Shipping 3.0

IMarEST Lord Kelvin Prestige Lecture

Roger Adamson, Chief Executive, Futurenautics

11th December 2014

Shipping today is dysfunctional

o Oversupply / speculation in tonnage o Poor safety record – 10 times OECD best practice o Regulation /compliance – moving at the pace of the slowest

• Environmental – Ballast water, MARPOL, SEEMP, ECA • HR – STCW Manila 2010, MLC 2006 • ECDIS – E-navigation

o Commentators and industry alike are agreed that cyclical nature of shipping is a handicap, but there seems to be a lack of focus on how to address this.

o Global Marine Trends report 2013 took no account of technology – too disruptive to model. That’s not good enough. The assumptions are that things will remain static. But they won’t.

o Shipping 1.0 was sail. Shipping 2.0 was steam, radio and containerisation. Shipping 3.0 is digital.

Macro Trends • Internet of things • Cloud technologies • Millennials/Gen Y • Industry 4.0/Cyber physical systems • Nearshoring / Nextshoring • Collaborative Consumption • Drones • Nanotech • Autonomy • Circular Economy

• Robotics • Artificial Intelligence/Predictive Algorithms • 3-D Printing/Additive Manufacturing • Crowdsourcing • Gamification

Volatile, Uncertain, Complex, Ambiguous o Many of us fail to appreciate the exponential trends at play

– Digitisation

– Automation / AI / machine learning

– Evolving business models

– Changing consumer & employee expectations

o Shipping 3.0 will see pressure on business models, margins, value chains, stakeholders, customers and seafarers.

o Data is the new currency

Futurenautics - The Seven Spheres

Autonomous/Unmanned Flagship of Shipping 3.0 • 40% reduction in operating cost • 7-10% increase in cargo carrying capacity • Simplified vessel construction, 12-15% lighter • Enhance safety & reduced environmental impact

2015 – First autonomous prototypes 2017/18 – Rolls-Royce demonstrate fully autonomous vessel 2025 – Fully automated ships entering service 2035 – Most ships delivered with autonomous capability 2050 – Some segments e.g. Container, fully automated and unmanned

And it’s already in use today...

Are we as safe as we think?

Neuroscience tells us our brains work differently with digital information Screen reading shifts to "non-linear reading", characterised by skimming a screen or having your eyes dart around a web page. We are losing the bi-literate brain.

The brain wasn’t designed to multi-task Too much stimulation/input and multi-tasking leads to IQ declines similar to drugs and sleep deprivation. In studies multi-tasking men lowered their IQ scores to the average range of an 8 year old child The effects may not be temporary. High multi-taskers show less density in the anterior cingulate cortex, responsible for cognitive function

“I feel that it is important to create an awareness that the way we are interacting with the devices might be changing the way we think and these changes might be occurring at the level of brain structure”

Human-Machine interaction – autonomy dulls situational awareness

We aren’t good at this But machines are That’s why the unmanned ship will happen

And it’s not just about seafarers • Knowledge automation– 70% of white collar jobs in the US at risk. • From Fleet to Middle Management Shipping 3.0 will impact everyone • We have a responsibility to manage that

Business e-volution

The internet of all things, the cloud, big data, knowledge automation and customer and consumer expectations will change shipping. Shipping leaders must be prepared as

-The cloud offers companies new creative ways to monetise physical assets as a service - value creation of $1m / vessel ~ approx. $20bn for world fleet

-Transparency and data availability erodes established market norms and threatens disintermediation as businesses seek closer integration with their customers

Shipping – Entering the transparency phase

Business e-volution The internet of all things, the cloud, big data, knowledge automation and customer and consumer expectations will change shipping. Shipping leaders must be prepared as

-The cloud offers companies new creative ways to monetise physical assets as a service - value creation of $1m / vessel ~ approx. $20bn for world fleet

-Transparency and data availability erodes established market norms and threatens disintermediation as businesses seek closer integration with their customers - 3D Printing leads to disintermediation of the logistics channel

Disintermediation of the Logistics Channel

Business e-volution The internet of all things, the cloud, big data, knowledge automation and customer and consumer expectations will change shipping. Shipping leaders must be prepared as

-The cloud offers companies new creative ways to monetise physical assets as a service - value creation of $1m / vessel ~ approx. $20bn for world fleet

-Transparency and data availability erodes established market norms and threatens disintermediation as businesses seek closer integration with their customers - 3D Printing leads to disintermediation of the logistics channel - Industry 4.0 – leads to ‘use cycle’ within an increasingly circular economy - New multi-sided business models are required - exhaust data may hold promise - Organisations require new skills – already a shortage of ‘Data Scientists’ - Old sources of competitive advantage will give way to new ones – diseconomies of scale - Evidence based decision making

New, aggressive, techno-centric competitors will enter the market

Seatropolis 3D Print Fabs

On berth vessel maintenance

Hyper Connected

data centre

Autonomous vessels

G Roads (Autonomous Trucks)

Collection of real time marine data

Intelligent logistics systems

Drone Port (Cargo)

Collection of real time port data

And it’s already in use today...

And it’s already in use today...

Black Swans o Drone Airships

– $6.5 billion / pa investment in drone technology

– New materials – buckypaper – Co-location with Seatropolis – Infrastructure constrained regions

o Nuclear Fusion – Ship efficiency – Disruption in key maritime sectors – Disruption to global trade patterns – Targeting maritime

Shipping 3.0 will require all our ingenuity, nerve and resilience.

“There is no silver bullet, no-one knows where the digital world is headed” Heather Cox Citi Group

“Smooth seas do not make for a skilful sailor.”

We’ve already had one light bulb moment – time for another

May you live in interesting times...

Welcome to the world of the Futurenaut

E: roger.adamson@futurenautics.com T: +44 (0)207 125 0090 W: www.futurenautics.com/current-issue/