From End to End #2: The Digital Value Chain of Shipping Company 4.0
Welcome aboard as we continue our exploration into the Digital Value Chain of Shipping Company 4.0. In the first chapter of our series, we set the scene for the digital revolution in the maritime industry, delving into how economic fluctuations, staffing challenges, and operational complexity are being reimagined through digital transformation. We’ve seen how the fusion of tradition and innovation is not only reshaping the shipping landscape but also paving the way for a more sustainable, efficient future.
As we navigate further, Chapter #2 of our series delves into the next wave of challenges and opportunities: (4) environmental regulations and sustainability, (5) cybersecurity, and the (6) establishment of new digital standards. These areas are crucial in steering the shipping industry toward a more responsible and secure digital era. We will explore how Shipping Company 4.0 is responding to these key aspects and reinforcing our commitment to a digital, interconnected, and green future in maritime logistics.
Always keep in mind that our concept of The Shipping Company 4.0 isn’t just about overcoming challenges; it’s about harnessing the power of digital innovation to create a resilient and thriving maritime ecosystem.
The Voyage Continues: Tackling New Frontiers
In this chapter, we turn our attention to areas where digitalization not only responds to pressing issues but also pioneers new paths for sustainable and secure maritime operations. As we navigate these waters, we’ll explore how embracing digital innovation enables us to confront and master these challenges, setting new benchmarks for the industry.
4. Environmental regulations and sustainability | Shipping accounts for approximately three percent of global greenhouse gas emissions. However, this share could continue to rise in the coming years. On one hand, the absolute amount of emissions is expected to increase due to the growth of global trade by 2050. On the other hand, other industries are advancing more vigorously in ecological transformation, potentially amplifying the relative contribution of shipping to overall emissions.
According to reports, the share of emissions from shipping could grow to 17 percent by 2050. Given the extended lifespan of many shipping facilities, it is crucial to establish a course now to meet climate targets, such as achieving Net Zero emissions by 2050. This is especially significant as emissions from ships not only affect the climate but also the immediate environment. Politicians are not inclined to merely stand by and do nothing in response to these challenges. With the “FuelEU Maritime“ law, the EU is imposing the growing use of eFuels on the industry. At the same time, Brussels stipulates that ship emissions will also be included in the EU Emissions Trading Scheme (ETS). ETS applies to shipping from 2024 and could become a cost factor.
The International Maritime Organization (IMO) also provided clear signals for the more stringent conditions at sea. The Energy Efficiency Design Index (EEDI) for new ships has already been in force for some time. Towards the beginning of 2023, this was followed by the IMO‘s EEXI, a rating system that assesses a ship‘s specifications in terms of energy requirements.
Added to this is the Carbon Intensity Indicator (CII), which assesses the CO2 intensity in shipping and determines the efficiency of individual ships for this purpose. The greenhouse gas emissions of the ship are put in relation to the amount of cargo carried and the distance travelled. Further IMO measures are already in the pipeline. For shipping companies, this means that the climate-friendly operation of ships and the associated restructuring of their own business model in the direction of sustainability cannot be avoided in the long term, especially since the IMO wants to reduce emissions by 40 per cent as early as 2030.
In addition, large business customers are exerting enormous pressure on shipping companies to be able to show lower CO2 emissions for the transport of their goods.
5. Cyber security | In a survey conducted by Cyber security company CyberOwl in 2022, 44 per cent of the industry specialists surveyed said that their organization had experienced a cyber-attack in the past three years. According to the report, cyber-attacks only cause average costs of 182,000 US dollars for the industry. But this figure quickly belies the risk of loss that exists for all operators.
For example, one in twelve ship operators must bear average costs of 1.8 million US dollars annually as a result. In the past few months alone, there have been numerous incidents that gained widespread attention in the news due to their magnitude. However, it can be assumed that these more prominent cases from the maritime industry only offer a limited glimpse of the overall events. The following table provides an overview of a few cases from recent years. What these cases show: Cyber criminals attack participants in the maritime industry along the entire value and supply chain. By law, ports and shipping companies are part of the critical infrastructure (KRITIS). For shipping companies, this goes hand in hand with a whole series of requirements. According to §8a of the BSI Act, these include, for example, proof that the IT security of the respective KRITIS operation is state of the art. The status as a KRITIS also entails a series of reporting obligations that must be complied with vis-à-vis the authorities.
In addition, there are regulations from the International Maritime Organization (IMO). Accordingly, shipping companies must consider cyber risks in their security management system. The IMO has established its own guidelines for the standard of cybersecurity in the industry with its “Cyber Risk Management.” Consequently, robust protection against cyber risks should be a core component of the digitalization strategy (security-by-design).
6. Digital standards | Initiatives such as the Digital Container Shipping Association (DCSA) are in the process of formulating common digital standards. Specifically, the DCSA has set itself the goal of establishing the electronic version of the bill of lading in the industry by 2030 with an Electronic Bill of Lading (eBL). Nevertheless, the success of such initiatives requires the consistent digitalization of all processes within the shipping companies and the willingness to invest extensively in digitalization.
Let‘s Summarize it
Our concept of the Shipping Company 4.0 is a response to a multitude of challenges. Consistent digitalization is required to meet the diverse challenges facing shipping companies. Therefore, the Shipping Company 4.0 provides a holistic framework for the upcoming transformation.
Continuing the Journey
In the next section, we will build on the theme of ‘Digital standards’ and turn our focus to Smart Shipping. We will explore how data can become the fuel for innovations and new business fields, and what we can learn from the aviation industry in this process.
