ECDIS supply should be bundled with ENC updates, online delivery and broadband provision, according to interviewees from a survey carried out by The Strategy Works
A survey conducted by consultants The Strategy Works in Q4 2017 discovered that ECDIS suppliers need to provide bundled solutions with electronic navigational chart (ENC) updates and value-added services for route planning. ECDIS supply is a highly competitive market, dominated by the installation of Japanese hardware from companies such as Furuno Electric and Japan Radio Co.
Around 90% of interviewees agreed that Japanese manufacturers are the biggest players in ECDIS supply. One interviewee even said “The Japanese have taken control of the market”.
Interviewees said the success of Japanese manufacturers is not necessarily just down to price. Key factors include ease of use and performance, along with the convenience of sourcing multiple pieces of hardware and software from the same place and better integration across the bridge.
An influential European mariner told The Strategy Works that “not many of our decisions are based on price”. On the other hand, smaller shipowners, particularly in Asia, are perceived to be more cost-driven and are waiting until they have to meet IMO ECDIS carriage requirements.
But interviewees suggested shipowners should not be driven by SOLAS compliance in their decision to install and use ECDIS for daily operations. As one interviewee stated “Anyone who does not change to ECDIS is wasting money because that is what the youngsters are trained on.”
To compete, ECDIS manufacturers and suppliers should consider bundling the hardware with software and value-added services. Shipowners interviewed suggested that services including weather information and efficient routeing applications would be beneficial, while ECDIS suppliers see this as a growth market.
Around 90% of interviewees from the downstream side of ECDIS supply felt that this value-added service market is set to grow dramatically within the next five years. Increases will be driven by suppliers seeking to gain competitive advantages through creating a one-stop-shop for integrated software.
“Bundling is an important part of supplying data to the ship operators,” said one unnamed ECDIS provider. Another European distributor said that “within the next five years bundling will be significant” as the customer wants “more service for the same price”.
“Within the next five years bundling will be significant”
Another predicted that ECDIS service “will be an entirely different market within the next five years” because of bundling, as it is an inevitable trend in ship navigation. ECDIS hardware is becoming something of a commodity, so user interfaces and advanced routeing software are seen as significant brand differentiators as this enables good passage planning.
An additional trend is bundling ENC updates through satellite communications, especially VSAT, to shipping fleets. To provide these services, ENC suppliers have teamed up with satellite communications companies. This means a proportion of the broadband that ships utilise is used for downloading chart updates to ECDIS.
There are indications that some ECDIS manufacturers have already started to move into the satellite communications market. However, there were mixed opinions of whether there was a future role for ECDIS manufacturers within the maritime broadband market.
The main barrier to ECDIS manufacturers entering the satellite communications market themselves is the required investment in infrastructure along with the strength of current broadband providers.
As one ENC distributor said “broadband providers have the market to themselves and do not need to share with manufacturers”. Another barrier is that shipowners are often on long-term broadband contracts and do not regularly change provider. Customer loyalty and convenience are therefore a factor.
However, 70% of the interviewees said bundling ECDIS supply and maintenance with ENC delivery and satellite communications provision would be attractive to shipping companies..
This attractiveness is due to the simplification that bundling provides when updating software and the ability to pick and choose both hardware and software, rather than being constrained to one brand. Bundling is also becoming more attractive to distributors as “it gives them a competitive edge”.
Lease versus own
Another competitive advantage could come from providing an ECDIS leasing service. Interviewees in the survey agreed there would be benefits to shipping companies for leasing rather than purchasing ECDIS..
One key benefit is a lack of large capital outlay involved in leasing when compared to purchasing ECDIS units. Another is the “peace of mind” that comes from the user not being responsible for maintenance and updating ECDIS, which is with the supplier.
“Leasing is an extremely competitive package”
A leading but unnamed shipping company said that leasing “makes perfect sense and is becoming a more attractive option for owners and managers”. One of the distributers said there is “great interest in leasing applications and subscription-based services” and that “leasing is an extremely competitive package”.
Interviewees were also asked to consider the future for ship navigation, and in particular IMO’s strategy to implement e-navigation. There was general consensus that not many people in shipping actually know what e-navigation is. It can mean different things to different people.“People think that the ‘e’ stands for electronic but it actually stands for enhanced,” said one of the interviewees.
Interviewees thought e-navigation had not been properly adopted by IMO yet.
“People think that the ‘e’ stands for electronic but it actually stands for enhanced”
However, there is a clear view that the move towards e-navigation is considered a natural progression for the shipping industry. Those surveyed said the main advances are likely to occur in automatic routeing and shore-based vessel monitoring that could lead in some cases to autonomous vessels.
One leading mariner told The Strategy Works “I think we will see much more e-navigation as there are huge savings involved.” Distributors described the transition to e-navigation as “a natural request” from shipping companies and that it will become “more and more prevalent”.
Nonetheless, interviewees regard e-navigation as technology for the future of navigation. There are schemes under development, but so far, there are no clear leaders.
This is an edited extract from The Strategy Works: ECDIS Market Trends. London-based consultancy The Strategy Works carried out in-depth telephone interviews in October 2017 with several high-profile industry figures from ECDIS providers, ENC distributors and end-users from shipping companies.