During the time I’ve worked with ECOPRODIGI, it has become apparent that the maritime industry is not like other industries. There’s a lot of talk of “disruption” but somehow it doesn’t seem to apply to maritime industry – instead the industry is very often described as backwards or old-fashioned, even by the maritime actors themselves.
I had a chat with the keynote speaker of ECOPRODIGI’s upcoming seminar, Lars Jensen, to find out how he sees the industry and its future, based on his extensive experience. Jensen is the CEO of SeaIntelligence Consulting and has worked within the container shipping industry for more than 17 years. Recently, he has published a book “Liner Shipping 2025 – how to survive and thrive?” in which he looks to the future and the changes the industry is evidently facing.
Profound change expected – but not overnight
Disruption is nowadays one of the most popular concepts to describe the quick transformation of society and different industries, often enabled by digitalisation. Contrary to many others, Lars Jensen states that the shipping industry is not going to be disrupted – not if disruption is understood as a dramatic shift, or even disappearance of an entire industry. “We have 60 000 merchant vessels over there with a life span of 25 years, they’re not going to go away overnight”, states Jensen and continues: “We’re moving billions of tons of physical cargo, and we cannot turn that into programme code.” For this reason, even the greatest new innovations cannot change – or disrupt – the industry dramatically or very quickly.
Nevertheless, according to Jensen the shipping industry is facing a profound change in the next 10-20 years– and the key driver for the change is namely the need to digitalise and automatize. The change however, is not coming in like a strong wave but rather like a tide, to use Jensen’s allegory, which means that the shipping companies do have time to transform and find out how they should act under the new circumstances.
Understanding the industry’s logic
There are a lot of practices within the maritime industry that seem irrational from an external perspective. As more and more digitalisation projects are taking place in shipping companies, it becomes apparent that “outsiders” leading digitalisation or automation projects need to understand the industry and its physical reality first. According to Jensen, “we’re-gonna-change-everything” approach typically fails spectacularly as there are practical barriers, not because the industry likes them, but because they are extremely hard to remove: “It is unlikely that somebody completely from the outside comes in and takes control of the industry – unlike what you see in like music or video rental industries, where you really can turn the whole product into a software. We really cannot do that.”
In the era of digitalisation, Jensen proclaims himself as a strong believer in networks and direct interaction. People tend to stick in the maritime industry for very long time, often in different positions, thus building up a huge know-how of the industry’s logic. A lot of the essential information to understand, for instance, the barriers for digitalisation are not necessarily codified in books but instead is in the minds of the people in the industry.
When everything is automated, what comes after?
Now that every shipping company seems to be investing a lot of money and effort on digitalisation and automation, Jensen wants also to see beyond that: “Digitalisation and automation are necessary for any shipping company to survive, but it is not enough. The first ones who truly automate, will have a cost-advantage, but only temporarily – because if something can be automated, over time everyone will be able to do it.”
The industry is in a situation where the companies need to digitalise and automate whatever can be digitalised and automated – that is necessary to keep the company “in the game”, but it is not enough. “Where you really have to start focusing is: how do I provide the services to help my clients when either something goes wrong – there are hurricanes, port cranes that break, people that go on strike, cargos that fall over board – or it’s a unique thing they need to do that cannot be automated”, Jensen emphasises.
In this sense, the whole mind-set of the industry needs to change: the core product is no longer moving cargo from A to B, but the services the companies can provide when things go wrong or are unique in nature. This is what Jensen calls exception management. “I see the entire industry go as fast as they can towards digitalisation and automation – that’s fine. But I see very little effort focused on ‘What then? What are we going to do in terms of differentiation after that?’“
Investments for efficiency are investments for the environment
Jensen remains relatively cynical on shipping companies’ willingness to go “above and beyond” the existing regulation regarding environmental effects caused by shipping. He mentions that the companies paying increased attention to environmental concerns tend to be located in the Baltic Sea region, especially in the Nordics.
“I’m certainly not saying that nobody cares but for the vast majority it’s a matter of dollars”, says Jensen but elaborates that improving efficiency to save fuel and other costs obviously improves the environmental performance as well. The key driver might be money, but the investments for improved efficiency are investments for the environment – and this win-win situation captures the whole idea of eco-efficiency which is also in the core of ECOPRODIGI project.
Lars Jensen will give the keynote speech in ECOPRODIGI seminar on 20 November 2018. He will discuss how automation and digitalisation are changing the business processes and landscape within the maritime industry and how automation ultimately goes hand in hand with improvement in environmental performance.
Lars Jensen was interviewed by ECOPRODIGI Communications Manager, Miitta Eronen, from Centrum Balticum Foundation