In today's maritime industry, standing still is moving backward. The wave of digitalization isn't coming—it's here. From regulators to companies’ internal procedures, the need to streamline processes and enhance safety is pressing.
According to Wärtsilä Marine Business, 2/3 of shipping companies have started on their digital journey, with this being just the beginning, as almost all of them are currently exploring digital solutions.
Technical Management is the key factor that ensures safe and reliable operations of the global merchant fleet, which consists of more than one-hundred-thousand vessels. However, technical management teams often get bogged down by manual processes, leading to delays, avoidable human error, and missed opportunities. Digitization is the low hanging fruit that saves cost and increases efficiency.
The question now isn't why to digitize - but how.
A glimpse at the potential savings
Technical operations cover a broad spectrum, from safety and regulatory compliance to sustainability and timely deliveries.
After years of running operations manually and with low efficiency, digitization brings substantial saving opportunities in reduction of operating expenses (OPEX).
In one of KPMG’s maritime industry research studies, it was determined that digital solutions can help reduce OPEX by 10%-20% per category. For an average container vessel with ca. US$ 3,000,000 OPEX / year, the saving potential amounts to over US$ 483,000 per vessel per year. For a company that has 40 vessels under management, this represents over US$ 19,000,000 in savings per year.
Digitalization brings optimizations to all sides
Inspection and maintenance
According to AGCS, 80% of accidents happen due to human error. Top reasons for human errors are: Fatigue, inadequate communication, lack of general technical knowledge, inadequate knowledge of the ship's system, automation error, decision based on incomplete information, faulty standards and procedures being followed, poor maintenance, hazardous working environment.
Many of these reasons can be addressed by filling in the information gap, which can be optimized easily by digitization. On the one hand, crews can follow standards and regulations through on-the-job guidance, and collect structured data. On the other hand, generic tasks like manual data entry and report generation are eliminated, freeing up the 65% of TSIs time “being wasted” to focus on other more important tasks.
Industry regulators are taking initiatives on making changes. This means that digitialization trend is going to last. The Oil Companies International Marine Forum (OCIMF)’s updated inspection regime SIRE 2.0 is already requiring their inspectors to use mobile devices that have all the related regulations incorporated. Vessels that don’t pass the regime will face severe consequences like not being able to carry cargo. With the full rollout for SIRE 2.0 in early 2024 approaching, many tanker companies have started to implement internal inspection inspection regimes that leverage mobile devices and modern software as well.
Manning
There are 1.89 million seafarers powering the growing world fleet. By 2030, over 30% of those in management or senior supervisory roles are expected to retire. Coupled with the fact that fleets are growing, and ever larger vessels, seafarers are getting promoted faster. With less experienced seafarers in the supervisory ranks, concerns about quality grow stronger.
At the same time, according to EMSA, 41.5% of EU seafarers are digital-natives. This underscores a potent opportunity: integrating technology into frontline operations and providing on-the-job training to bridge the expertise gap.
Currently, a large part of seafarers roles involve collecting and passing on information, especially amidst tightening regulations. By having the convenience of retrieving and reporting information in the palm of their hands, and getting guidance on-the-job, crews’ burdens are lighted, and standards are more reliably followed.
Based on the experience of Kaiko Systems, equipping seafarers with a mobile App to plan, conduct, and document their daily jobs not only makes it easier for them to perform high-quality work. It also saves them up to 50% of time spent on inspections, by automating the lengthy reporting process.
On the other hand, as seasoned seafarers approach retirement, their wealth of knowledge and know-hows could be lost. Through digitized solutions, expertise and experience that is built up over decades onboard, can be made accessible to the next generation.
Over the next five years, companies with a digitized seafarer workforce will develop competitive advantages on growth and market authority.
Insurance
In the marine insurance sector, Hull & Machinery (H&M) insurances typically have a gross loss ratio of 90%. This high ratio indicates that for every $100 earned in premiums, insurers pay out $90 in claims.
This is exacerbated by repeated incidents and the complexities of the post-pandemic landscape, causing insurance premiums in 2022 to soar to alarmingly high levels, with many shipowners observing double-digit percentage increases.
Through ensuring job quality and enabling data exchange, digitization will benefit the whole value chain from ship owners through to brokers, insurers, and reinsurers.
- Shipping companies reduce avoidable incidents by 30% to 60%
- Insurers can harness real-time insights to adjust premiums, ensuring a more precise risk assessment, and having reduced claims probabilities.
- Brokers, utilizing reliable and structured data, are better positioned to offer targeted risk mitigation strategies.
Drawing parallels from health insurance where insurers incentivize individuals to perform health activities with perks like free Apple watches or cashbacks, Kaiko Systems collaborates with insurers to offer similar incentives to shipowners. Specifically, shipowners can get a 15% premium reduction by using Kaiko Systems for ensuring quality during routine on-board work — a potential saving of almost US$ 2,000,000 for a 40-vessel fleet.
Digitization stands as a win-win for shipping and insurance entities alike, elevating the quality of onboard technical tasks and ensuring transparency in vessel health.
Enabling the next generation of technical operations
The maritime industry is now at a pivotal juncture. Embracing digitalization is no longer a choice, but an urgent necessity, driven by the workforce structure change to the benefits of all interconnected stakeholders in the industry.
Whether it’s the increased operational efficiency for the employees, the direct cost savings through a significant reduction in OPEX for the shipping companies, or the enhancement of safety and quality control on board for the regulators and insurance companies. The digital revolution offers tangible advantages that are obvious. And the opportunities cited in this blog post only underscore the beginning of what's possible.
Kaiko Systems, among others, exemplifies the potential of this digital frontier for the industry, where manual processes are not just being replaced, but are being reimagined to optimize efficiency and profitability. And beyond the technology and tools, lies a vision of setting a paradigm shift towards safer, smarter, more collaborative maritime technical operations.
