The maritime industry is in an important position for both global trade and development, but is still in the stone age when it comes to business operations, argues Wilhelmsen chief digital officer Inge Sandvik
Shipping giant Wilhelmsen rejects the oft-repeated label that our industry is conservative, with chief executive Thomas Wilhelmsen telling a DNB-organised conference in January “if you are conservative in the maritime industry, you will not make it.”
The group is engaged in a programme of digital transformation, and to this end brought on board chief digital officer Inge Sandvik, who has a long history of ‘disrupting’ and digital development in the Norwegian start-up scene, in January 2017. In a wide-ranging interview, Mr Sandvik shared details of what digitalisation means for the group, and his experiences so far.
“I think the maritime industry is in an amazingly interesting and important position if you think about both global trade and development, but we are in the stone age when it comes to how we operate this business,” said Mr Sandvik.
“Within the next few years you will see the winners and losers differ a lot compared to how they are today. And the companies that are investing in digital transformation will get the opportunities,” he added.
While technology is an enabler, digitalisation is about changing business models, said Mr Sandvik. The group realised that while they have domain knowledge of how the maritime business works and how to gain customers’ trust, they did not have the knowledge or framework to build digital products and services. To this end they acquired a 50% stake in Dolittle, a start-up that produces new architecture and frameworks for digital product building, in May this year. “We can take our domain knowledge and put it into a framework that enables us to build applications much faster and in a safer and scalable way,” said Mr Sandvik.
One model where Dolittle’s expertise is paying dividends is in the product-as-a-service model. This replaces the traditional one-time transaction model of sales with one that fuses the actual product itself with accompanying services and monitoring software, with possible payment options including a fixed subscription fee or even performance- or outcome-based models. Wilhelmsen are investigating this possibility with ropes, incorporating sensors into the rope that gathers usage data that is then transferred to an app on a shipboard tablet and to shoreside staff for analysis. With Dolittle’s assistance, the software component of the project, both backend and frontend, was developed in just two weeks. Once the framework for this is established, its scaleable nature means it can form the basis of potentially hundreds of simultaneous projects and processes across a range of potential applications.
As part of the smart ropes project, the company is also looking at making different product types compatible. For example, the API of the ropes enables them to ‘talk’ to sensor-enabled winches. This enables products to be provided in bundles that can provide data not just on the operations of individual pieces of equipment, but also how they work together, for example the tension on ropes from the winches.
“We see a huge potential in terms of building better customer experiences by working more horizontally”
These new business models make it possible to drive down costs for service and product providers as well as customers. For Wilhelmsen this means becoming much more data-driven. While the companies that comprise the group produce a lot of data, this is currently quite siloed. “We see a huge potential in terms of building better customer experiences by working more horizontally,” both within the group’s companies but also with partners and customers, he said.
Wilhelmsen is also looking at deploying machine learning models onto ships that can provide operational decision-making support for crews. “Most shipping companies, if they even do that, are sending data ashore” for computation, Mr Sandvik said. “They’re looking in the rear-view mirror and just seeing what has happened.” By deploying machine learning models that utilise edge computing it is possible to anticipate problems with preventative maintenance by computing data on board. On shoreside, these same models can then be further developed and deployed in real-time to vessels, said Mr Sandvik.
The cost of communications is another issue that Wilhelmsen seeks to address, said Mr Sandvik. Extension of 4G connectivity further offshore is being investigated, and peer-to-peer communication between vessels. Looking to the future, it is anticipated that vessels will be narrow-band enabled, meaning there would be shipside industrial wireless networks enabling data to be captured at a very low cost from sensors in a much more efficient way. Wilhelmsen is testing out both 5G and the long-range wireless data transfer technology LoRa as possible narrow-band systems.
Wilhelmsen came together with Kongsberg earlier this year to create Massterly, a joint venture company that will allow the two firms to create a complete autonomous shipping value chain, covering design and development, control systems, logistics services and vessel operations. Explaining the decision to set up the JV, Mr Sandvik said Wilhelmsen observed that areas of landside logistics were inefficient and environmentally not optimal – “to put it mildly” – and saw the opportunity in disrupting by transferring this to autonomous shipping on water, “a road that doesn’t need any maintenance, has no capacity problems and has huge capability.” He added that this is “not only disruptive by being more environmentally friendly, but by really disrupting existing business models.”
“For the first time in history we see that environmentally friendly regulations are being disruptive from a business perspective”
“For the first time in history we see that environmentally friendly regulations are being disruptive from a business perspective,” he said, adding “It’s going to be impossible to compete against these types of shipping concepts in the future.”
Looking to the future, Mr Sandvik noted that while humans will remain on board vessels, they will be operating in a very different, much more data-driven way. “The future of ship management will be very different for those companies that are able to take advantage of these new data platforms and the new way of building both products and services that can drive down costs”, he said. “That’s what it’s all going to be about, driving down costs and increasing customer experience.”
Expanding on this, he noted that in future there will be more focus on “creating products and solutions that customers love to use.” Traditionally, user experience has not been a priority in the maritime sector, he said, adding “we will be simplifying a lot of the things that people hate today.”
Of course, with increased connectivity comes increased cyber security risks. “Cyber security is the number one priority for anyone that wants to digitise a ship – it’s an enormous risk,” said Mr Sandvik, noting that this risk is only going to increase. Wilhelmsen is keen on the collaborative approach to managing this risk and is working with other companies to define standards and establish forums including participants from across industry to address the challenges posed.
Looking back at his 1.5 years with Wilhelmsen, Mr Sandvik said he had observed a significant cultural change, with people becoming much more willing and open. “The most important thing is, we’re still talking about people, not technology,” he said, noting that the same change management principles of getting people on board apply as elsewhere. “I’m super excited to be in a company where there’s so much excitement around innovation and being able to adapt.”