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October 23, 2015

Voyager News

When you come to a fork in the road…When you come to a fork in the road…

T and communications for shipping stands at a fork in the road. In one direction lies the promise of hugely increased bandwidth and the potential for almost unlimited connectivity delivery by High Throughput Satellite systems.

To the other lies the reality that shipowners and operators, already struggling to make money, are reluctant to pay more for services that historically have failed to deliver the promised potential.  Whether to go one way or the other depends on whether the service providers can convince owners, operators and managers that crew connectivity demand will continue to rise and that big data and increased business connectivity is the ‘White Knight’ that can deliver fresh value.

As delegates to the recent DigitalShip Singapore Conference heard, whether supplier, buyer or end user, neither seems an easy path at present.  The starkest illustration of the service problems providers face came from Futurenautics’ Roger Adamson, whose latest connectivity survey uncovered a huge difference in average regional spend between European and Asian owners. This was despite the same owners indicating their next installation would be for (more expensive) VSAT.

“In terms of annual investment in IT, around 60% of operators said they were spending $20-60,000 per vessel per year on IT but the difference is Asia. Where European operators spend $28,000, in Asia it’s just $5,000,” he said. That matters because the region accounts for 50% of tonnage and cargo demand.

There is a mismatch too between the perceptions of how the connectivity is used. While 80% of the crew questioned said connectivity was either a significant or very significant factor in their choice of employer, only 3% of operators said crew welfare was a driver to spending more money on communications.

The survey – of 41 ship operators with 4,300 ships, 3,000 crew across 30 nationalities,  60% officers, 40% ratings – reported for most owners and operators data traffic was flat or even slightly slowing, despite most indicating that VSAT or HTS would be their next investment.  Futurenautics asked crew if the entry into force of MLC 2006 had meant improved connectivity, despite it not providing a mandate to provide crew services. Though some 20% said it had got better, 40% said it was about the same and 40% said it had actually got worse. But what would seafarers most like to see from connectivity?

The answer – fast and free in-port Wi-Fi – seemed surprising but Adamson said crew “get the fact that it will be expensive and slow at sea but they don’t want to pay when in port and they expect it to be good”.
This struck a chord with China Navigation Fleet Director Martin Cresswell, whose company’s vessels make numerous port calls across Asia. While at sea, the fleet uses ‘expensive and slow’ VSAT but crew are given SIM cards that enable them to use their own devices while in port.

“We have given the crew free communications for many years, they are limited in size of message but can send as many as they like. What we are looking for is high speed internet access in port that we can provide free to crew,” he said.  “There is a gap in the market between what users expect and what providers can provide. We are waiting to see a convergence of moderate cost with good quality service and when that happens we will be in there quick,” he added.

Cresswell said he didn’t identify massive amounts of data to stream to or from ships but had seen that equipment manufacturers are increasingly asking for data access to the machines they install onboard.
A supplier’s request was one thing, but what about the owner themselves? For newbuildings the long amortisation means specifying the latest kit is not a problem but retrofitting an existing vessel needs more creativity than many suppliers are showing.

As Cresswell pointed out, additional Capex is a tough sell at board level unless equipment could be leased long term. “Technology is changing a lot and communications requires continuous updates. We would take new models every couple of years provided we could can do so at reasonable cost.” For that to happen he said, means long lease periods from suppliers who would have the same lifespan as the vessel.
For Peter Schellenberger of V.Ships, whose clients include the new breed of financial shipowners and operators, the question is always how fast comms could bring costs down.

“These guys don’t want to run ships and their investors are not aware of how they run. What they have is a detailed need for budgets and clarity. Convincing owners like this of the necessity means having to throw in additional added value such as ECDIS, charts or engine connectivity. We need to keep owners motivated to spend any money at all.”

The mismatch between expectation and reality looks set to continue. As Roger Adamson pointed out, about 300,000 satellite terminals have been activated over 30-odd years. Apple sold more of its iPhone 6+ on the first day of availability. “It’s unrealistic of shipowners to expect they will get that kind of technology at the same price point and connectivity as they get in their mobile phone.”

But even marginal improvement in connectivity could enable deeper changes, he said, and that is where the hope lies, for the supply side at least. “Lack of connectivity has been a brake on disruption [in shipping]. Owners are sitting on huge amounts of data that could be turned into value. Once we start to experience that disruption, the cost benefits become easier to demonstrate.”

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