a communication method via satellite. Today, there are various platforms that provide ship connectivity and the further digitalisation of shipping will no doubt be at the forefront of progress in 2018. A noteworthy idea is that ships themselves can be sensor hubs and data generators, allowing masses of information to be sent from ship to shore in a short space of time. This means that fleet managers on shore and in ports can better advise the crew, after analysing this sophisticated data, on issues such as navigation, loading operations, and weather patterns. It should lead to a much more efficient and accurate method of data transfer that will decrease accidents which result from human error.
“Shipping is a business that influences the world economy and is influenced by it”
Also of note, though unlikely to be a reality in 2018, is the idea that with increased digitalisation we can envisage autonomous ships; ones with an autopilot function or the capacity to be remotely operated from shore. Norway is leading in this field; in late 2016 the first test bed for autonomous shipping opened in the Trondheimsfjord and today companies such as Kongsberg are developing technologies to make this a reality. Some short distance driverless ferries have been in use but Oskar Levanger, Vice President of Innovations for Rolls Royce Marine predicts that by 2035 there will be unmanned ocean-going vessels. No doubt 2018 will see increased research in this field to make this a realistic possibility.
LNG as marine fuel
Reducing the environmental footprint of shipping has been an ongoing topic and the leading alternative fuel has been LNG. The trend for 2018 is likely to be an increase in vessels operating on LNG, particular more container vessels and tankers. GTT, CMA Ships, and DNV GL have been working on a project called PERFECt (Piston Engine Room Free Efficient Containership) developing a vessel with LNG fuel tanks in the same space as gas and steam turbines. This means that an engine room is not needed, and that space can be used for cargo. Now in its second stage, they are looking at optimisation of the system to increase efficiency and cargo capacity. The 2018 trend is likely to be the continued increase of LNG as a fuel and certainly the continued development of vessels operating on LNG whilst maintaining, if not increasing, cargo capacity and cost efficiency.
“Staying ahead of the game is the way to success, so it’s time for analysts to at least attempt to predict the future”
2018 will be a crucial year for the UK and EU as we enter the last year of Brexit negotiations from March 2018. So far, not much progress has been made and although the Department of International Trade released a white paper on trade policy in October 2017, it covers only general principles rather than specifics. There are thousands of questions but one of the potential issues from the UK perspective is the UK flag. The Merchant Shipping Regulations 1993 require a British connection between the individual/corporation and the flag for the vessel to be registered in the UK. Until now, that included EEA nationals but there are no answers yet on what will happen post Brexit, for both the EEA vessels currently on the register and of future ones wanting to register. 2018 Brexit negotiations will be crucial for future trade and shipping matters and one hopes that, in the short period until the official exit, the UK and EU make better progress than they have in 2017.
We have all heard about the collapse of Hanjin Shipping and the financial struggle of companies such as Rickmers, but it is good to see how those doing better are managing their businesses. For example, AP Moller-Maersk saw its second annual loss in seven decades in 2016 – $376 million. However, it has reorganised its business by splitting off several parts, including Maersk Line, the container shipping business. That is now consolidating its business with for example, the purchase of Hamburg Sub in late 2017. This will make Maersk Line stronger but will also lead to further bankruptcies of others and mergers and acquisitions. Moves such as these by the big players will result in smaller players getting squeezed out. It is likely that 2018 will continue to see increased consolidation, as well as increased alliances, as companies seek to weather
the storm of overcapacity. Staying ahead of the game is the way to success, so it’s time for analysts to at least attempt to predict the future.