Big data and artificial intelligence are positioned to radically transform the entire global supply and logistics chain, notes Andreas Berger, CEO of Swiss Re Corporate Solutions.
“Within the next 15 years, we expect the global maritime industry to be fully interconnected, integrated, and digital,” he says.
“This will lead to unprecedented performance improvements and efficiency gains. It will also push novel and fully integrated data-driven shipping, as well as data-driven financial and insurance services.
In this context, we need to work together to establish data lakes and data protection standards because digital partnerships will help us monetise the benefits of digitisation.”
2019 Sees Attitude Shifts In Financial, Safety, And Trade Issues
In this, the second year of our survey, it’s worth noting a few issues for which respondents’ views have shifted.
For example, respondents showed more confidence in 2019 in some financial areas:
This year’s respondents were less likely to view insufficient access to finance as a significant issue, and its score dropped to 2.65, down from 3.01 in 2018.
Michael Parker, Chairman, Global Shipping, Logistics & Offshore at Citi, feels the rise in confidence regarding access to finance can be traced to a number of factors.
“First, owners feel that excess capacity is being absorbed. With a view that most freight markets will enjoy stronger earnings in 2020, a better outlook will translate into renewed investor interest in debt and even equity markets,” he says.
“Second, the unwinding of the distress in the shipping finance sector is near completion, with the banks exiting the sector or reducing their exposure having achieved their objective, leaving a clearer and competitive group of committed lenders focusing on high-quality owners and projects.
Third, the challenges of new regulations, such as IMO 2020, the IMO’s commitment to the 50% reduction in GHG emissions, which everyone knows is just a first step, and the broader impact of the ESG agenda on the maritime supply chain are making everyone realize that scale and financial strength are going to be essential.
“For those companies that can manage through these new more complex issues, finance will be forthcoming, and that is why one can see renewed confidence in access to finance from that type of industry participant. For small and medium sized owners, access is there through some banks and the alternative lenders, though at a price.”
Unlike the gain in confidence for financial issues, respondents in 2019 felt that a major safety incident would have a more significant impact than in 2018.
The impact score was 3.11 in 2019, compared with 2.76 in 2018, while its likelihood score remained relatively low, just as the year before. It also maintained a reasonably high preparedness score.
However, Alastair Marsh, CEO of Lloyd’s Register, sees three key reasons why maritime stakeholders should be concerned over the likelihood of a major safety incident.
“First, there is the inherent risk from new regulations, which often demand changes to ways of working and the use of emerging technologies,” he says.
“Second, as vessels become more reliant on increasingly complex and interdependent technology, predicting a failure becomes an equally complex task. There is also the increased risk of cyber-attack, which has the potential to lead to a major safety incident.
Third, there are factors that are beyond the industry’s control due to geopolitical uncertainty.”
While safety in shipping has improved over the years, 100 ships are still lost every year, on average, and there continues to be a high number of work-related injuries and fatalities compared to other industries.
Marsh says there are several ways the maritime industry can address these risks and improve its safety performance: “We need to continue to work to assess and model the risks surrounding new technologies, with focus on the cyber threat.
We could equally benefit from looking at other sectors, such as aviation, to see how they have managed the risks associated with rapidly changing technology.”
Meeting The Challenge Within The Maritime Industry
Much of what keeps maritime professionals awake at night involves issues ripped from the headlines of the global media.
Cyberattacks and threats involving data and new technology.
An economic crisis and trade wars. Geopolitics in places like the Strait of Hormuz and the South China Sea.
Climate change and the reality of limited resources.
Cyber-related threats stayed near the top of the list of concerns in the 2019 survey, and are likely to remain high on the list in the future.
Shipping is part of global and local critical infrastructures, which have come under increasing attack over the past few years.
Also maintaining a high level of concern this year are economic and geopolitical concerns. Financial concerns are driven by issues such as the trade tensions playing out between the US and China.
Should the global economy stall, the maritime industry will be swiftly impacted. And our survey respondents do not believe the industry is well prepared to weather such a storm.
Environmental issues took a central place in the survey results this year, with some areas that were newly added drawing much concern: decarbonization of shipping, which placed at number two for impact, and new environmental regulation, tallied as third in impact.
The lion’s share of concern here was undoubtedly climate change and efforts to decarbonize shipping, which we explore in a deep dive chapter elsewhere in this report.
Perhaps the main takeaway from our look at the top issues of 2019 is the lingering feeling respondents have that the maritime industry is relatively unprepared to deal with them.
This has not changed from last year. But rather than be a point of worry, we hope this view of preparedness is taken as a challenge.
Our qualitative research indicates that the industry has the power to influence many of the top long-term issues identified, and the expertise and resources to focus on them.
Download our 2019 Global Maritime Issues Monitor.