Transforming blah blah blah into meaningful collaboration
There is no contest for shipping’s word of the year, it’s collaboration by a nautical mile. Every event, panel, conference and white paper calls collaboration vital for decarbonisation and the enabler of digitalisation.
Haris Zografakis confessed that as a Partner at Stephenson Harwood he spent 29 years of his life not collaborating. As Blue Visby Consortium Coordinator, he has focussed on solving one of the industry’s biggest challenges; ships sail fast between ports then wait for a berth, burning money and emitting carbon.
Collaboration in his experience has been “mostly blah, blah, blah”. There is a spectrum of options that can evolve to joint industry projects, joint development projects and joint ventures, “but these are not a solution, just steps. They raise awareness, but is not sufficient,” he said.
The Blue Visby Consortium includes organisations including BIMCO, The Baltic Exchange and UKHO. Their focus is on ‘one thing only’, an attempt to reduce and remove the single largest inefficiency from global trade and with it shipping’s carbon emissions – equivalent to those of Denmark or Norway.
“What was needed was to develop a system that uses elements of collaboration and which proposes mechanisms to share costs and benefits and addresses split incentives. It starts with blah, blah, blah and moves towards a step, then to a solution,” he added.
The Digital Container Shipping Association is dedicated to increasing efficiency of logistics through the development of digital trade documents, a process that Head of Digital Trade, Niels Nuyens agreed was a model for collaboration in practice.
More than 30 years have passed since the first ‘ebill’ initiatives were announced and traction is still small. The technology and legal acceptance are in place, so why the delay? “Research we conducted last year showed that the blockers to using e-bills of lading were the readiness of trade partners. Waiting and not being first is not the reason for delay. There needs to be a shared commitment that will create collaboration,” he said.
Dorte Thuesen Christensen of tanker operator Hafnia said the company supported the use of digital trade documents and thinks it is important to take the first step so that others will follow. “We have a few charterers onboard and we’ve tried to create demand; if customers don’t want it, it will never happen.” she said.
Nuyens agreed the DCSA is ‘not there yet’ and one of key reasons is standards. “You can only have ebills on the basis of common standards. It is obvious that collaboration is easier on that basis; it’s a tough job because all members have same ambition but their own perspectives.”
Director of consultancy Novamaxis, Peter Schellenberger had previously assembled a working group to discuss digital solutions and found charterers and P&I Clubs were the most reticent to join. “Emotionally they are not part of the discussion,” he said.
As a result, discussions are dominated by the same group and Schellenberger shared the results of a poll about new solutions and disruption. “Only 20% of owners and managers were interested, 30% were open to change and the other 50% not interested unless they were regulated,” he said.
He also felt that industry unfairly blamed seafarers for lack of interest in new technologies onboard ship, when in his experience as a shipmanager, technical teams have pulled decision-making back to shore. “A modern approach would be to reintegrate seafarers into the decision-making process. Using them to bring digital products and service to the ship would have a positive impact on retention and motivation,” he added.
Certainly making investment decisions depends on close co-operation, according to Thuesen. The commitment required to build lower emission ships requires backing from charterers on a period contract so that risk is shared. “We need to get out of the ‘you win, I lose mindset’ because we still lack maturity on that approach. You have to show your own leadership to get your partners to do the same,” she added.
Rajesh Gopinathan of Seaspan Corporation agreed that designing and building tonnage (which his company long term charters to liner operators) requires collaboration, particularly with class societies and charterers to produce vessels capable of using fuel solutions as well as securing the bunkering supply chain.
Zografakis developed his theme and dispelled the easy definition of collaboration. For it to be meaningful he suggested required a combination of standard setting, benefit sharing and governance.
“Standard setting is massive and we don’t do enough of it. Common interest means having benefit sharing that’s meaningful. There are easy technical solutions to ‘sail fast and wait’, the difficulties are governance and benefit sharing,” he said.
He cited the principal example of common financial interest in shipping; General Average, in which the liabilities of a casualty are shared between all stakeholders.
As to governance, he cited the model of P&I Clubs, mutual societies that collaborate to pool risk. Made up of competitors, they operate on the basis of self-governance for common interest. “That works and we use a model similar. Collaboration is only meaningful with these elements in place. Without them, it’s all talk,” he said.
But with the industry giving greater attention to efficiency initiatives, is there a danger of digital disparity, that the bigger, wealthy companies draw away, leaving the smaller ones behind?
Schellenberger thought size was not necessarily the determinant, but rather being committed to the process. “This is a chance for everyone, small and medium operators. It also depends on the investment in training, the crux is implementation and people on board who can handle the implementation.”