Managing Risk and Regulation in Shipping
If shipping is the lifeblood of the global economy, then technology is emerging as its beating heart.
Where would the world be without ships? The Egyptians may never have discovered trade. The Vikings might never have conquered and raided neighboring nations.
Today, shipping is the lifeblood of the global economy. The international shipping industry is responsible for the movement of around 90% of world trade – from raw materials to food and finished goods. In the EU, the shipping industry supports over 2.3 million jobs, contributing €145 billion to the region’s GDP.
But these benefits do not come without significant costs and risks. The maritime environment is one of the most dangerous environments in which to operate, with a risk of occupational fatality up to 180 times greater than for the average workplace. The environmental impact of shipping activity is significant, from oil spill disasters, such as the Exxon Valdez and the Amoco Cadiz, to greenhouse gas (GHG) emissions.
Unsurprisingly, shipping is a highly regulated industry. Two principal evolving conventions, SOLAS and MARPOL have been created to regulate maritime operations to manage these safety and environmental risks. These regulations have been broadly successful – ship losses have dropped by 75% over the last 50 years and there has been a 20 fold reduction in significant oil spills over the last 40 years.
However, operators still fall foul of these regulations. Financial pressures within the intensely competitive shipping industry can lead to irresponsible operators illegally dumping waste at sea to avoid the disposal costs in port, or using cheaper, dirtier prohibited fuels. Responsible operators can inadvertently violate the regulations simply through poor administration of ships’ logs required to demonstrate compliance. Transgressions of the regulations are a profound risk to operators. They can lead to multi-million dollar fines, impounding of the vessel or banning the vessel from operating in specific countries or ports. In almost all cases, these costs are uninsurable.
Is there a better way for ship operators and owners to manage the operational risk of their fleets, and do so in a manner that is resilient to change? It’s very likely the answer is “yes!”
Compliance is first and foremost a process problem. With new regulations, ship operators must analyze current working processes to determine if they sufficiently ensure compliance, and modify where they do not.
Appropriate technology can be leveraged to model compliant, efficient working practices, and provide a platform to disseminate these to a diverse, disparate workforce. The technology can also be extended to ensure that the workforce is then compliant with this process – not just doing the right thing, but also doing that thing right.
Data and analytics integration can also be a critical enabler. Sensors can be attached to systems to ensure correct equipment operation. Data flows from these sensors can be integrated with other disparate onboard systems to form a coherent single picture of ship operation. Electronic logs can be automatically updated as significant physical events are detected. System failures of environmentally important equipment can be quickly detected preventing inadvertent pollution.
If shipping is the lifeblood of the global economy, then technology is emerging as its beating heart. Please click below to learn more.