WORKSHOP ON MARITIME CLUSTERS AND GLOBAL CHALLENGES … 2_ a - Martin Stopford - Web.pdf ·...

The view in the deep ocean

Martin Stopford President,

Clarkson Research

WORKSHOP ON MARITIME CLUSTERS AND GLOBAL CHALLENGES 50th Anniversary of OECD WP6

Challenges in the world maritime industry.

Martin Stopford, President CRSL 1 Dec 2016

The world of 1966 - changing



In 1966 Blue Funnel’s Priam multi-deck was the latest thing in liners

Containers on deck! For 100 years the ships improved by evolution but the system did not. The liner and tramp service continued unchanged. But the world changed and needed a different system – a “revolution”

In 1966 tramps were big business for shipbuilders

• The replacement of the liberty ships was a big issue in 1966.

• 30 designs were put forward to replace the 700 remaining Liberty Ships

• The SD14 and Freedom did best

• 350 SD14 built over next 20 years


Malcolm McLean “couldn’t remember where he got the idea!”

First international container service, purpose built Fairlane discharging Rotterdam May 1966

S5: In1966 the container “revolution” took its first step


In December 1966 the first VLCC, the Idemitsu Maru went into service (209,413 dwt)


1. Shipping cycles getting bigger 2. Sea trade growth slowing 3. Regional trade transformation 4. Shipyard capacity management 5. The zero emissions agenda 6. How to harness digital technology? 7. Is the business model serviceable?

50 YEARS LATER, MANY NEW CHALLENGES


1. Shipping cycles getting bigger

In today’s simplistic business model, cycles are the drivers of change

The Shipping Market Cycle Today - 25% below 25 year trend

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Cla

rkse

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dex

$0

00

/day

The Clarksea index shows the average earnings of tankers, bulkers, containerships & gas

Clarksea Index was

$11,768/day last week

25 year trend 25 year average $15,582/day


5-Dec-16 Lecture 3: Shipping Market Cycles 10 wwww.maritimelectures.com © Marecon Ltd wwww.maritimelectures.com © Marecon Ltd

Looks like the longest dry cargo cycle since 1845!

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1725 1745 1765 1785 1805 1825 1845 1865 1885 1905 1925 1945 1965 1985 2005 2025

If the dry market recovers in 2020 this cycle will have lasted

17 years

Cyc

le le

ngt

h in

yea

rs

Sailing ship era 1743 to 1870

Source: based on the MEFI index produced by Martin Stopford

Shows FIRST year of each cycle & length from beginning of peak to beginning of next peak

2. Sea trade growth slowing

The trend growth rate of trade on a slowing trend

05/12/2016 Maritime Lectures – Guest Lecture 2: Shipping & Shipbuilding Market Outlook

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World ip % PA

Credit Crisis Dot.com

Crisis

VERY WEAK INDUSTRIAL

GROWTH SINCE 2009

S6: World Industry growth rate to September 2016 – very sluggish

Updated feb 2016

05/12/2016 Maritime Lectures – Guest Lecture 2: Shipping & Shipbuilding Market Outlook

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Sea trade growth edges down - about 2.3% growth likely in 2016

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Growth of sea trade 2000-2016 (annual % change)

3. Regional Trade Transformation

The OECD trade share shrinking & owners moving offshore


1. In 1966 the Maritime World was dominated by the OECD

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OECD Imports Non-OECD Imports

OECD sea imports 75% of total

Non-OECD sea Imports 25% of total

Source: data collected by martin stopford from various sources, mainly United Nations and UNCTAD

1. OECD imported 75% of cargo

2. Multinationals managed transport

3. They imported raw materials

4. And exported manufactures

Sea trade was growing very fast Seaborne imports by region (% of world trade)

9. Break-bulk liners struggling 10. Cargo handling costs escalating 11. Could not handle expending trade 12. First container service in 1966

Liners making move to containerisation

Bulk market - industrial shipping was developing

5. Cargo owners lead the change 6. They built big, specialised ships & 7. Owned or chartered most of fleet 8. E.g. 80% tankers on timecharter


The bulkers & liners struggle with mature technology

5. The bulk & liner revolutions are over

6. Cargo owners have stepped away

7. Designers struggling to improve ships

8. Very big containerships disappointing

2. In 2016 the OECD is still quite important, but declining at 1% a year

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OECD Imports Non-OECD Imports

OECD Imports

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Non-OECD Imports

63%

OECD Imports

77%

Non- OECD

Imports 23%

1. OECD now imports only 37% of cargo

2. China and Asia driving trade

3. Non-OECD 63% and maybe 75% soon

4. Non-OECD has six times the population

Sea trade growing but OECD losing market share

The future – another revolution desperately needed

9. Shipping investors need a new vision

10. World economy needs new services

Seaborne imports by region (% of world trade)


In 1966 only 13% of the fleet was flagged out. Today it is over 70%

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National Flag Foreign Flag

Move to offshore flag accelerates in

2000s boom

National flag fleet static

• 1.3 billion DWT of “flagged out” tonnage

• Over 70% of the merchant fleet is now registered offshore

• Up from 42% at the end of the 1980s (see chart)

• Shipping now a global business

Million dwt


4. Shipyard Capacity management

We need a better strategy for managing the supply of ships, but are not likely to get one

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Regional Shipbuilding Trends 1902-2015: different dynamics today

Korea

Japan Europe

other countries

GT 37.3%

GT 35.4%

GT 19.1%

GT 2.4%

China

China’s shipbuilding strategy has changed from “getting bigger” to “getting stronger” GT 5.8%


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Deliveries

Series4

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new capacity)

Stage 1 (expand existing

capacity)

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shipyards)

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diversify in 423 active shipyards)

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World shipbuilding output & capacity 1994- 2017

In 2009 there were 992 active yards In 2016 there were 423 active yards

forecast


5. The Zero Emissions Challenge

Yamaha have a zero emission bike, but a zero emission cargo ship will need extreme technology

In 2066 seaborne trade could be 46 billion tonnes – or could it?

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Source: data collected by martin stopford from various sources, mainly United Nations and UNCTAD


6. How to harness digital technology

Are we smart enough to use the information & communications technology (ICT) revolution to revolutionize sea transport?

Who is smart?

Three ways change the business Model


1. Smart Ships – with much better QA & efficiency standards;

2. Smart Fleets – which manage the smart ships like a transport factory (e.g. a BMW factory).

3. Smart Global Logistics – which integrate the whole thing door to door

Massively more efficient satellite communications are removing the 5000 year old need to treat the ship as the business unit

S10 : The Smart-Shipping “Toolbox” creates opportunities:-


1.Satellite communication: new INMARSAT Ka band global systems (99% reliable) broad band data to be collected, processed & beamed ashore. Submarine cables too.

2.Telematics: "sensors" & FPGAs generate digital information about equipment & ship - cheaper and better than ever.

3.Data Storage: The cloud provides storage for data generated by sensors. Analyse “Big Data” to improve performance.

4.Smart phone-style apps : to do specific jobs without big computer systems & management information

5.Information systems: management know exactly what’s going on and performance levels. “Deep learning” is getting better.

6.Automation: feedback loops allow automation of many tasks (navigation, maintenance, operations etc)

Railnova information system

Auxiliary sealed & monitored

Young engineer with degree

No 1 hold 12,600m3

No 2 hold 13,300m3

No 3 hold 13,000 m3

No 4 hold 12,300 m3 floodable

No 5 hold 13,000 m3

No 6 hold 13,000 m3

No 7 hold 12,200 m3

5. Navigation & manoeuvring

1. Propulsion plant control

2 Auxiliary power management

3. Auxiliary machinery operation

4. Ballast & trim management

6. Cargo handling operations

7. Administration of maintenance

8. Supply of spares management.

Alarm management

Thruster control

CONNECTIVITY+ SEMI-AUTOMATION+DASHBOARDS etc

On

bo

ard co

mm

un

ication

s 1: Smart Ships – smarter operations, better quality control


Martin Stopford, President CRSL 1 Dec 2016 Source: Martin Stopford 2016

DATA READY SHIPS

1. Navigation 2. Operations 3. Comms.

Core systems

1. SHIP TEAMS

ship servers managing data, apps & comms

6. SHIPBUILDERS & EQUIPMENT

SUPPLIERS

5.CUSTOMERS WITH CARGO SYSTEMS

7. PORTS & THROUGH

TRANSPORT

TRA

NSP

OR

T FA

CTO

RY

Warehouse (on cloud?)

Company Systems:- 1. Process management 2. STQ monitoring 2. Messaging system 3. Intranet & dashboards 3. Phone system 4. LPWAN & APIs

3. SYSTEM

S. TEAM

S

1. Support systems 2. Process data 3. Automation 4. Apps, FPGAs etc 5. Manage stats

1. Technical support 2. Maintenance systems 3. Regulatory reports 4. Fleet performance 5. Personnel management

4. TEC

HN

ICA

L TEAM

S

2. M

AN

AG

EMEN

T

LOCATION AN ISSUE

Volume, Velocity, Variety

2: The Smart Fleet – run a fleet of ships as a transport factory


3. The Smart Global Network –integrated transport systems

Integrating sea cargo and inland transport was a goal of the 1960s but it never happened.

This vision is difficult for slim organizations.

Smart Shipping can breathe life into the through transport system, opening up a new era of global trade

The challenge is to generate new business by integrating sea transport into the global trade network

7. Is the business model serviceable?

Weak personnel, little control and few technical solutions

The End

A challenging time

WORKSHOP ON MARITIME CLUSTERS AND GLOBAL CHALLENGES … 2_ a - Martin Stopford - Web.pdf ·...

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