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Shipping firms navigate new world of risk

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Shipping firms navigate new world of risk

The maritime transportation industry has come a long way since the days when navigators used the stars to guide wooden sailing ships across the oceans, but future changes may be just as radical as the shipping industry embraces artificial intelligence to transport goods around the globe.

While the launch of fully autonomous oceangoing vessels may be years away, shipping firms already are implementing navigational and operational tools that rely on AI and more developments are expected.

As shipping firms rely more on technology, however, cyber exposures increase, potentially changing the risk profile of the vessels, insurance experts say.

The international shipping industry is responsible for transporting roughly 90% of world trade, according to the Londonbased International Chamber of Shipping, and, with the increased deployment of so-called megaships, transportation industry analysts said efficient delivery is critical because they bring more cargo into ports.

Collision avoidance technology, so-called smart containers that monitor the condition of their contents, and remote-controlled and autonomous vessels are some of the innovations that shipbuilders, transport companies and insurers are discussing as they look to make the industry more efficient.

“We are in a world where efficiency is the name of the game,” said Chris Maro, New York-based vice president, marine with JLT Specialty USA, a unit of Jardine Lloyd Thompson Group P.L.C. “You’re seeing firms become more and more under pressure to reduce costs, so the need for quantitative cost analysis and engaging AI systems has never been more prevalent.”

In April, Sea Machines Robotics Inc. of Boston said it had signed an agreement with Denmark-based A.P. Moller-Maersk Group to test computer vision, Light Detection and Ranging (LiDAR) and perception software on one of Maersk’s new ice-class container ships. The system uses AI to improve at-sea situational awareness, object identification and tracking, Sea Machines said.

In June, French container transportation and shipping company CMA CGM S.A. said it had collaborated with Shone, a San Francisco-based startup that specializes in the use of artificial intelligence for maritime transportation, to embed AI on board ships.

“From an insurance standpoint, we welcome this approach because we believe it’s the right approach where they are utilizing vessels and not re-engineering them,” said Andrew Kinsey, New York-based senior marine risk consultant for Allianz Global Corporate & Specialty S.E. “What we’re doing is we’re taking data collection, which has always been part and parcel to a marine operation, but now we are analyzing millions of data points and using AI to crunch those numbers.”

Others are looking at autonomous vessels.

In a 2016 report, Autonomous Ships: The Next Step, British power systems manufacturing firm Rolls-Royce Holdings P.L.C. said that by 2035, the company “hopes that autonomous oceangoing vessels are a common sight on the ocean.” Earlier this year, Rolls-Royce said it had signed a deal to supply its Autocrossing system to 13 ferries for the Norwegian transportation company Fjord1.

“The automatic crossing system provides safe, predictable and energy-efficient transit back and forth by automatically controlling the vessel’s acceleration, deceleration, speed and track,” Rolls-Royce said in a statement.

In May, Rolls-Royce and Finnish shipowner Finferries agreed to jointly demonstrate remote and autonomous ferry operations.

Charles Fernandez, London-based head of marine liability and hull at Canopius Group A.G., said the increased connectivity of the shipping industry prompts concerns about cyber attacks, which he said, is “one of the biggest challenges we face on the insurance side.”

In June 2017, Maersk was hit by the NotPetya virus, which disrupted its container shipping operations for weeks. The company estimated the attack cost as much as $300 million.

Mr. Maro of JLT Specialty said that owners and operators already are developing cyber security plans, “but the reality is that if autonomous vessels are going to be introduced, it is going to shift the need to build out an even greater cyber security management system.”

Niels Bruus, senior director, head of future solutions at Maersk Line, in Copenhagen, Denmark, said the company is using technology to assist crew members, not replace them.

“For us, it’s about using technology to make vessels safer, more efficient and more reliable,” he said. “I think the focus should be on the technology and how the technology can best support the people to operate the vessels in the most efficient way.” Mr. Kinsey of Allianz said autonomous ships may one day sail across the world’s oceans, but there are obstacles to address.

“There are still many hurdles to get through from a legal and logistics and insurance point of view,” he said. “There are so many things that require human interaction on a vessel. When you sail from San Francisco to Hong Kong or New York to Rotterdam. You can’t go that whole trip without having to change over generators or have something break. We just don’t have the mechanical systems that are dependable enough to operate autonomous vessels.”

 

 

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