ShipCrunch

Announcing Portfire 1:40 - The Banksy of shipping?

The person deemed most worthy of inclusion in the Portfire40 is a man (or woman) of mystery.

By Ryan Skinner (email)

After a considerable nominations process and then voting, the first winner of Portfire40 was selected! Months ago, in fact.

Unfortunately, this first honoree is a shy man. Months of attempts to get him to talk manifestly failed. Finally, Peter Mello of Sea-Fever proposed we consider him as a little like the Banksy of shipping - a mysterious, influential figure.

You see, he calls himself HAUS. He seems to be a seafarer. And he edits Wikipedia articles.

That's it.

Some of you may ask: "How does this qualify him for inclusion in Portfire40, which is about people who are having a lasting impact on the industry by the novelty and vigor of their thinking, the strength of their passion for improvement and the impact they have on the community?"

International Criminal Court for Shipping?

Could a ferocious supranational arm of justice for shipping, solve all of shipping's problems?

By Ryan Skinner (email)

I've been there before. The rulebook that's pulled over the shipping industry like a straight-jacket doesn't work. It creates paper-compliers (following only the letter of the law) and stifles innovation.

Nobody (except Norwegians, god bless my host rulers!) likes a nanny state, which is the demeaning status the IMO has been brought to by its class of uber-technocrat mandarins. Their rules become an impenetrable barrier between people who do things and true excellence.

But, how can you prescribe a certain level of performance without rules? Let's abandon the territory of sticks for a second, and look at carrots. How many national R&D systems long ago understood that steering the direction of innovation (via technocrat diktat) was hopeless, and gave the steering back to industry itself?

That is, shipping companies themselves know what performance means. They know what failure looks like. Let them direct their own resources towards excellence.

But, but, but, but, I hear you whining, how about those who run operations of zero-quality to compete purely on price? How can a quality operator compete with them?

They can't.

You don't need to be a Nobel economist to understand that price is alpha and omega. That's always been the fundamental of shipping, hasn't it? Move things from here to there at the lowest possible price.

At the same time, you don't want to see oil slicks the size of Rhode Island pouring from countless tankers strewn about the world's beaches like bulimic bikini models.

Shipping has always seemed to have an enforcement problem. Because it crosses borders daily and operates in international space, efforts to police the industry have always seemed handicapped.

A few years ago, I delved deeply into the Milosevic case in the Hague, and particularly the unique status of the International Criminal Court, whose creation Wikipedia deems "the most significant reform of international law since 1945." Here was a body who managed to apply a set of global morals in the face of rigid and protectionist nations.

Even if I hate his despotic technocratic cousin, I do love Johnny Law. Nothing warms my heart like a tough sheriff (must be my American blood). Imagine if shipping companies were allowed, within some limitations, of operating as they saw fit. So far, so good. But if they screw up, they get hit hard. Very hard. We're talking very, very painful fines here.

After the Valdez incident, US authorities created OPA 90 to burn tanker companies that messed up. At the time, I was able to document how some shipping companies created straw management companies to minimize their liability. That was a fault with a national law. Let's empower a real supranational authority to bring some international order to the high seas.

It's either that or slowly suffocate from rules. These are the choices. Pick your poison.

Yes, finally, a few words on piracy

What it takes to put an issue like piracy on the high seas,
higher on the public agenda

By Ryan Skinner (email)

Piracy's a subject I long ago decided not to touch with a barge-pole. Why? It doesn't need attention from the likes of me, and so many people know so much more than I. Let them fill the airwaves with ideas and opinions.

It's a tragedy that piracy has not gained more attention, though. An utterly solvable problem of heart-rending proportions taking place in full openness has generated less overall attention than, say, one memo from a Nokia CEO.

Don't blame the public. Until these pirates are stealing our women and raping our cattle, we're not going to give it two thoughts. It's not an issue that is touching people where they'll feel it.

The industry has seemingly crafted pretty strong economic arguments against piracy. I've heard cost of piracy figures ranging from $1 billion up to $12 billion (can you say piracy bubble?). I'm sure these facts and opinions get the creaking machinery of the bureaucracy moving, but there's no urgency.

I've seen little in the way of emotional appeals. The closest it came was during the Maersk Alabama incident, but that story turned into an action movie featuring a sniper.

Suspend your disbelief for a sec. I see Leslie Stahl of 60 Minutes in the humble home of a Ukranian second mate, who describes the harrowing ordeal of an extended period of incarceration on his own ship at the hands of pirates. Stahl asks the mate's young daughter "how did you feel when your daddy was kidnapped?" The young girl cannot explain her fear, but we can see it better than any words can convey.

Stahl interviews one of the warlord pirate leaders in Puntland, and a couple 16-year-old pirates who are about to board a mother ship. "Why do you do this?" Through the translator, we hear them say "It's a living."

Stahl talks to shipowners, negotiators on both sides, IMO leaders and Navy admirals. She paints the picture of an entirely avoidable state of affairs, beginning with a collapsed state harried by fish poachers and illegal dumping and ending with a menace to a salt-of-the-earth workforce.

Who's going to pitch this story to 60 Minutes? Take Producers David Gelber, Howard Rosenberg, Shachar Bar-On, or Associate Producer Sam Hornblower. All have friends of friends in shipping. Go ahead and look them up in LinkedIn. Maybe you know someone who knows them, or another producer.

It's all about the stories. Who knows a seafarer with a piracy story that hits heart-strings? Our piracy experts have countless colorful sources on both sides of the piracy equation. We know the navies, the IMO and the shipping industry will talk about it.

For a producer of gripping television documentaries, this story has a bow on it.

Here are some examples of other people trying to put some color to this story, if on a more modest scale than 60 Minutes:

Kirk Klocke's 3-part documentary on the shipping industry and piracy

A CBC documentary that has, unfortunately, been taken off the air

Sky's Ross Kemp in search of pirates

My cousin the pirate on Vimeo

Somaliland Piracy (but only if you understand Italian)

Mandatory ECDIS the worst thing that could have happened?

They say everyone chooses their own kind of hell. For shipping, it just might be the rules.

By Ryan Skinner (email)

It's total sacrilege, but I'm going to say it. Maybe DNV f*cked up.

Now, I have all the respect in the world for the guys over at Høvik. They're brilliant. Even if I kind of panned their Quantum thingy, they're still leagues ahead of most outfits in this business. They're what passes for bleeding edge in (let's be frank) an oftentimes dull industry.

But consider this ECDIS business. Over and over again, people pushing ECDIS cite the DNV studies, which demonstrated that mandatory ECDIS would reduce groundings by some dizzyingly high percentage. It was more or less on the back of these studies that the IMO went whole-hog and made these chart computers mandatory on all SOLAS ships PDQ.

The rules logic goes awry on the graph where x = some not-too-distant point in the future and y = a metric tonne of rulebooks. Suddenly, a rule requiring every master to have his mother on the bridge to hold his hand, doesn't work. The sheer weight of rules sinks the ship.

Now, I'm a big fan of ECDIS. It's ingenious like the GPS in a car, which I don't use but love on rentals. And perhaps that's the difference. No one mandates a GPS. No one argues that every GPS operates a little differently. No one moans about the need to update a GPS now and then. No one needs to take any special training to use one.

Would it not be better for regulators to get far out of the way, and let technology adoption take its own natural path? If ECDIS is just an example, is the profusion of rules making shipping safer, or more dangerous?

In order to apply a little science to this question, I've created/found a few graphs that help illustrate the problem. The first illustrates the expanding stack of rules that apply to shipping operations:

As we can see from this well-documented study, the amount and detail of rules-making has grown out of control. This chart is anecdotal, yes, but anecdotal evidence from shipping companies suggest it's approximately true. Is it having a beneficial effect on safety? Here are two charts taken at (relative) random regarding maritime casualties.

Granted, increasing volume of accidents and value lost may easily stem from a much larger world fleet. Nonetheless, it doesn't seem as if more rules = more safety. Is it then wise to create, yes, even more rules?

When considering mandatory ECDIS, perhaps it would be best to look at accident figures for high-speed craft (ferries and the like). ECDIS has been mandatory on these for many years; has it resulted in fewer incidents? Anyone have the data on that?

Both shipowners and officers are rightly grumpy about ECDIS mandation. Many people are simply PO'd that this thing's being pushed down their throats. Officers hear that they will get dual ECDIS and paper will be gone, and they worry. What about viruses? What about system crashes? Others rejoice.

I know the ECDIS fan-boy crowd is going to come down on me hard for this. They argue (in many cases, rightly) that without mandation the merchant fleet simply won't do ECDIS. Why? Because it's costly. And that may be true. But costs come down. Applications increase. And pretty soon ECDIS would be mandatory for entirely different reasons, not legal ones.

You can legislate yourself into a thicket, and I fear this may be happening more and more often in shipping and at the IMO.

Does shipping have an efficiency dilemma?

Does more efficient shipping equal more ships and more pollution and emissions? The Jevons Paradox.

By Ryan Skinner (email)

I've had an operation in the new year, and thus more time to read some meaty stuff. I stumbled over a particularly compelling little article in the New Yorker that argued persuasively against the dangers of energy efficiency.

"Em, what?" you may ask. How is energy efficiency dangerous? I'd encourage anyone to consult the full article (a great read) by David Owen directly here. [Sorry, subscription required for full text].

For everyone else, here's the gist. A 19th Century economist named William Stanley Jevons noted that his contemporaries were confusing economic use of fuel (efficiency) with reduced consumption. In fact, the opposite often takes place: Greater efficiency spurs renewed investment and results in even greater consumption. It's become known as the Jevons paradox.

The logic holds. It's similar to an argument I heard about car safety. With all the safe accoutrements that have been added to modern cars, why is traffic mortality still so high? Because people drive faster. If you want real traffic safety, replace the airbag in the steering wheel with a spring-loaded knife. That'll slow people down.

This paradox can be easily seen in shipping. How many times have we heard shipping's wafer-thin champions describe how the per-unit efficiency and cleanliness of ships have radically improved? Of course, any idiot can see that shipping's overall environmental footprint has grown and grown. Cleaner ships begat more ships begat more pollution.

Some would argue that the connection between efficient ships and pollution has become "decoupled". That is, more efficient ships would not trigger increased investment. When energy becomes only a marginal proportion of costs, this happens. So tell me, is energy a marginal proportion of shipping's costs? Will it be any time soon?

A valuable thought experiment in this context might be to consider how great the volume of transport could be given zero costs. That is, if anything could be transported (say, teleported) anywhere, instantly, at zero cost, how much more would be transported than today?

The ultimate irony of some of Jevons' champions is their argument that the best way to cut greenhouse gas emissions would be to mandate unefficient ships. It's counterintuitive, but it at least moves the focus from a slightly misleading metric - efficiency - to the most painful one - cost.

What do you think? Is the game of chasing efficiency counterproductive?

ShippingEfficiency.org: Slam dunk for the industry, or toaster stunt?

Is the Richard Branson-magic the stuff of industrial progress, or the stuff of smoke and mirrors?

By Ryan Skinner (email)

Carbon War Room's Peter Browning dropped me, ever so casually, a press release from Cancun last night, informing me of the world's first carbon emissions data hub for shipping. Their press release is here: Download Carbon War Room unveils world’s first carbon emissions data hub for shipping . Washington Post, The Guardian and Sky News have already carried the news.

Basically, we're talking about a web-site, with a back-end that claims to provide ship charterers and supply chain pro's with vessel efficiency information. It's built on the IMO's EEDI and the CCWG's CO2 index.

I'm not going to dive into the merits of EEDI and the CCWG methodology. Leave it that they have some soundness. @freightinvestor responded to my tweet arguing that shippingefficiency.org was a slam dunk for the industry thus:

Now, I've had my issues with Carbon War Room in the past. And, again, I would argue they're making the same mistake. Once again, they ask for widespread participation, while they only follow up with the few who serve their interests.

But, alas, you can't get upset when the big kids won't let you play in their sandbox, if they manage to build a great sand castle. Many in the industry have argued that a widely inclusive and democratic process on big, industrial questions is impossible. Better to work with a coalition of the willing. Perhaps that's the rhyme and rhythm of this kind of progress.

The question remains: Is what they've constructed merely a pretty sand castle, or is it something better and sturdier?

As PR stunts go, slapping a metaphorical energy efficiency tag, like those we see on dishwashers and toasters, on to the side of a post-Panamax container ship has some merit. It's cute, straightforward and easily comparable. It just might fix an industry problem, allowing buyers of shipping services to select based on a vetted standard for environmental performance.

If there are any problems related to the public value of shippingefficiency.org, it's these:

1. It could kill moonshots. That is, when you create a nice and easy stepwise way to enable lowered emissions (if small), then you sap the energy from bolder efforts to gun straight for zero emissions.
2. It doesn't really do anything about overall shipping-related emissions. Coal-powered production of goods in one country will not suffer, compared to cleaner-powered production in another country. That is, we're only looking at the relative efficiency of moving things, not producing them. Arguably, shipping could say that production isn't it's problem. From a PR perspective, though, it is.

Shipping web-sites that aim to bite off as much as shippingefficiency.org has, and chew it, are few and far between. Shippingefficiency.org doesn't solve shipping's emissions problems, but it puts a decent face on the effort, if only for the industry itself.

Got opinions? Anyone leaving a comment here, sharing their opinion of shippingefficiency.org, I promise to forward to Carbon War Room's Peter Boyd directly. Let's put some opinions on this.

Collision over port-area pollution, e-Navigation and shipping secrecy?

An irresistible force hits an immovable object in the immediate vicinity of voters. Ouch.

By Ryan Skinner (email)

Shipping's long pleaded its innocence in environmental terms. It argued for efficiency in supply chains, even as smoke stacks belched SO_X and NO_X into port-side populations' lungs.

Suddenly, shipping's going to get the terrible opportunity to put some figures behind its words. That is, ships' operators are going to be asked (at the sharp end of a law) to reveal their emissions figures to port authorities.

Why? Because they have these figures, because port authorities know they have them and because new technologies for port traffic make them important. What's going on here is the collision of emissions monitoring, greater attention to emissions in port areas and e-Navigation.

e-Naviwhat, you say? Many imagine e-Navigation as just an extension of ECDIS, whereby you'll get your charts on a screen, along with weather information, tides, blackjack, sports scores and your horoscope, or something along those lines.

But e-Navigation is more than that. It's about tying ships much closer to shore authorities. We're talking about setting up a big, fat data and communications pipe between ships coming to ports and shoreside authorities.

One of the often-stated goals of e-Navigation would be a rationalization of port traffic, so that ships would not steam hellbent-for-leather to a port, then idle just outside the port waiting for a slot. It would be folly to believe that shoreside authorities aren't going to demand a feed of emissions data from each ship coming to land from, say, 100 kilometers away.

Will shipowners and operators freak out to hear they're going to have to give all and sundry full access to their pollution vital signs? To their schedules? And to their operating profile? I imagine so. After all, Maersk recently announced that they would give shippers with full, certified emissions data related to their shipments. They never said they would publish the same on a Times Square billboard.

Particularly for port areas, greater transparency and novel technology are set to slam into the interests of secrecy. What's your take?

I'll show you mine, if you show me yours (#measurement)

Has shipping finally gotten a decent yardstick to beat itself (senseless) with? It might.

By Ryan Skinner (email)

This week Maersk announced that it had obtained Lloyd's Register certification for a scheme to measure carbon emissions from its ships. From now on, it would:

Add the carbon dioxide (CO2) data - verified by Lloyd’s Register - as one of eight performance measures in score cards that are presented to customers.

That is, the data will be certified, not just a figure jerry-rigged by a hyperactive business development manager. In the article in Bunkerworld, a representative from Starbucks got all frothy about the ability to put together complete supply chain emissions records. It's something I understand the rest of the supply chain has been waiting for: accurate emissions figures for the sea link.

Whose ship is it anyway? A five-part investigative series

The rising software content of merchant ships sets the stage for an epic struggle over ships' components and data.

By Ryan Skinner (email)

This is the first part of a five-part series that studies the impact that software is having on the commercial shipping industry. The series will feature a major shipowner (Wilhelmsen Lines), a major supplier (Wärtsilä), a coalition under the aegis of the Norwegian Shipowners' Association, a Maltese centre of excellence (MARSEC-XL) and a major auto manufacturer coalition (AUTOSAR).

What's at issue? What's the cost? Who does this affect? What are the solutions? Who's involved in trying to solve them? All of these questions will be addressed in the series. These pieces will be cross-published in Lloyd's List. Join the discussion with comments to this series of posts! Now here's the series:

General Manager Knut L. Arnesen of Wilhelmsen Lines Malta shares some of his company's recent frustration with components onboard their ships: "We need to reduce our emissions, but - to do that - we need to be able to make a consolidated picture of what's going on in the ship. Then we can modify and measure; basically: run iterations. But it's been a maddening process to get all the data from component suppliers into a common format," said Arnesen.

It's a common and increasing complaint. Technology is coming to ships so quickly and in so piecemeal a fashion that it is creating a threat both to profits and safety. Commissioning problems and delays with newbuildings coming out of the shipyard, human error issues on the bridge and painful software decisions in refits are often related to a lack of software integration in ships' equipment.

A quick description of what is meant by software integration: At the heart of every automated component is a piece of software code, often a very large piece. Unless the software from different automated components is organized into a common framework, those components won't work well together and data from one will be unavailable to the other. That's Wilhelmsen's and Arnesen's quandary.

The answer is to organize software into a framework that is shared - in other words, a common architecture for shipboard components' software. This has so far been missing from the shipping industry, and its absence is starting to make itself felt. Arnesen confirms that interoperability challenges are costly, and getting worse as ships grow increasingly sophisticated.

Yet the process of arriving at the kind of shared framework that allows shipboard systems to communicate easily to one another can be a long and painful one for the industry. Why? It challenges the business models, and by extension the livelihoods, of many suppliers, as well as the organizational power of a fragmented shipping industry.

In the next instalment, we see how the automotive industry solved its serious software integration problems - a model for shipping?  

Shipping, meet global gas politics

Stability-loving shipping may bite off more volatility than it can chew, with gas.

By Ryan Skinner (email)

Norwegians love gas. I mean, they really, really love gas. Norway invested around 6 billion euro to develop its Snøhvit field in the Barents Sea, and another 8+ billion euro for Troll. Feel that love.

But, that wasn't enough. Norwegians also trekked over to America to help the Yanks extract gas from shale. As a result, America, which was going all soft on Putin to get cheap Russian gas, will probably be a net gas exporter in ten years.

The phenomenon of shale gas extraction has led more than one energy expert to exclaim "this will change the geopolitics of natural gas."

Into this turmoil comes shipping, which - according to a recent Lloyd's List poll - believes gas to be the biggest game-changer looking ten years ahead.