The Impact of Technology on Maritime Management

The Impact of Technology on Maritime Management

22 Nov 2019

Decision makers in the shipping industry need better, faster, more accurate data upon which to base their decisions. It is imperative that managers have access to data about markets, customers, and processes which are hard for competitors to duplicate and can lead to a competitive advantage. Technology can be used for the collection of data remotely (ship to shore) and facilitate knowledge flows across business units.

In the last few years, shipping companies have embraced the concept of big data analytics as a means for creating value. Value is created by acting on insights that are derived from the analysis of high-volume, high-velocity and high-variety sets of dynamic data, what has been referred to as “big data”, i.e. data that exceed the processing capabilities of traditional data management approaches (Russom, 2011; Chen and Zhang, 2014). As more and more data are collected, stored and analyzed, shipping companies should aim to utilize the value of the data in order to make informed decisions at tactical, operational, and strategic levels.
Big data analytics can assist companies by improving their strategy and enhancing operations efficiency, and through value creation to improve their financial performance. This can be achieved through a deeper understanding of business dynamics, intensifying customer engagement, optimizing daily operations, and capitalizing on new sources of revenue (Russom, 2011).

In the context of shipping, ship management, or ship operations, big data business analytics can help create value and achieve management objectives in several areas as follows:

1) Fuel consumption: significant cost reduction can be achieved by understanding the conditions for fuel consumption optimisation of a ship at a given level of speed performance through the collection of data from the appropriate sensors and the application of optimization techniques;

2) Route and supply-chain optimization: big data analytics and optimization techniques can be applied on the data related to the ship routes. This will lead to the development of an optimal route strategy including the order of port calls on the route;

3) Operational efficiency: value can be created through efficient management of time and identification of areas for cost savings in operations such as port visits, route details, and operational ship data;

4) Maintenance prediction: data and predictive analytics can be used to identify the areas of the ship that need priority in terms of maintenance. This will ensure that maintenance is considered at the optimum moment, preventing delays, increasing efficiency, and reducing maintenance and off-hire time;

5) Cargo tracking: added value by providing to customer real-time cargo-tracking information and cost savings by tracking containers that have been lost;

6) Regulatory compliance: ship ownership and registration data can be used to determine whether the ship poses any safety, legal, or financial risk. The same checks can be carried out for companies;

7) Procurement: analysis of organizational spend profiles, procurement processes, and future demand to ensure optimal sourcing strategies and supplier selection, optimal bid processes, cost modelling, and supply-chain risk assessment;

8) Market size and competition: understand the world fleet, ship, and ship ownership information, as well as new markets.

Maritime Management

In recent years, there has been heightened consideration related to the potential application of blockchain technology in business management context (Deloitte, 2016; Froystad and Holm, 2015; Goldman Sachs, 2016). In this context, there are various opportunities for the implementation of blockchain technology in maritime management, as follows:

1) Digital records of maritime data/assets/ships: in shipping, the lifecycle of the asset (ship) can be digitalized and transferred on a blockchain. Blockchains have the ability to create a system where every ship has its own digital passport with all relevant characteristics of the ship and idiosyncratic information including ownership, registration/flag, history of sale and purchase with price-related data, transaction dates and owners, charter party contracts, loans, maintenance records and dry-docking/repairs data, and even the origin of the building materials and their condition recorded digitally;

2) Re-design of maritime management processes: if maritime data including assets related data are stored digitally on the blockchain, transactions could be handled on a blockchain in a similar way to how payments between parties are handled using digital currencies. Blockchains enable the development of a fully secure, verifiable system, so that two parties can conduct a transaction immediately, without the need for a trusted third party to verify the transaction. Because the history is easily audited, all parties have confidence in the data being shared, and the time needed to close a transaction can be much shorter;

3) Transparent markets: by creating a public ledger of transactions, the shipping market becomes more transparent and new platforms may arise. Platforms that provide, for instance, orders, positions, and fixtures will improve transparency, which is bound to increase the performance of the actors in the chartering process thanks to the transparency and the immutable results recorded in the ledger. The immutable track record of performance that is stored in the blockchain may lead to a possible new rating system. An increase of transparency will also allow regulators and agencies such as classification societies and mutual insurance clubs to get a better understanding of the risks affiliated with maritime business;

4) Payment systems: another point which is argued by literature is using cryptocurrencies in, for instance, lease payments, or as deposits for rental agreements. The advantage is that cryptocurrency can be programmed to escrow and distribute itself. However, as long as digital currencies suffer volatile price fluctuations, it is unlikely that they can be used in a maritime ecosystem;

5) Smart contracts: smart contracts are inherent to the development of blockchain-based applications. The technology enables self-executing contracts, which can automatize several processes in maritime management.

This reviewed fundamental principles and core concepts in the management of maritime companies, including organizational design structures, managerial functions, business processes, measuring and managing performance using KPIs, and the potential impact of innovation and new technology in maritime management. It has been recognized that there is a relative lack of relevant papers on these key areas in maritime management, and although many generic concepts would apply, it is also necessary to carry out shipping- and maritime-related research. This book represents an attempt to address conceptually and empirically specific aspects of maritime management. Yet, further research is needed to address issues such as organizational structures, management control, delegation, and decentralization in maritime companies in relation to the impact on business operational process efficiency. In the context of the maritime industry, there are numerous examples of leaders that inspired their organizations to unprecedented success.

Yet, research in the area is characterized with relative paucity, providing opportunities for new researchers. In this contemporary era, where research output success hinges on multi-disciplinary approaches, there is scope for investigating the relationship between managerial characteristics and business success in the maritime industry. In addition, recognizing the fundamental difference between operational excellence and strategic excellence, there is ample opportunity to examine the relationship between the two as well as to explore the determinants of operational and strategic performance excellence in shipping, ship operation, and ship management. Finally, there are great opportunities for investigating the application of technology in the maritime management context. This includes the adoption and implementation of big data analysis and the adoption of smart contracts in areas such as ship management and chartering.

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