A broader view: The Future of Shipping

SAFER, SMARTER, GREENER

A BROADER VIEW

THE FUTURE OF SHIPPING

Project Director Trond Hodne

Lead Authors Tore Longva, Per Holmvang, Vebjørn J. Guttormsen

Authors Nippin Anand, Océane Balland, Andreas Brandsæter, Christos Chryssakis, Dariusz Dabrowski, Eivind Dale, George Dimopoulos, Magnus Strandmyr Eide, Atle Ellefsen, Chara Georgopoulou, Etienne Gernez, Audun Grimstad, Sondre Henningsgård, Nikolaos Kakalis, Sastry Yagnanna Kandukuri, Eskil V. Kjemperud, Knut Erik Knutsen, Martin Lågstad, Gabriele Manno, Philippe Noury, Tore Relling, Shinta Y. Rotty, Rolf Skjong, Linda Stavland, Jason Stefanatos, Kay Erik Stokke, Hans Anton Tvete, Alexander Wardwell, Jan Weitzenböck, David Wendel, William Wright, Alexandros Zymaris, Kjersti Aalbu

This initiative is a collaboration between DNV GL and Xyntéo, an advisory firm that works with global companies on projects that enable businesses to grow in a new way, fit for the climate, resource and demographic realities of the 21st century. www.xynteo.com

Suggested reference: DNV GL: The Future of Shipping, Høvik, 2014

Photography: iStock.com

ACKNOWLEDGEMENTS

Foreword from Henrik O. Madsen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

A broader view . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

SUSTAINABLE SHIPPING – THE CHALLENGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY . . . . . . . . . . . . . . . . . . . . . 20World population and economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Information and communication technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Climate change and environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

PATHWAYS TOWARDS SAFER,

SMARTER AND GREENER SHIPPING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40Safe operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Advanced ship design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

The connected ship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Future materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Eficient shipping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Low carbon energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

THE WAY FORWARD – SHIPPING TOWARDS 2050 . . . . . . . . . . . . . . . . . . . . . . . 102References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

One hundred and ifty years ago, the world was in the midst of a profound transition.

New technologies such as steam power, electricity and the telegraph led to an explosion

in productivity and connectivity, reshaping the global economy in just a few short

decades. Yet these shifts also introduced new risks to life, property and the environment

and transformed the relationship between technology, business and society.

MANAGING RISK,

BUILDING TRUSTDNV GL’S PAST, PRESENT AND FUTURE

4 THE FUTURE OF SHIPPING

It was this context into which Det Norske Veritas and

Germanischer Lloyd were born. These companies,

which have now merged into DNV GL, took on the

role of verifying that vessels were seaworthy during a

time when the convergence of new technology and

business models caused an unacceptable number

of ship accidents. By managing the increasingly

complex risks associated with the rapidly evolving

maritime sector, classiication societies built trust

among shipping stakeholders, contributing to the

birth of a new era in international trade.

Today, as DNV GL celebrates our 150th anniversary

and our irst year as a united company, the world

is at another inlection point. The technologies,

systems and institutions that have driven the most

prolonged period of growth in our civilisation’s

history are being tested by the new demands of the

21st century. And once again, our ability to manage

risk and build trust will help us enable the changes

the world needs.

In order to rise to this challenge, we have been

exploring six themes of strategic relevance to our

new organisation. Some of the themes, such as

climate change adaptation, have taken us into newer

territory; others, such as the future of shipping, have

seen us re-evaluate more familiar ground. I believe

that all of them, however, are absolutely central to

our efforts to empower our customers and society

to become safer, smarter and greener.

I hope that we can use the themes’ indings, as well

as the momentum of 2014, to engage a wide range

of stakeholders in a forward-leaning discussion

about how to achieve our vision – global impact for

a safe and sustainable future.

I look forward to the journey ahead.

Henrik O. Madsen

5

As DNV GL turns 150, we are exploring six ‘themes for the future’ – areas where we can leverage our

history and expertise to translate our vision into impact. We selected these themes as part of our efforts

to take a broader view of the relationship between technology, business and society. On these pages

you will ind short introductions to each theme. To ind out more, join us at: dnvgl.com.

A BROADER VIEW

The future is not what it used to be. Rising global

temperatures, diminishing natural resources and

deepening inequality threaten everyone’s prospects,

including those yet to be born. Yet alongside these

new global challenges are new innovations, solutions

and opportunities that make a safe and sustainable

future possible: a world where nine billion people can

thrive while living within the environmental limits of

the planet. In this theme, we set a vision towards this

future. We analyse the barriers to change and detail the

concrete actions that governments, business and civil

society must take together if the obstacles are to be

overcome and the opportunities for safer, smarter and

greener growth are to be seized.

Technology has always been an enabler of societal

change and we can expect that it will play a pivotal

role in our transition to a safe and sustainable future.

Indeed, existing technology is already unlocking safer,

smarter, greener solutions for powering our economy,

transporting our goods, caring for our sick and feeding

our growing population. But history shows that trans-

formative technologies – from the automobile to the

internet – can take decades to reach scale. And time is

one resource we do not have. How can we accelerate

the deployment and commercialisation of sustainable

technologies while ensuring that they are introduced

safely into society? In this theme, we investigate this

question, analysing the barriers to technological

uptake and providing insights from past and present

technologies.

A SAFE AND SUSTAINABLE FUTURE

FROM TECHNOLOGY TO TRANSFORMATION

THEMES FOR THE FUTURE


The Arctic offers a preview of a new paradigm for business: harsher environments, higher

public scrutiny and a greater need to engage with stakeholders. As industries enter the Arctic,

understanding, communicating and managing risks will be essential both to earning social license

to operate and minimising the impacts of their activities. With such high stakes, the Arctic will be a

deining frontier – not just of operations, but of safer, smarter, greener technologies and standards.

The Arctic is rich with resources and dilemmas. And while there are no easy answers to these

dilemmas, we must tackle questions about its development step by step, based on a common

understanding of the risks. In this theme, we examine the complex Arctic risk picture and explore

its implications for shipping, oil and gas, and oil spill response.

ADAPTATION TO A CHANGING CLIMATE

ARCTIC – THE NEXT RISK FRONTIER

Climate change mitigation remains essential for our work to build a safe and sustainable future.

But the greenhouse gases that have accumulated in the atmosphere over the past century and

a half have already set changes in motion. Infrastructure and communities around the world

urgently need to adapt to a climate characterised by more frequent and more severe storms,

droughts and loods. And given the interdependence between business and society, business has

a strong interest and critical role to play in these efforts. In this theme we have been developing

tools to help both businesses and communities adapt to this new risk reality: a web-based

platform for sharing information and best practices; a risk-based framework to help decision-

makers prioritise their adaptation investments; and a new protocol to equip leaders to measure

and manage community resilience to climate change.

Electricity has already revolutionised the way we power our operations, fuel our vehicles, and

light and heat our buildings – and it will have an even bigger role to play in the decades to come.

Many emerging technologies can provide cleaner, smarter, affordable and reliable energy.

Floating offshore wind can provide emissions-free power at scale by 2050. And a suite of smart

grid technologies will provide households and communities with leaner, more local power. In this

theme, we take a closer look at these technologies, and examine the contributions they can make

to providing low-carbon power to future generations.

Shipping is the lifeblood of our economy and the lowest-carbon mode of transport available to a

world with ever-rising consumption. It therefore has a crucial part to play in underpinning the shift to

a safe and sustainable economy. But the industry faces a challenging climate: more intense public

scrutiny of safety and security, tightening restrictions on environmental impacts and huge eficiency

gains due to the revolution in digital technology. In anticipation of these transitions, we have

analysed six technology pathways that can contribute to making the shipping industry safer, smarter

and greener. Through the solutions we identify, we believe it is possible by 2050 to cut ship fatalities

90 per cent and reduce the sector’s carbon dioxide emissions by 60 per cent, all without increasing

costs.

THE FUTURE OF SHIPPING

ELECTRIFYING THE FUTURE

7

EXECUTIVE

SUMMARY

The purpose of this report is to look into the future of

shipping and preview the technologies, systems and

practices that we believe will play a role in achieving

a worthwhile ambition: to create a truly sustainable

shipping industry by 2050.

The shipping industry moves about 80 per cent of

world trade volume, making it an integral part of the

global economy. Shipping is an extremely eficient

mode of transport and has steadily improved safety

and environmental performance over the past

few decades. However, there are still signiicant

challenges ahead.

In this report, we focus on three key sustainability

challenges for the shipping industry and establish

ambitions for the future. These ambitions are based

on internationally recognised climate targets and

current best safety practice in land based industries:

� Lives lost at sea – reduce fatality rates

90 per cent below present levels

� CO2 emissions – reduce leet CO2 emissions


� Freight cost – maintain or reduce

present freight cost levels

In our view, achieving these ambitions will have the

most profound impact on sustainability, and will

help clarify what the industry must do to achieve

sustainable shipping.

Ambition: Reduce fatality rates by 90 per cent below present levels

Achieving this target will require a new safety

mindset and continuous focus on multiple issues

related to technologies and how organisations are

structured and function . Building a robust safety

culture where humans, organisations and regulators

systematically gather information and learn from

failures will be critical to achieving a 90 per cent

reduction in fatalities.

Today, more and more systems are controlled

and integrated by software, which introduces new

challenges for operations, maintenance, testing

and veriication – a trend likely to continue. At the

same time, advances in digital technology will play

a greater role in the design phase, allowing for

more accurate modelling of hull forms. The further

development of automated systems and advanced

decision support tools will contribute signiicantly to

on-board safety.

In the subsea industry, remote operations are already

a reality. Systems with proven marine applications are

likely to be adopted by merchant shipping. In time,

the development of fully automated, unmanned

vessels could become reality. Combined with

advances in materials requiring limited maintenance,

autonomous shipping would eliminate occupational

risks on-board. While the unmanned vessel concept

would likely face signiicant public scepticism,


we believe that many on-board systems will be

autonomous, which will improve the industry’s safety

performance.

Ambition: Reduce fleet CO2 emissions 60 per cent below present levels

Currently, no single solution can ensure the industry

achieves a 60 per cent reduction of CO2 emissions,

especially considering the expected increase in

transport demand. Energy eficiency is certainly part

of the solution, but the target cannot be reached

unless the industry shifts to low carbon solutions.

We are entering the age of alternative fuels. The irst

stage will see more vessels powered by LNG,

a process driven by high oil prices and regulations on

NOx and SOx. Over time, other low-carbon solutions,

such as ship electriication, biofuels, batteries and

fuel cells powered by renewable energy sources will

be adopted, increasing the diversity of the industry’s

fuel mix. The technologies are there, but the barriers

are signiicant – the lack of adequate infrastructure

and security of energy supply act as a drag on

development of a number of alternative fuels.

Ambition: Maintain or reduce present freight cost levels

The future holds tremendous opportunities

for companies able to take advantage of new

technologies and develop competitive business

models. To capture potentials to reduce costs and

increase reliability that the industry must get smarter.

Owners will have to increase investment in systems

to enhance safety and reduce emissions, but by

applying technologies and solutions to become

more eficient, they can keep freight costs at present

levels. Increased connectivity has already changed

the shipping industry.

With more ships connected to the internet via

broadband satellite networks, and more on-board

systems connected to each other and the internet,

merchant shipping is becoming a more data-centric

industry. Increasingly, on-board systems are being

integrated, automated and controlled through

software.

Communications and data analysis can improve

logistics operations with a focus on the total value

chain. More powerful computers will be able to

model realistic conditions a vessel may face at sea

and in different weather conditions, and be used to

design more optimal hull and machinery systems.

Advances in sensor technology will enable improved

condition-based monitoring and maintenance

procedures and allow owners to run remote

diagnostics and, when necessary, recommend ixes.

The way forward

Three forces are acting on the shipping industry

to drive change: increased regulations, which set

more stringent minimum safety and environmental

performance requirements; competitive pressure,

which encourages more cost-eficient operations;

and public demand for more transparency and

sustainability. This societal pressure is not only

directed at government authorities and ship owners,

but also at cargo owners, who are under increased

pressure to do business with owners who operate

vessels beyond compliance.

Regulations will continue to be an important driver

for sustainability in three critical areas: safety,

eficiency and the environment. However, regulators

should be sensitive to the inancial impact of these

requirements and work with the industry to ind

workable solutions. As we gain more knowledge

about the impact of shipping on the environment,

the industry will be in a better position to evaluate

various regulatory solutions that both create value for

society and provide a level playing ield for various

segments and companies.

9

INTRODUCTION

The purpose of this report is to look into the future of

shipping and preview the technologies, systems and

practices that we believe will play a role in achieving

a worthwhile ambition: to create a truly sustainable

shipping industry by 2050.

To frame this challenge, we had to consider a

number of dificult questions, namely: Where is

the shipping industry heading now, given current

developments and trends? What targets should the

industry set for itself in the years ahead? What are

the gaps between the industry’s current path and

a more sustainable future, and what can be done to

close these gaps?

Answering these questions requires that we not

only identify likely drivers and barriers to change,

but suggest a number of solutions to improve

sustainability. We have identiied a broad range

of available and future technologies and deined

the work that needs to be done to develop these

technologies further. The result is a report that

challenges existing formats. Unlike many forward-

looking studies that start with a set of assumptions

and then offer different future scenarios, we have

instead chosen to broaden our focus to include

not only the likely outcomes, but also possible and

preferable ones.

At the same time, we have limited our scope to the

design and operations of commercial ships, and did

not include sections devoted to shipbuilding and

ship recycling – both critically important segments

that also must adapt to a changing world. While

these and other industry stakeholders (e.g. suppliers,

cargo owners and regulators) will be impacted

by the changes described in this report, our focus

remains on the merchant leet.

As such, this report should not be confused with an

industry forecast – we recognise that it is impossible

to predict how the world, or the shipping industry,

will change by 2050. Rather, we hope this report will

be a catalyst for dialogue and a challenge to the

industry to pursue ambitious goals.

This report explores the following topics:

� Our deinition of sustainable shipping, indicators

that we can use to measure our progress, and

concrete ambitions for 2050

� An overview of global-, macro-economic and

environmental trends, and potential game-

changers that could impact shipping in the

next four decades

� Descriptions of six technology pathways likely

to play a role in achieving sustainability

� Proiles of trends, drivers and barriers, and

how these forces will shape shipping’s future,

and impact the industry’s ability to reach the

sustainability ambitions.

We hope this report will encourage owners to

embrace new technologies and inspire various

industry stakeholders to think in a new way about

how an old industry, steeped in tradition, can adapt

to a rapidly changing world. Change begins with

conversation, and DNV GL looks forward to being an

active participant in the dialogue to achieve a more

sustainable industry.

11

SUSTAINABLE

SHIPPING THE CHALLENGE


© S

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ttersto

ck

The shipping industry moves about 80 per cent of world trade by volume, making it

an integral part of the global economy. And with the world leet expected to expand

to keep pace with global economic development, the shipping industry will be under

increasing pressure to improve its safety and environmental performance. Even

as marine transportation is recognised as the most eficient way to move goods,

the shipping industry must balance its vital role as an enabler of global trade and

prosperity with its obligation to contribute to a more sustainable future.

SUSTAINABLE SHIPPING – THE CHALLENGE 13

What does a sustainable future mean?

Sustainability is commonly deined by three

interdependent dimensions: the environment,

society and economy. Environmental sustainability

supports the social and economic conditions by

which humans can live in productive harmony with

nature to meet the needs of present and future

generations.

Social sustainability refers to the ability of a social

system (such as a nation or state) to effectively serve

the needs and provide for the safety of a group of

individuals. The sustainability of a social system can

be determined by how effectively it provides access

to basic human needs, such as stability, social equity

and security, among others.

For the shipping industry, safety is a critical part

of social sustainability. The International Maritime

Organization (IMO) deines safety as: “The absence

of unacceptable levels of risk to life, limb and health

(from non-wilful acts)”.

Economic sustainability is measured by how well

a system allocates resources in a way that beneits

society in the short and long term. According

to the World Business Council for Sustainable

Development, economic sustainability is deined as

“…an economy where economic growth has been

de-coupled from ecosystem destruction and material

consumption, and re-coupled with sustainable

economic development and societal well-being.”

The sustainability challenge

Sustainability in the shipping industry has steadily

improved over the years. Moving goods on ships

is highly eficient; the industry has signiicantly

increased safety at sea; and environmental

performance is starting to improve with new

regulations in place. However, despite signiicant

improvements in safety, working on a vessel remains

a dangerous occupation. Also, ships often operate

in sensitive ecological zones and most load and

unload cargo in proximity to densely populated

costal urban centres, contributing to a variety of

atmospheric and oceanic environmental damage.

These issues are currently being managed by

various regulatory bodies, including the IMO,

which recently presented a model for a sustainable

maritime transportation concept that outlined

goals and actions the industry can undertake to

provide safe, eficient and environmentally friendly

transport systems. Some industry players have taken

the initiative to improve safety and environmental

performance beyond compliance by investing in a

broad range of innovative systems and technologies.

However, with the expected increase in global

shipping in the next four decades, it is clear that

more work needs to be done.

Measuring sustainability

In order to measure the level of sustainability,

we have selected a list of key indicators to track

shipping’s progress towards becoming a more

sustainable industrial sector. The selected indicators

present the most relevant challenges for shipping

within the three sustainability dimensions.

It should be noted that the indicators listed do not

relect all of the environmental, social and economic

aspects of shipping. The selected environmental

indicators relect only the most important challenges

we recognise today. Over the next decades, we may

identify other pollutants that represent a signiicant

threat to the environment. Likewise, this report does

not examine shipbuilding and ship recycling – both

critically important parts of the value chain that also

must adapt to a changing world.

However, by focusing on key indicators relevant to

the way the world leet operates, we can provide an

overview of how shipping impacts environmental,

social and economic sustainability.

"...the shipping industry must balance its vital role as an enabler of global trade and prosperity

with its obligation to contribute to a sustainable future"


©D

NV

-GL


Sources: Buhaug, Ø., Corbett, J. J., Endresen, Ø., Eyring, V., Faber, J., Hanayama, S., Lee, D. S., Lee, D., Lindstad, H., Markowska, A. Z.,

Mjelde, A., Nelissen, D., Nilsen, J., Pålsson, C., Winebrake, J. J., Wu, W.-Q. And Yoshida, K., 2009, Second IMO GHG Study 2009, International

Maritime Organization (IMO) London, UK, April 2009. Ballast water: http://www.emsa.europa.eu/implementation-tasks/environment/

ballast-water.html. A similar number is assumed for organism carrier outside the hull: John M. Drake and David M. Lodge: Aquatic

Invasions (2007) Volume 2, Issue 2: 121-131, doi: http://dx.doi.org/10.3391/ai.2007.2.2.7. The International Tanker Owners Pollution

Federation ltd. – Statistics, http://www.itopf.com/information-services/data-and-statistics/statistics/ Updated 2013 Ecorys: The Ship

Recycling Fund, Financing environmentally sound scrapping and recycling of sea-going ships, 2005. IHS Fairplay World Casualty Statistics:

Includes all vessels excluding ishing and miscellaneous ships. Average for the period between 2003 and 2012 is used. Freight cost: Review

of Maritime Transport, 2012, UNCTAD. Insurance claim: 2012 CEFOR Annual Report, CEFOR – Covering about 20% of the world leet.

SUSTAINABILITY INDICATORS CURRENT STATUS FOR SHIPPING

90%of the ship recycled

Recycling

5000tonnes per year

Average 2010 – 2012

Accidental oil spills

20 000marine organisms

introduced per day

Invasive species


900million tonnes

per year

CO2 emissions

900ship accident fatalities per year

Average 2003 – 2012

Lives lost at sea

12million tonnes

per year

SOx emissions

22million tonnes

per year

NOx emissions

0.23%of insured value

Average 2010 – 2012

Insurance claim costs

7-11%of cargo value

Freight cost


FUTURE AMBITIONS

FOR SUSTAINABLE SHIPPING

Shipping is an extremely eficient mode of

transport and has steadily improved safety

and environmental performance. Because the

industry is already taking action to address SOx

and NOx emissions and put in place legislation

to manage the introduction of alien species,

these topics will not be directly addressed

in this report. Instead, we focus on three key

sustainability challenges for the shipping

industry, and establish ambitions for 2050.

These ambitions are based on internationally

recognised climate targets and current best

safety practice in land based industries:

� Lives lost at sea - reduce fatality

rates 90 per cent below present levels

� CO2 emissions - reduce fleet CO2 emissions


� Freight cost - maintain or reduce

present freight cost levels

In our view, meeting these ambitions will have the

most profound impact on sustainability, and will

help clarify what the industry must do to achieve

sustainable shipping.

STATUSLives lost at sea include fatalities due to ship

and occupational accidents in international

shipping. Based on statistics from IHS Fairplay

for the period 2003-2012, there were on

average 900 crew and passenger fatalities per

year, corresponding to 1.6 crew fatalities per

100 ship-years. In addition, several studies

report that the number of fatalities due to

occupational accidents is approximately the

same as for ship-related accidents. Based on

available data, we estimate that about six crew

fatalities occur per 100 million work hours.

AMBITION Reduce fatality rates 90 per cent below present levels

The current crew fatality rate in shipping is

10 times higher than for industry workers in

OECD countries (Organisation for Economic

Co-operation and Development), which is 0.6

fatalities per 100 million work hours. Seafarers

have the right to a safe workplace and

passengers have a right to safe transportation.

The shipping industry should set targets to

achieve parity with safety levels in land-based

industries by 2050.

LIVES LOST AT SEA

90% below present levels


CO2 EMISSIONS

STATUSShipping is responsible for approximately three

per cent of total anthropogenic (manmade)

CO2 emissions, or about 900 million tonnes

per year in 2008, according to the International

Maritime Organisation. Most scenarios for

shipping towards 2050 predict signiicant

growth in the demand for seaborne trade and a

corresponding growth in the world leet, which

is likely to generate more CO2 emissions.

AMBITION Reduce fleet CO2 emissions 60 per cent below present levels

Reductions in shipping’s contribution to

global CO2 emissions must be seen in the

context of global warming. If the global target

is to limit global temperature increase to

2°C, then the shipping industry must reduce

emissions by the same share (calculated at 60

per cent, according to the UN Environmental

Programme) as other industrial segments. With

the expected growth in transport demand,

shipping must cut emissions per transported

unit by 80 per cent in 2050, to achieve

emissions at least 60 per cent below present

levels.

FREIGHT COST

STATUSOver the past decades, shipping freight

costs have steadily declined, relative to the

value of goods shipped. The United Nations

Conference on Trade and Development

(UNCTAD) recently reported that freight

costs are down to seven per cent (relative

to the value of goods) for developed

countries and down to eight to 11 per cent

for developing countries. This indicator varies

widely depending on transport distance,

volume and the value of goods. For example,

although economy of scale is one of the big

advantages of shipping as a mode of transport,

this advantage cannot be fully exploited in

all regions due to the lack of land-to-shore

infrastructure and low trade volumes.

AMBITION Maintain or reduce present freight cost levels (as a percentage of the value of goods)

This indicator is provided to ensure that

improving safety performance and reducing

CO2 emissions do not signiicantly increase

freight cost. The shipping industry facilitates

global trade and development and is therefore

an important part of a sustainable future.

Using cleaner and more expensive fuels and

other technologies may increase cost, but

competition and proitability will continue to be

powerful drivers for cost reduction in shipping.

60% below present levels

Maintain present levels


SHAPING THE SHIPPING INDUSTRY

GLOBAL TRENDS


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Over the next four decades, we believe developments in the following four areas will

signiicantly impact the shipping industry: world population and economy, information

and communications technology, energy, and climate change and the environment. Within

each of these areas, we will describe speciic trends and possible game-changers likely

to inluence the development of the shipping industry. Game-changers are notoriously

hard to predict, but by analysing dramatic changes in the past, we can gain a better

understanding of their nature.

GLOBAL TRENDS SHAPING THE SHIPPING INDUSTRY 21

Exceeding nine billion people

The world economy is projected to grow at around

three per cent per year on average to 2050, doubling

in size by 2030 and nearly doubling again by 2050.

At the same time, the global population is expected

to exceed nine billion in 2050. While the population

in more developed regions is expected to remain

stable, the population of today’s developing

countries is projected to increase from 5.7 billion

in 2011 to eight billion in 2050. At present, the

population of the 48 least developed countries is the

fastest growing in the world at 2.5 per cent per year.

The global population will age

Assuming that global fertility rates continue to

decline, the median age of most countries is

expected to rise, except for countries in Sub-Saharan

WORLD POPULATION AND ECONOMY

World population and the global economy are projected to expand rapidly in the

next four decades. While this growth will be uneven across countries and the risks

and opportunities for different shipping segments will vary, these macro-economic

and demographic changes are likely to have a dramatic effect on global trade lows

and the direction and structure of the shipping industry.

Africa. The population aged 60 or over is growing

rapidly in both developed and developing regions.

Globally, the number of individuals aged 60 or over

will increase from 784 million in 2011 to 2 billion

in 2050. By 2050, the number of older people in

developed countries will be almost twice the number

of children. Mismanagement of this changing

demographic represents a signiicant risk to long-

term economic growth in developed countries with

ageing populations.

Urbanisation and mega-regions

Population growth is very much an urban

phenomenon. Indeed, urban areas are expected to

absorb almost all population growth, especially in

less developed regions. By some estimates, 67 per

cent of the world’s population will be concentrated


in urban centres by 2050. If so, the world’s urban

population is expected to grow from 3.6 billion

in 2011 to 6.3 billion in 2050. Today, there are 23

megacities of 10 million or more inhabitants. By

2025, it is projected that there will be 37 megacities,

accounting for 13.6 per cent of the world’s urban

population.

Global growth will be powered by emerging markets

Towards 2050 there will be signiicant changes in

the relative size of economies. Emerging economies

are expected to grow at a faster pace than advanced

economies, and will sustain global growth. A large

portion of global growth will take place in Asia.

China is expected to surpass the US as the largest

economic power a few years before 2030. In 2050,

China, India, Indonesia, Japan, Republic of Korea,

Malaysia and Thailand are projected to account for 90

per cent of Asian GDP and 45 per cent of global GDP.

However, a study commissioned by the Asian

Development Bank cautions that Asia’s rise is not

inevitable. Risks related to income inequality, social

and political instability and the “middleincome trap”

(a condition where a country lags behind advanced

economies capable of producing high value goods

but is unable to successfully compete against low-

cost export countries), may disrupt future economic

development and growth.

A shift in the geography of global consumption

For the irst time in history, a majority of the world's

population will not be impoverished by 2050. Almost

three billion people, more than 40 per cent of

today’s population, will join the middle class by 2050,

and almost all will live in regions now classiied as

emerging markets.

As has occurred in developed countries, these

economies will transition away from export

oriented/manufacturing heavy growth towards

customer driven/service sector growth. A new class

of emerging consumers will revolutionise global

demand, acting as an internal growth engine.

Initially, these consumers will seek more affordable

manufactured goods, often produced by other

emerging markets.

As a result, trade between emerging markets

is expected to grow rapidly. At the same time,

improved living standards often result in demand

for better environmental protection, safer labour

conditions, and a higher level of transparency in

how government operates.

Inequality will persist

The gap in living standards between emerging

markets and advanced economies will narrow, but

large cross-country differences will still persist. The

average income per capita will still be considerably

higher in advanced economies than those found in

emerging economies.

Assuming growth follows a predictable path, China

will see more than a seven-fold increase in per capita

income over the coming half century. However,

living standards in China will still only be 60 per cent

of that in the leading countries in 2060. India will

experience similar growth, but its per capita income

will only be about 25 per cent of that in advanced

countries. Inequality will also still be a signiicant

issue within countries.


Source: United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revison

Source: United Nations, Department of Economic and Social Affairs, Population Division (2011). World Population Prospects: The 2010 Revision, Volume II: Demographic proiles. ST/ESA/SER.A/317.

Figure 1. Urban population by major regions: 1950 - 2050

Figure 2. "Most active" population age 20-34 years.

29

19

50

India

19

55

19

60

19

65

19

70

19

75

19

80

19

85

19

95

19

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Pe

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Windowof economicopportunity

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00

20

05

20

10

20

15

20

20

20

25

20

30

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20

40

20

45

20

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20

55

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20

75

20

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20

85

20

90

20

95

21

00

28

27

26

25

24

23

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21

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USA China EU (27)

3 500 000

Africa

3 000 000

2 500 000

2 000 000

1 500 000

1 000 000

500 000

1950 1960

Po

pu

lati

on

(th

ou

san

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1970 1980 1990 2000 2010 2020 2030 2040 2050

Asia

Latin America and the Caribbean

Northern America

Europe

Oceania


Implications for shipping

Demand for seaborne transport

Population and economic growth increases demand

for seaborne transport. Towards 2050, demand for

energy will increase deep-sea transport of LNG,

crude oil and coal. Growing industrial capacity will

demand increasing volumes of input materials, such

as iron ore and bauxite. A larger global middle class

will increase demand for food-stuffs and consumer

goods and create demand for passenger ferries

and cruise ships, as spending on leisure and travel

increases.

Changing trade patterns

Changes in the global economy and demographics

will continue to inluence trade patterns in deep-sea

and coastal shipping – including growing intra-Asian

trade and south-south trade. New sources of energy

and new locations for existing types of energy will

likely impact energy transportation patterns. For

example, more gas carriers may load cargoes in the

US than in the Middle East. New areas of activity

for offshore supply shipping may also inluence the

global shipping infrastructure.

While the emergence of a growing urban middle

class suggests increased demand for seaborne

transportation, it is not a given for all segments. For

example, as China’s export-driven economy shifts

towards internal consumption, growth in export

volumes will decrease while inland and coastal

shipping will increase.

New geography of shipping services

A new distribution of world economic activity

will have consequences for the geography of

shipping services such as technical management

and ship building. Currently, the construction of

vessels in many segments (tankers, bulk carriers,

containerships) has shifted from the US and Europe

to Asia, while the expertise required for advanced

shipbuilding, such as cruise ships and offshore

supply vessels, remains concentrated in the

advanced economies.

By 2050, shipyards in Asia and South America will

have the expertise to capture a growing share of

contracts for advanced ships. At the same time,

shipping services, such as ship management and

crewing, will also be distributed more widely.


Emerging maritime clusters in countries such as

Brazil and China will provide strong competition for

traditional maritime clusters.

Social acceptance criteria

As the global population becomes more educated

and wealthy, acceptance criteria for safety and

sustainability performance will change. Tolerance

for accidents at sea – which today far exceed

accident rates in the offshore sector and land-based

industries – will fall, placing pressure on owners and

ship managers to improve safety performance. At

the same time, public concerns regarding local air

pollution in densely populated areas and climate

change will force the industry to adhere to more

stringent environmental standards.

Potential game changers

Increased regionalism could make IMO

an irrelevant organisation

Over the next decades, states and regional

organisations may take on a larger role in regulating

international shipping independent of the system

0

5

10

15

20

25

30

1950 1960 1980

Po

pu

lati

on

(B

illio

ns)

1990 2000 2010 2020 2030 2040 2050 2060 2070 2080 2090 21001970

Medium LowHigh Constant fertility

Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat (2011). World Population Prospects: The 2010 Revision. New York: United Nations.

Figure 3. Population of the world, 1950-2100, according to different projections and variants

now managed by the International Maritime

Organisation (IMO). States may develop and enforce

regional emissions control areas with different

requirements, as we have seen in the US and the EU.

Other actors, such as charterers and NGOs could

also play a signiicant role by setting more rigorous

standards and requirements for shipping companies.

If the IMO is unable to take a leading role and fulil

the expectations of its members, it risks losing

legitimacy and may become irrelevant by 2050.

Collapse in the demand for seaborne transport

Most studies project a continued increase. However,

a major global economic crisis could result in a

sudden and catastrophic collapse in the demand.

Other factors, driven by a global event (such as a

series of natural disasters) could also lead to trade

collapse. Disruptive technologies may also impact

trade. For example, local 3D printing could remove

the need to transport certain goods, causing a

signiicant drop in some shipping segments.


2060

China 28%

United States 16%

India 18%

Japan 3%

Euro area 9%

Other non-OECD 12%

Other OECD 14%

China 17%

2011

United States 23%

India 17%

Japan 7%

Euro area 17%

Other non-OECD 12%

Other OECD 18%

2030

China 28%

United States 18%

India 11%

Japan 4%

Euro area 12%

Other non-OECD 12%

Other OECD 15%

Figure 4. Major changes in the composition of global GDP - percentage of global GDP in 2005 PPPs. Source: Looking to

2060: Long-term global growth prospects. A going for growth report. OECD Economic Policy Papers, No. 03, 2012

Globalisation Acceleration and reversal

While the shipping industry

has enjoyed decades of trade

liberalisation and economic

globalisation in the post-war period,

history teaches us that the global

economy is cyclical, inluenced by

policy shifts that swing between

protectionism and trade liberalisation.

As a rule, the shipping industry thrives

during periods of globalisation

and contracts during periods of

protectionism. Consider that world

trade declined by around 66 per

cent between 1929 and 1934

during the inter-war period. During

periods of economic uncertainty,

“creeping protectionism” is a risk to

globalisation, as governments enact

defensive trade policies to mitigate

domestic economic crises.

LESSONS FROM HISTORY


Data explosion

The volume of digitalised data is growing

exponentially. In 2006, roughly 161 billion GB of new

data was stored. By 2010, stored data had increased

by a factor of six. In this period, growth was driven

primarily by a shift from analogue (paper-based)

record keeping to faster and more cost effective

digital systems. Today, ICT is being increasingly

applied to new areas, both private (recreational,

gaming, personal relationships) and industrial

(healthcare, tourism, simulation). By 2020, it is

expected that 200 times more data will be generated

annually than in 2008.

INFORMATION AND COMMUNICATION TECHNOLOGY

The pace of change in information and communication technology (ICT) will

continue to accelerate towards 2050. Over the next few decades, developments

in ICT will revolutionise shipping, creating a more connected and eficient industry

more closely integrated with global supply chain networks. Future developments

in ICT will allow more data to be collected, analysed and integrated into the

decision-making process at all levels.

Advances in storage technology will give tenfold

increase in storage capacity roughly every four years.

Furthermore, developments in miniaturisation and

embedding software, together with expanded social

media platforms, will accelerate the generation of

vast amounts of data. However only three per cent

of potentially useful data is tagged, and even less is

analysed. To capitalise on this phenomenon (known

as “big data”), researchers will need to develop

advanced capabilities for search, analytics and

decision support.


Powering up

Computer processing power has developed in

parallel with rapid developments in data storage and

management. Consider that today’s mobile phones

have the processing power of desktop computers

10 years ago. If this trend continues, mobile phones

will have the processing power of today’s PCs – and

in time, affordable and small, distributed sensors

will have the ability of today’s mobile phones.

This growth in processing power will impact data

collection and allow intelligent monitoring and

control. Local, real-time data processing will highlight

the need for new data formats and process models.

Power computing will give rise to new requirements

for programs and programming languages.

Increased connectivity

“Connectivity” is a term used to describe not just

internet access but developments within mobile

telephony and other wirelessly connected devices.

In 2008, China surpassed the US in number

of Internet subscribers. As only 42 per cent of

China’s population currently has internet access (in

contrast with 81 per cent of the population of the

US), a further increase in Chinese internet users is

expected.

A growing proportion of information (news,

books, real-time data, TV, entertainment, etc.)

will be accessed via various handheld devices.

Another intriguing change likely to occur is that

developing countries, which previously lagged

behind industrialised countries in terms of wired

communications infrastructure, will leapfrog the

developed world in the use of mobile telephony.

Software everywhere

An ever-increasing number of products contain

embedded software. Mechanical control has been

replaced by digital control systems in many areas

such as in kitchen appliances, washing machines and

telephones to name a few. Consider that in 2000,

automobile control systems contained about one

million lines of code. Today, this number is closer to

100 times that many.

More autonomous, decentralised software

applications (e.g. inhabitant software) combined with

more powerful processors will make central control

of systems more dificult. As humans become more

dependent on software, ensuring security, user

identity, and reliability will be of growing concern.

Electronic devices containing inhabitant software will

become a part of, and utilise, cloud computing and

grid networking.


Automation and remote control

ICT developments allow for the increased use

of automated systems to improve operational

performance and reduce costs and risks associated

with human error. Today, sensors installed on ships

have allowed the monitoring of certain operating

parameters – a trend likely to apply to more aspects

of operations. Digital technologies will inluence

business operations, regulatory/bureaucratic

procedures, navigation, maintenance and operations.

Shipping may also adopt technologies developed

for the oil and gas industry, such as systems for

remote operations, diagnostics and data mining.


Deep-sea cables: a communication revolution

The irst successful transatlantic cable was laid in 1865. Within a decade, a network

of cables linking major cities around the world was in place. By 1897, there were

162,000 nautical miles of cable, with London at the centre of the network. This

communications network revolutionised communications and fundamentally

transformed the shipping industry. Previously, vessels would lie idle in port for weeks

waiting for orders on what to take on-board as return cargo. The use of telegraph

messages allowed voyages to be planned and optimised. More innovative use of

ICT is expected to have a similar, transformative effect on the shipping industry,

improving safety and eficiency in the coming decades.


Share what you measure

The use of sensors and systematic monitoring

systems will enable greater transparency in shipping,

from “tell me” to “show me”. That is, stakeholders

such as charterers and cargo owners will require that

shipping companies provide measured and veriied

information about a ship’s performance. In addition,

the low of information between different actors in

the shipping industry will be increasingly digitalised.

For example, electronic port compliance and

e-customs are likely to become the norm. Shipping

companies may also change how they interact

with customers and suppliers. The introduction of

more automation on-board and rapidly expanding

data volumes will require new approaches to data

storage, processing and transfer.

Advanced modelling and simulation

tools for design

Ship design will help owners manage challenges

related to technical issues, market speciicities,

future energy prices, climate change, and existing

and upcoming regulations. New computational

capabilities will enable the development of

advanced modelling and simulation tools for design

and optimisation of new hull designs, propulsion,

and complex machinery systems, etc. These

technologies allow for improvements in service

delivery, virtual prototyping, and next-generation

energy management.

Seafarer welfare

ICT developments in shipping can also have a

positive effect on crew retention. Making broadband

available on vessels signiicantly improves the lives

of seafarers, who can more easily communicate with

family and stay connected to world events.


Unmanned vessels

By 2050, we may see the development of unmanned

vessels. With advanced ICT, vessels can be designed

to be remotely-operated from shore. Unmanned

vessels would beneit from lower operational

costs compared to convention vessels, due to the

elimination of on-board crew costs, risks associated

with human error, and threats to crew safety.

Unmanned vessels may also revolutionise supply

chain logistics, which would have wide-reaching

impacts on the industry. As there would be no

human restrictions on how much time a vessel can

spend at sea, ships that do not carry time-sensitive

cargoes (such as perishable goods) could in theory

drift with sea currents when possible to move as

energy-eficiently as possible.

Hijacking incident

It should be noted that ships equipped with

autonomous systems may be more vulnerable to

hijacking than manned vessels. For example, by

hacking into the unmanned vessel’s control system, a

group or individual could highjack an oil tanker from

a remote location and hold it for ransom, or worse,

use the tanker in a terrorist attack. An incident like

this could have a deterring effect on autonomous

systems and uptake of ICT development in the

shipping industry. However, due to its proven

beneits, the level of ICT uptake to enable more

automation in shipping is likely to continue.


ANALOG DIGITAL

1986

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ANALOG

DIGITAL

1993

2000

2007

2007

ANALOG

DIGITAL

Paper, film, audiotape and vinly: 6.2%Analog videotapes: 93.8%

AN

ALO

GD

IGIT

AL

Other digital media: 0.8%Portable media players, flash drives: 2%Portable hard disks: 2.4%

CDs and minidisks: 8.8%

Digital tapes: 11.8%

DVD/Blu-ray: 22.8%

PC hard disks: 44.5%

*Other includes chip cards, memory cards, floppy disks, mobile phones/PDAs, cameras/camcord-ers, video games

This charts shows the world´s growth in storage

capacity for both analog data (books, newspapers,

videotapes etc.) and digital (CDs, DVDs, computer

hard drives, smartphone drives etc.)

In gigabytes or estimated equiavalent.

In 1986, pocket calculators accounted for much of

the world’s data-processing power.

Percentage of available processing by device:

Computing power

Pocket calculators

Personal computers

Video game consoles

Mobile phones, FDAs

Supercomputers (0.3%)

Servers, mainframes

1986

2007

41% 33%

66% 3

17%9%

25% 6

Figure 5. The world's capacity to store information. Source: Todd Lindeman and Brian Vastag/ The Washington Post,

http://www.washingtonpost.com/wp-dyn/content/graphic/2011/02/11/GR2011021100614.html

THE WORLD'S CAPACITY TO STORE INFORMATION

Despite efficiency gains, global energy demand will increase

Population growth and economic development are

projected to result in a global economy four times

larger than today, requiring 80 per cent more energy

in 2050.

The assumed 1.3 per cent annual growth in the

world’s total primary energy demand will add 40

per cent to consumption by 2040. In OECD countries

low population growth rates, aging, technological

progress and energy saving practices will result

in relatively modest increases in energy demand.

However, for non-OECD states, energy demand

is expected to rise almost 70 per cent by 2040

compared to 2010, relecting population growth,

industrialisation and growing prosperity.

ENERGY

Economic growth will drive demand for energy, while increasing eficiency will help

mitigate demand. A number of studies predict increasing use of fossil fuel towards

2050. While there will most likely be an available supply to meet the demand, this will

have a severe impact on the earth’s climate. As established energy sources dwindle

and new alternative fuel sources become viable, the world will move towards a more

sustainable, low-carbon energy supply.

The demand for different energy sources will

grow at very different speeds, ranging from

0.5 per cent to 9.0 per cent per year, with select

renewables increasing most rapidly. Differences

in the availability of other energy types will

continue to play a large part in accounting for

inter-regional energy mixes.

Fossil fuels will continue to dominate

Despite advances in renewable energy, many

analysts forecast that the global energy mix in

2050 will not differ signiicantly from today. The

OECD predicts that fossil energy will meet 85

per cent of energy demand, while renewables,

including biofuels, will account for only 10 per

cent. The remainder is likely to be covered by

nuclear energy.


Due to its availability, lexibility and low emissions

(relative to coal), natural gas will become an

increasingly important fuel. Gas demand will grow

rapidly in China, with India, the Middle East and

Africa following. In North America and Europe,

natural gas will overtake oil as the largest source

of energy.

Coal displacement is expected to take place nearly

everywhere, but at different speeds in different

regions. We expect coal use to decline sharply in

OECD countries. In China, overall coal demand is

expected to be almost 60 per cent higher in 2040

than today, although its market share is expected to

go down. Oil use in China will increase by the same

percentage, and gas by close to 400 per cent.

The growth of non-fossil fuels will vary between regions

Non-fossil fuels are expected to grow at around

2.6 per cent annually, driven by a universal desire

to mitigate local pollution issues, combat climate

change and secure energy supply. In some

developing countries, renewables will also be used

to bring electricity to the rural areas.

Growth patterns will vary from region to region.

The OECD countries will prioritise wind and solar,

while many non-OECD countries will press ahead

with hydro and nuclear power as well. In any event,

solar, wind and geothermal energy will continue to

capture market share in the generation of electricity.

We assume that policy support will remain in place

to drive the deployment of renewables and reduce

costs.

In China, hydro power will grow by more than 100

per cent from today’s levels, and nuclear and other

renewables will increase more than 10-fold during

the forecast period.


Change in the energy mix

The change in fuel mix for shipping will be strongly

affected by the future global energy mix, as well

as fuel price and infrastructure development.

Geographical availability of different fuels, coupled

with energy security issues, will also inluence the

energy mix. For example, the exploitation of shale

oil and gas could have a signiicant impact on energy

prices.

Different cargoes, new ship types, and new

transport patterns

Changes in the global energy mix will lead to

changes in the types of cargoes transported by ships.

There will be an increased demand for transportation

of natural gas, biofuels, and other alternative energy

types. Shale gas production has soared in the US in

recent years, and is projected to continue growing at

a rapid pace. The US will likely become a large LNG

exporter, and traditional gas routes from the Middle

East to Asia will compete with new routes connecting

the US to Asia. Most analysts agree that increased

demand for gas will require an expansion of the

current gas carrier leet.

Demand for clean energy will spur growth in

renewable energy investments, requiring specialised

tonnage to transport and install offshore renewables

(e.g. wind, solar) facilities.

Shift in marine activities

The search for alternative energy sources will lead

to a shift from traditional offshore marine activities

to activities related to both deep-sea operations


and offshore renewable facilities. New types of

offshore support vessels will need to be designed

to install, maintain and decommission offshore

wind or solar facilities. It should also be noted that

the development of offshore resources, including

offshore power grids, will likely result in more

congested sea lanes, which increase the risk of

collisions and groundings, which represent safety

risks.


Technological breakthrough

If the threat of GHG emissions could be managed

by the development of some, as yet unknown

technological breakthrough, the shipping industry

would change rapidly. Such a breakthrough may be

achieved through the discovery and introduction of

a new, cheap clean fuel type or a simple, affordable

carbon capture and storage solution, a technology

which would allow the continued use of fossil fuels.

400

300

200

100

0

1990 2000 2010 2020 2030 2040

Source: IEA/IHS Global Insight (history), Statoil (forecast)

Figure 6. Energy intensity of the world economy tonnes of oil equivalent /million 2005-USD

Fuel shifts can happen fast

Maritime history shows that the shipping industry is quick to adapt to new fuels, if

the right incentives are in place. For example, in the period between 1914 and 1922,

the percentage of vessels using oil rather than coal in their boilers increased from

three per cent to 24 per cent. While the speed of this shift was abetted by the fact

that owners could use existing machinery with minimal modiications, it shows that

the industry can move quickly if a better solution is available. However, history also

shows that fuels that demand new types of machinery, such as the transition from

coal to oil via the combustion engine, slows the migration to new energy sources.


A new energy crisis

Export bans, or conlicts in energy-producing

countries, could result in a lasting global energy crisis,

leading to sky-high fuel prices for shipping. A long-

term energy crisis could dwarf the price hikes the

industry experienced in the 1970s, forcing shipping

companies to rethink existing business models, ship

design and operation.

Acceptance of nuclear-fuelled ships

After an extended setback resulting from the

Fukushima incident, nuclear power has re-emerged

as a viable energy alternative. Although several

hundred nuclear-powered navy vessels exist, few

nuclear-powered merchant ships have been built.

Land-based prototypes offer compact reactors

comparable to large marine diesel engines. The main

barriers to nuclear shipping relate to uncontrolled

proliferation of nuclear material, decommissioning

and storage of radioactive waste, the signiicant

investment costs and limited societal acceptance.


Figure 7. World primary energy demand by region (Mtoe).

Figure 8. Share of total primary energy demand.

1990

100 %

90 %

80 %

70 %

60 %

50 %

40 %

30 %

10 %

20 %

0 %

2011 2020 2025 2030 2035

Other renewables

Bioenergy

Hydro

Nuclear

Gas

Oil

Coal

Source: IEA (2013). World Energy Outlook 2013

SHARE OF TOTAL PRIMARY ENERGY DEMAND

8000America

Europe

Asia Oceania

Asia

E. Europe/Eurasia

Middle East

Africa

Latin America

Mill

ion

to

nn

es

of

oil

eq

uiv

ale

nts

1990 20112000 2020 2030 2035

7000

6000

5000

4000

3000

2000

1000

0

Source: IEA (2013). World Energy Outlook 2013.

WORLD PRIMARY ENERGY DEMAND BY REGION (MTOE)

A more hostile natural environment

Assuming greenhouse gas emissions continue to

drive global temperatures upward, we can predict

a broad range of consequences likely to occur. These

include rising sea levels, increased frequency and

severity of heat waves and droughts, storm surges,

river looding and a higher frequency of wildires.

These consequences will have signiicant regional

differences. For example, wet areas will become

wetter and dry zones will become more arid.

By mid-century, the availability of water is projected

to increase at high latitudes (and in some tropical

wet areas) and decrease, or become unstable, in

dry regions in the mid-latitudes and tropics.

It is also projected that many semi-arid areas

(e.g. Mediterranean Basin, western United States,

southern Africa and north-eastern Brazil) will suffer

a decrease in water resources due to climate change.

CLIMATE CHANGE AND ENVIRONMENT

According to an OECD baseline scenario, pressures on the environment from

population growth and rising living standards will outpace progress in pollution

abatement and resource eficiency. Already, signs of climate change, a growing

scarcity of natural resources and threats to the environment have resulted in a

renewed focus on environmental sustainability.

Unusual and unprecedented heat extremes are

expected to occur far more frequently and cover

greater land areas. Finally, sea levels have risen more

rapidly than previously projected. A rise of as much

as 50 cm by the 2050s may be unavoidable as a

result of past emissions.

Strained resources: water and food

Climate change will affect the availability of food,

water and energy. These effects will vary widely by

region. Combined with a growing population and

dietary changes, the stress on available resources –

especially water – will intensify. Unless action is taken,

hundreds of millions of people could be exposed

to increased water stress. By 2030, nearly half the

world's population will live in areas with severe water

stress.


Today, agriculture uses 70 per cent of global

freshwater resources – a disproportionate share

of this igure is used for livestock husbandry.

Nevertheless, between 2000 and 2050, global cereal

demand is projected to increase by 70 to 75 per

cent, while meat consumption is expected to double.

With more people locking to big cities, water will

be increasingly concentrated in urban areas. At the

same time, overishing has decimated global ish

stocks, an event exacerbated by destructive isheries

and ocean acidiication.

Climate change could mean decreased cereal

productivity in low latitudes, countered by increased

cereal productivity at mid-to high latitudes. If not

affecting total volumes, there will at least be shifts

in production sites/trade patterns.

Pollution and public health

Air pollution will become the world’s top

environmental cause of premature mortality,

overtaking dirty water and lack of sanitation. By 2050,

air quality will still be above WHO guidelines in most

developing countries. Particulate matter and ground

level ozone are the two most important air quality

components, which typically rise in concentration

as the result of power generation (e.g. coal) from

industry and from transport.

Already by 2030, ive to eight per cent of the

population will live without safe drinking water and

17-28 per cent of the population will live without

improved sanitation. These challenges may grow

more complex as we get closer to 2050.

In addition, climate change will adversely affect

human health in populations with low adaptive

capacity. Climate change could also create new

social and economic tension and competition

for resources that could lead to civil and political

conlict.


Reduction of shipping footprint

While shipping is one of the most eficient modes

of transportation, the industry still contributes to

environmental damage. Like all industries, shipping

will be expected to reduce its environmental

footprint and is likely to be subject to stricter

regulations, especially on greenhouse gas emissions.

In addition to international regulations on emissions,

it is likely that stakeholders such as charterers,

banks, insurance companies, and investors will set

stricter requirements for owners to improve energy

eficiency and reduce GHG emissions.

Shipping companies will also likely be required

to reduce their material footprint. In a world

characterised by increasingly scarce resources and

rising public concerns regarding the environment,

recycling of materials will become both a

requirement and a norm.

Climate change adaptation

Ships, yards and ports are all vulnerable to climate

change and should expect to take action to adapt.

For example, the expected shift in wave patterns,

increased wave heights, and more severe weather

conditions in the medium and long term, will call for

improved design and operational safety standards.

Likewise, increased intensity of rainfall, heat waves,

wind speeds, storms and storm surges, all represent

different risks to yards and port infrastructure and

operations.


Arctic shipping

Climate change will unlock the Arctic, leading to

increased activity in ice-covered waters. This includes

destination shipping, shipping activities related to

offshore oil and gas extraction and transit shipping.

There are a series of hazards and uncertainties

related to sailing in the Arctic, such as sea ice,

harsh weather conditions, and the availability (and

operational costs) of icebreakers. Challenges include

winterisation to combat icing on the ship and cargo,

freezing in ballast tanks, and wind chills affecting the

crew. Ships sailing in the Arctic will need to be ice-

classed and have technologies in place to prevent

environmental damage and mitigate risk to fragile

marine eco-systems found above the Arctic Circle.

New cargoes and trade patterns

Countries will continue to depend on international

trade to ensure food security in 2050. The Food and

Agriculture Organization estimates that net imports

of cereals from developing countries will more than

double from 135 million metric tonnes in 2008/2009

to 300 million in 2050. However, the pattern of cereals

Shipping can adapt to new cargoes

History shows that the shipping industry is used to adapting to new types of cargoes

when there is a need in the market. Over time, vessels have become more and more

specialised to adapt to different cargo types. This includes the development of oil

tankers to meet the need for bulk transport of oil, the development of specialised

parcel tankers to transport different types of chemicals, and the development of

passenger liners and cruise ships to meet the demand for personal travel.


Figure 9. Global

premature deaths from

selected environmental risks:

Baseline, 2010 to 2050

Source: OECD (2012). Environmental outlook to 2050: The consequences of inaction

Particulate matter

0 0.5

2010 2030 2050

Deaths (millions of people)

1.5 2 2.5 3 3.5 41

Ground-level ozone

Unsafe water supply and sanitation

Indoor air pollution

Malaria

and other foods will change, based on how climate

change impacts production and import demand.

We may also see new types of cargoes, such as

water. Water scarcity will be a serious issue towards

2050, and large oil tankers can provide temporary

solutions in areas that have acute water shortages.


A ban on the use of fossil fuels

If the impact of climate change is more severe than

predicted, humanity may be forced to ban the use of

fossil fuels. This would have dramatic consequences

for all industries, including the shipping industry.

Many vessel types are designed to either transport

fossil fuels or support the exploration and production

of fossil fuels. A ban on fossil fuels could make

these ship types obsolete. For example, a ban would

stop oil and gas offshore activities, making offshore

supply and other offshore special vessels irrelevant.

Oil tankers would also ind themselves out of work.

CO

2 emissions (m

illion tons CO

2 / year)

CO2 emissions from international shipping from 1990 to 2050

2500

1500

1000

500

0

Historic Business as usual With MARPOL Annex VI (EEDI & SEEMP)

2000

1990 2000 2010 2020 2030 2040 2050

60

NOx emissions from international shipping from 1990 to 2050

50

30

20

10

0

1990

Historic Business as usualWith MARPOL Annex VI

2000 2010 2020 2030 2040 2050

40

NOx emissions (m

illion tons NOx / year)

30

SOx emissions from international shipping from 1990 to 2050

25

15

10

5

0

1990

Historic Business as usualWith MARPOL Annex VI

2000 2010

SO

x e

mis

sio

ns

(mil

lio

n t

on

s S

Ox

/ y

ea

r)

2020 2030 2040 2050

20

Fi� �e �� Emissions to air in

international shipping from

1990 to 2050.

Source: IMO Second GHG study, extrapolated by DNV GL and Bazari Z. and Longva T., Estimated CO2 reduction from introduction of mandatory technical and operational energy eficiency measures for ships, LR and DNV, 2011.

PATHWAYS TOWARDS SAFER, SMARTER AND GREENER SHIPPING


©M

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Meeting the ambitions to make shipping a sustainable industry by 2050

will require the industry to mobilise new technologies and solutions and learn to

rethink differently about how its business and operations function. We have outlined

six pathways that we think will have the largest impact on achieving a more sustainable

industry: safe operations of ships, advanced ship design, the connected ship, future

materials, eficient shipping and low carbon energy.

PATHWAYS TOWARDS SAFER, SMARTER AND GREENER SHIPPING 41

SAFE OPERATIONS

Despite genuine progress, the shipping industry lags well behind many other

industries when it comes to safety. While the industry’s relatively high rate of fatalities

and accidents can be attributed in part to risks associated with operations in

challenging environments, the public has become increasingly critical of accidents

that result in injury or loss of life. How will the industry respond and what tools are

available to improve the industry’s safety record? In the past, the industry has turned

to technology for answers, but increasingly, owners are recognising the value of

embracing a broader, more holistic approach to safety.


While an increased focus on safety in the shipping

industry has helped reduce fatalities at sea over the

past two decades, more work needs to be done. The

crew fatality rate is 10 times higher than the current

level in land-based industries in OECD-countries.

To improve its safety record, the industry must

address a number of issues. First, the industry has

allocated more resources to mitigate individual

accident risk than major accident risk, which is rare

but leads to far more serious consequences. Second,

owners tend to place too much conidence in safety

procedures, excluding focus on more complex,

holistic safety methodologies. Third, the bridge

remains mostly an autocratic work environment,

one that hinders effective communication. Fourth,

owners too often blame individuals for causing

accidents, instead of looking at the underlying

causes. And inally, the industry’s approach to safety

has been reactive rather than proactive, re-enforcing

an industry culture that relies on accidents to drive

change, rather than focus on prevention.

Mana��n� om��x�ty

Avoiding accidents and ensuring the safety of

on-board personnel represents one of the most

complex challenges faced by owners and ship

managers. Unlike mechanical or technical systems,

safety systems must account for the seemingly

ininite variables of human behaviour. On-board

personnel regularly interact with each other, heavy

machinery and a broad range of control and data

systems in a loating workplace far from land-based

resources, and often impacted by severe weather

and harsh conditions.

Kn�w��d�� dr�v�s �af�ty

For owners and managers, there are both internal

and external drivers to improve safety. Internally,

owners assume responsibility for safeguarding

the life and welfare of their personnel and the

integrity and safety of assets and cargo. Externally,

shipping companies have regulatory, commercial

and reputational incentives to improve on safety

performance. However, like many industries,

accidents remain the prime driver of changes in

safe operations.

We live in an increasingly connected world, where

news of maritime disasters travels quickly. Public

outrage in response to fatal accidents at sea has

placed the industry under increased scrutiny,

pressuring regulators to introduce new requirements

to improve safety and owners to take steps to reduce

risks. In addition to the human cost of fatalities and

injuries at sea, owners, managers, oficers and crew

are increasingly subject to criminal prosecution,

civil suits and compensatory damage claims. Also,

accidents often result in costly insurance claims, and

can do signiicant harm to a company’s reputation.

While these risks would seem to act as powerful

incentives for owners to take a more proactive

approach to safety, improvements in performance

have generally followed accidents. Consider that

the sinking of the Titanic, one of the industry’s

most memorable catastrophes, not only lead to

the introduction of the SOLAS Convention and

(eventually) the IMO, but triggered a number of

safety-related innovations in for example materials,

hull integrity and stress testing.

S��ut��ns for safe operations

To bring accidents in shipping into alignment

with land-based industries, owners and managers

must embrace a new mindset on safety. While

new technologies will play a role in this process,

they cannot be viewed as a substitute for a more

proactive, holistic approach to safety. By focusing on

underlying causes, and how organisations should be

structured to support safety systems, the industry will

have a better understanding of how humans interact

with each other and technology, and how different

forces and stakeholders impact operations and risk

management.

This section will examine three solutions most likely

to impact safe operations in the following decades:

dynamic risk management, which maps out links

between operations and strategy and how various

stakeholders affect safety performance; organising

for safety, which is focused on elements crucial to

building an effective safety culture; and system

resilience, which offers solutions to get the best out

of technology and personnel to achieve improved

operational safety and eficiency.


Safety improvements in shipping have generally

followed accidents. However, the shipping industry

has also been inluenced by accidents in other

industries. In the 1970s, accident investigations in

the aviation industry resulted in a shift away from

assigning blame to mechanical systems towards a

greater focus on human error, which led to improved

training programmes. In the 1990s, other aviation

accident investigations resulted in the development

of a more holistic approach that broadened the

scope of safety prevention to include not only

individual factors, but also environmental and

organisational factors.

In other words, rather than focus on searching for

the “bad apple” or assigning blame to individuals,

this new approach to safety focuses on underlying

causes. Today, accidents in both the aviation and

nuclear industries have driven research on how

humans, technology and organisations (HTO) interact.

Although the shipping industry has learned some of

these lessons, it has a long way to go.

Humans, technologies and organisations are barriers

to accidents. Dynamic Risk Management (DRM) is

a system used to control, apply and maintain these

barriers and ensure the integrity of the entire system.

Unlike the more linear, static risk management tools

that seek to identify causal links and isolate speciics

gaps in safety (often after an accident occurs),

DRM is focused on prevention. By taking a more

comprehensive view of risk parameters to include

interacting systems and strategies, DRM continuously

assesses risk throughout the valuechain, both on land

and at sea. And because DRM employs inductive

methodologies to assess risks, it is proactive not

reactive. In brief, rather than develop new safety

procedures in response to accidents, DRM will allow

the industry to anticipate and eliminate potential risks.

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To be effective, a DRM system must assess operational

risk on a continuous basis. However, we must stress

that the value of DRM is not based on data and

Dynamic risk management

Impact level: None Low Medium High

PATHWAYS SAFE OPERATIONS

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


technology alone. Rather, what makes DRM a powerful

solution has more to do with a mindset than any

speciic technology. To be effective, this new mindset

must include a pro-active approach to safety, barrier

thinking and what forces impact safety barriers. One

useful DRM tool is the “Bow Tie” risk management

method, a methodology that plots the links between

undesired events and barriers. This method helps

users to visualise the events that triggered an event,

the consequences of that event, and identiies barriers

that may have reduced both the probability and

impact of the event. Often, the action of an individual

is necessary for a technical barrier to function. In such

cases, there is also a need to identify factors that shape

or affect human interaction with the barriers.

Exp%&'%d (%v%lop)%*'s

The ield of risk management and assessment is

developing rapidly. While the aviation, aerospace

and nuclear energy industries continue to be the

primary drivers of DRM tools and methodologies,

the shipping industry is also likely to beneit

from advances in the offshore industry, which is

developing risk management systems that can be

more readily adapted to the maritime industry.

Other developments likely to shape dynamic risk

management solutions are related to “smart barriers”.

Apart from prevention and mitigation of risks, smart

barriers (based on a complex network of barriers)

will be designed with the ability to anticipate and

act on information gathered and analysed as part of

the methodology. Such smart barriers will be highly

sensitive to performance variability, able to interact

within the barrier networks, and send notiications

and alerts well in advance. Understanding current

challenges and successful practices will enable

improved anticipation of undesired events, and allow

companies the necessary time to allocate resources,

improve performance and prevent accidents.

� Pro-active approach to safety, barrier thinking and identiication of forces that impact safety barriers

� Risk management methods such as “Bow Tie”

� “Smart barriers” - a complex network of barriers designed with the ability to anticipate and act on information gathered and analysed

� Improved learning from accidents

� Better understanding of the dynamic nature of risk

� Applying proactive measures through anticipation of risk

� Reduced risk level from increased understanding of risks and barriers

Technologies and tools Benefits


To improve its safety performance, the shipping

industry must overcome a number of hurdles related

to systems complexity, inadequate training, and

organisational challenges. Despite improved training

regimes and increasingly reliable systems, accidents

remain all too common. In response, companies

have turned to procedures (e.g. checklists,

documentation, reporting systems) to manage

safety risk. Yet studies indicate that dependence on

systems in the absence of a robust safety culture

erodes trust, encourages complacency, and has led

to fundamental misinterpretations of the purpose

and objectives of safety management systems. If

so, the underlying reasons for commercial losses,

accidents and incidents cannot be attributed to

individuals or insuficient technologies, but to a lack

of management control of systems and a failure of

management to understand the importance of a

robust safety culture.

A safety culture refers to how an organisation

operates with regard to safety and its ability to

manage unpredictable and undesired events.

Building a robust and mature safety culture is critical

for identifying potential risks, sharing information

and learning from past experiences. As such,

companies can reduce risk and be in a better

position to anticipate, avoid and manage crises.

Building a safety culture is a continuous long-term

process, and because the industry is constantly

exposed to new risks, the task is never completed.

Companies must identify and update safety trends,

establish and maintain clear benchmarks and

KPIs, and support these efforts with face-to-face

meetings, workshops and seminars. Creating a

structured and inclusive environment where safety-

related information is freely shared increases an

organisation’s ability to select the best systems and

tools and achieve the optimum safety return on

investment. At the same time, owners must build

a company culture that is just and fair, one that

clearly deines the line between acceptable and

unacceptable behaviour.

Organising for safety

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill




E+,-./+0 1234+o.50/2s

Much of the thinking behind building a safety culture

originates from the growing ield of organisational

behaviour, which studies how the relationship

between individuals, groups and structures within

an organisation impact its effectiveness.

Improving safety culture begins with top

management, who must identify and deine

organisational strengths and weaknesses, prioritise

focus areas and invest in systems and tools to

support the culture. At sea, improved safety

performance is enabled by effective cooperation

between oficers and crew, a process facilitated by

the leader’s behaviour, leadership style, and ability

to communicate effectively. Together with a modern

approach to selection and development of personnel,

this will give a strong impact on team functionality.

� Identify and understand the positive and negative drivers of the safety culture

� Effective cooperation between oficers and crew to utilise the total competence of the team

� Formal and informal arenas for experience exchange

� Selection, training and career development to ensure the right competence for the organization and the right development for the individual

� Quality depends on total team competence, not only individual competence

� A culture of sharing experiences

� Better learning from success and failures

� Improved teamwork and leadership increases motivation and awareness

� The right people in important positions

Expected developments

The beneits of building a strong safety culture

are already recognised by a number of shipping

companies, but in terms of development, the industry

still lags behind many industries on land. Today,

some owners have developed more sophisticated

reporting and monitoring systems, a trend that is likely

to continue. Also, advances in training, competence

development and human resource management

are likely to support efforts to build more robust

safety cultures. We also expect that public demand

for more transparency will encourage owners to

share more information, which may lead to more

standardised systems and enable the sharing of safety

culture “best practices.” At the same time, the direct

correlation between improved safety performance

and operational eficiency will be increasingly seen as

a competitive advantage.



System resilience refers to the capacity of a system to

adapt to different circumstances and the capabilities

of different users while remaining within deined

operational thresholds. A resilient system accounts

for the human element and enables the seamless

integration of equipment and control systems.

For the shipping industry, this solution applies to

a number of areas, such as the design of working

space where operations are conducted and solutions

to improve interaction between vessels operating in

high-density trafic areas, among others.

E67bling technologies

Systems resilience relies on a broad range of

technologies. Today, increasingly ergonomic and

integrated bridge control systems are available.

The development of global standards and principles

covering ergonomics and improved integration

of bridge controls is already underway, helping

to ensure better correlation between design and

operations. Also, a more standardised bridge will

reduce the time needed for personnel to familiarise

themselves with bridge controls and eventually lead

to the development of best practices that can be

applied throughout the industry.

At the same time, technologies developed by other

industries (e.g. aviation) are being applied to shipping

to help reduce port congestion and collision risk.

Today, some of the world’s busiest ports utilise satellite

technologies to track and monitor vessel trafic, and

we expect these technologies will develop further.


Next generation bridge control systems will further

enhance the interface between users and control

systems, making an important contribution to safety.

In the future, the working environment on the bridge

will be designed to handle both low and high-intensity

operations and planned and unplanned events.

In critical situations, safety risks increase due to the

number of stakeholders involved, rapidly changing

circumstances and insuficient time to gather and

System resilience



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


process the information required to make the correct

decisions. By mapping all known stakeholders, these

issues will be considered in the design process.

The design will provide the decision-maker spare

capacity to assess the situation, keep his/her situational

awareness and enact decisions based on the “big

picture”. Furthermore, a more standardised bridge

will increase training eficiency and help identify best

practices.

Developments in system resilience will also help

the industry with collision avoidance in increasingly

crowded ports and congested sea lanes. The industry

can mitigate these risks by improved utilisation of on-

board planning, lookout and navigation systems.

Closer to ports, the industry may also beneit from

a trafic control system, modelled on systems now

in use by the aviation industry. Such a Sea Trafic

Control (STC) system could provide clearance through

congested areas on assigned routings, or provide

recommendations to alter heading and speed,

when appropriate. The STC would be responsible

for helping vessels maintain a safe distance from

land and other marine trafic. This system increases

the eficiency and safety in high-density areas and

could also be used to direct trafic in vulnerable or

environmentally sensitive areas.

"Next-generation bridge control systems will further enhance the interface between users and

control systems, making an important contribution to safety"

� Ergonomic and integrated bridge control systems based on global standards

� Satellite and communication technology to track and monitor vessel trafic

� Surveillance and navigation technologies (monitoring, AIS, radar, laser, electronic maps)

� Sea Trafic Control (STC) system

� Increased effect and precision of safety and eficiency performance

� Increased feed-back loop with regards to integrating human and organisational elements in design and improvements

� Increased awareness of tasks and operations that are being performed

� Reduced disruptions in operation

T8c9:;<og=8s and tools Benefits


Due to public demand for improved safety,

regulatory pressure, and the application of new

technologies, developments in safe operations are

likely to accelerate rapidly in the next four decades.

By 2020, owners and managers will increasingly

adopt a more proactive and preventative approach

to safety, implement systems to facilitate learning

from mistakes and have a better understanding of

what issues affect safety barriers.

Advances in the science of human resource

development will enable the industry to have access

to a more skilled workforce. The workforce will

likely include more women, have lower turnover

of personnel, and improved quality of leadership

– both at sea and on land. Attention will shift from

individual mistakes to organisational issues, which

will help companies devote more resources to

improving organisational systems that better support

safety.

As new technologies and advanced risk

methodologies are applied, a safety culture

will be seen as a critical indicator of safety

performance. Owners and managers will take a

more comprehensive approach to risk management,

working to prevent both individual and major

accidents. By 2030 user-centric bridge control

systems will be the industry standard, and bridge

teams will beneit from improved communication

between personnel of various ranks on the bridge.

The IMO is also likely to require that all maritime

TODAY

Increased focus on the underlying

causes in accident investigations

Debrieing sessions to learn from

both success and failures

New safety management methods introduced

including understanding of barriers

Increased understanding of difference between

major accident risk and individual risk

A POSSIBLE FUTURE

SAFE OPERATIONS


nations report accidents and near misses and issue

recommendations to improve learning. At the same

time, sea trafic control systems in some ports will

migrate from just tracking vessels to offering routing

advice.

In 2050, the application of innovative risk

management models will result in a new, industry-

wide safety mindset that will combine both strategic

and operational issues to improve performance.

Regulators will put in place rules requiring the

industry to be more transparent, so that owners and

managers will share critical data on accidents and

near misses, allowing the industry to develop best

practices. Sea trafic control systems will become

more sophisticated to include vectoring, speed

allocation and data collection, and have the authority

to intervene if a vessel does not comply with

recommended routes.

Unlike other pathways towards sustainable shipping

described in this report, safe operations will not

be driven, or achievable, by the introduction of

new technologies. In fact, the introduction of

new technologies can represent a risk to safety

by increasing systems complexity. Rather, safety

at sea can only be achieved by gaining a better

understanding of human behaviour, and how people

interact with technology, systems and each other in

groups, both large and small.

2050

The bridge is designed around the user, and gives

just the right information in the right situation

Safety is a strategic goal of

all involved organisations

Trafic control is further developed, including

shift of control from ship to land if necessary

International focus on reporting, analysing

accidents and learning from near misses

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ADVANCED SHIP DESIGN

What if a ship owner could develop, test and evaluate new hull forms and technologies

under diverse conditions – well before work is ordered at the yard? How would the

industry change if owners had access to next-generation emulation systems capable

of mimicking on-board conditions? Thanks to recent developments in software

engineering and advanced computing, the industry will soon be able to produce a new

generation of vessels that will minimise risk and signiicantly improve performance in

safety, and operational and energy eficiency.


It is dificult to overstate the importance of ship

design to next-generation shipping. After all, ship

design marks the irst step in a vessel’s life and

impacts the development, installation and utilisation

all new technologies and solutions for the lifetime

of the vessel. Indeed, ship design is fundamental to

optimising performance – a key driver for an industry

seeking to produce safer, greener and smarter

vessels in the years to come.

M>?>@A?@ BoCDEFGAHy

Shipping is becoming more complex due to new

regulations, ierce competition, the introduction of

new technologies and fuel sources. To manage the

increasing complexity of systems and operations

both on land and at sea, owners are seeking new

tools for ship design to enable more cost effective

operations, increase their competitive advantage

and stay in compliance with new and expected

regulations.

Key drivers for developments in advanced

ship design include the rapid developments

in information technology, the digitalisation of

information and increasingly powerful computers

and processors. Indeed, many of the enabling

technologies related to advanced ship design are

already in use by other industrial segments (e.g.

aviation, automotive, aerospace, etc.), where their

potential has been demonstrated. If so, the question

is not if these tools will be available, but how fast

they will develop and how quickly the shipping

industry adopts them.

MuEHAIAsciplinary design

The application of advanced computing and

software engineering tools to ship design has been

slowed by a number of barriers. First, these highly

sophisticated tools are expensive and, to reach their

full potential, will require more robust computing

capabilities. Second, advanced ship design will

compete with existing ship design processes. If

so, migrating from legacy systems to a new way of

thinking about ship design represents a complex

organisational challenge. Furthermore, the absence

of common standards, inter-disciplinary competence

and data-sharing may act as a drag on optimising the

ship design process.

At present, the potential development of advanced

ship design is limited by computing power and

inadequate software. However, the greater

challenge appears to be related to how quickly

and to what extent the industry adapts to this new

technology. And since advanced ship design is

connected to other parts of the value chain (e.g.

shipbuilding, procurement, maintenance, etc.), it will

require coordination between different stakeholders

to achieve its full potential. Nevertheless, advanced

ship design represents a signiicant opportunity for

the industry to become safer, smarter and greener.

Advanced ship design solutions

Advanced ship design refers to a number of

innovations set to revolutionise the industry in the

coming years. This new approach to ship design

will act as a key enabler for the implementation of

a broad range of solutions and new technologies,

including new materials, digitalisation, connectivity,

low carbon energy solutions and related innovations

in equipment and systems. Because these subjects

are covered in other areas of this report, we have

chosen to focus on three primary areas: virtual

ship laboratory, energy eficient design and next-

generation emulation.

"...the question is not if these tools will be available, but how fast they will develop and how

quickly the shipping industry adopts them"


The virtual ship laboratory refers to a computer-

enabled virtual design environment. Thanks to

existing and expected advances in computer-

aided engineering, methods and tools, a virtual

environment can be created for testing performance

under diverse conditions, evaluating solutions,

introducing new technologies and assessing

different production, operational and design

features. This computer-aided model has the

ability to create a new, global ship design paradigm,

whereby all challenges and solutions can be

simultaneously addressed.

Future ship design tools will enable a shift from

the traditional segmented design process,

where different vessel features and components

are designed in isolation, to a more holistic,

multidisciplinary and integrated design process. In

addition, virtual ship design will provide owners with

access to a “virtual model” for each individual ship.

This model will be retained through a vessel’s entire

lifecycle, allowing for improved maintenance; easier

retroitting and modiication work; and operational

optimisation, among other beneits.

EJKbling technologies

Model-Based Systems Engineering (MBSE) represents

a new approach to the design, implementation and

operation of complex technical systems, one that

takes into account how different systems interact

and inluence the end product (the ship). By utilising

MBSE, the ship can be approached as a modular

system of inter-related sub-systems and processes

where each inter-relating element can be assessed

and optimised for the lifecycle of the vessel, enabling

optimisation of the design under both nominal

performance (design point) and the intended

operational characteristics.

Computational Fluid Dynamics (CFD) will also play a

role in the virtual ship laboratory. CFD is the preferred

method for studying and analysing ship hydrodynamics.

It can be applied for optimising hull shapes, analysing

motions and loads in waves, manoeuvring, the

assessment of hydrodynamic improvement devices,

and steps forward in propulsion design.

While the industry has already beneitted from

advances in computational luid dynamics, most

Virtual ship laboratory


PATHWAYS ADVANCED SHIP DESIGN

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


calculations today are limited to still or calm waters.

However, as CFD becomes more advanced, ship

designers will have access to more precise wind and

wave calculations, enabling the simulation of actual

conditions in variable environments.

All stakeholders within ship design are also likely to

make use of multidisciplinary collaboration platforms.

The platforms are computer tools that facilitate

co-operation and data exchange between teams

of engineers and software packages, and enable

improved co-operation between various stakeholders

across disciplines to produce the optimal results.

By sharing a common platform, teams of specialists

working on different areas, such as hull design or

machinery engineering, are brought under a single

umbrella, facilitating better results.

In addition, such platforms will allow experts in

different disciplines to access a single computer

model, enabling a more eficient and faster design

process. This also allows for the creation of a virtual

model identity for each individual ship, which can be

followed through its entire lifecycle.

At the same time, virtual and rapid prototyping tools

will allow teams to assess prototype designs before

their physical creation, in “a virtual realm”. This enables

signiicant cost and saves time when working on

complex, large-scale design projects. These tools are

already a reality and will become more widespread

with advances in software, more computing power

and the growing availability of suitable multi-

disciplinary collaboration platforms.

Finally, developments in Life Cycle Assessment,

a standardised method for assessing the

environmental impact of a product, will allow design

teams to account for the entire life-cycle of each

vessel in the design phase, providing a unique

insight into each phase of the ship’s existence – from

production, to operation and its eventual recycling.

ELMNOPNd developments

At present, Model-Based Systems Engineering is

used in the design of ship machinery and is a key

enabler for the introduction of new technologies.

In the future, the inluence of MBSE will expand in

scope to include other areas of ship design, such as

structural and hydrodynamic elements. At the same

time, developments in computational luid dynamics

represent enormous potential in ship design,

pending advances in software and computing power.

In the future, CFD will be able not only produce

hydrodynamic calculations for calm waters, but to

simulate actual wind/wave conditions.

By 2050, we expect all individual design aspects to

be coordinated and managed via multi-disciplinary

collaboration computer environments, and between

2020 and 2030, virtual and rapid prototyping tools

will become a standard module in the overall design

process, seamlessly integrated to all aspects of ship

design.

� High performance computing

� Model-based systems engineering

� Multidisciplinary collaboration platforms

� Virtual identities of ships and systems

� Tools for virtual and rapid prototyping

� Computational Fluid Dynamics (CFD) and Virtual towing tanks

� Standardised Life Cycle Assessment

� Reduced emissions to air

� Reduced impact on natural environment

� Lower risk of environmental damage

� Improved safety, transport cost and cost of material damage

� Lifecycle model for operational optimisation and maintenance



Energy eficiency will continue to be a principal

driver for the evolution of ship design. The

introduction of new technologies, which will be

facilitated by virtual ship laboratories, will play a

major role in improving vessel energy eficiency. At

present, there are two technology categories that will

impact upon energy eficient design: technologies

that minimise fuel consumption, and technologies

that minimise the overall energy demand of the

vessel. The irst category usually involves machinery-

related technologies, while the latter is related to the

hull.

Traditional ship design practices will undergo a

dramatic change as new technologies are adopted,

leading to modiications in hull forms, new types

of propellers, the disposition of machinery and

how ships are outitted, among other beneits. Key

technologies used to optimise energy eficiency

are expected to emerge in the areas of vessel

hull and hydrodynamics, bio-inspired processes

and components, electriication, as well as energy

harvesting, recovery and storage.

EQRbling technologies

It is expected that electric propulsion will be

commonplace for many ship types by 2020. While

challenges related to safety, reliability, initial capital

outlays and electric power train eficiency have

slowed the uptake of electric propulsion, the further

development of direct current (DC) grids on-board

vessels, which will allow generators to operate at a

variable speeds delivering optimal fuel consumption,

will help to address some of these issues.

Likewise, energy storage provides beneits in

relation to power availability, emergency power

and redundancy as well enabling easier utilisation

of renewable energy sources. At present, electricity

storage in batteries has had few marine applications,

with the exception of a few smaller passenger ferries,

which use electricity as their principal power source.

So far, the cost, life cycle and size of the batteries

have restricted their use. But with prices expected

to fall by approximately 50 per cent per kWh by

2020, this could change, and we could see larger

vessels incorporating them as part of a hybrid power

Energy eicient design



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


solution. Super-capacitors, which store energy by static

charge and provide faster charging times, longer life

cycles and increased safety, are another intriguing

development in electric propulsion, assuming their

cost and size can be brought down enough to make

them viable.

At the same time, developments in energy harvesting

and recovery are expected to facilitate more energy

eficient vessel designs, capable of utilising every

possible energy source on-board while minimising

energy loss – a key step towards sustainable shipping.

Energy can be harvested from thermal, solar, wind

and mechanical energy sources and stored for later

use. Also, by utilising the waste energy of a power

production system, owners can improve energy

eficiency. The most common method of recovering

energy today is waste heat recovery systems, but in

time, low temperature recovery systems will be also

become available.

Finally, a broad range of hull and hydrodynamic

improvement devices will increase in scope and

distribution, becoming standard features in most

future ship designs. By improving water low around

vessels, resistance and power needs can be reduced,

signiicantly improving energy eficiency.

ETUVWXVd developments

As systems for electriication and DC grids are

improved, we anticipate that such systems will

apply to a growing percentage of the world leet

in the years ahead. In addition to existing energy

storage systems, heat storage technologies, already

implemented on land, could also become an option.

For energy recovery, both high and low temperature

heat recovery should be integrated to ship machinery

as standard features, leading to expected eficiency

gains of around 8 to 15 per cent. Energy harvesting

technologies will gradually appear in ships.

"...developments in energy harvesting and recovery are expected to facilitate more energy

efficient vessel designs, capable of utilising every possible energy source on-board..."

� Ergonomic and integrated bridge control systems based on global standards

� Satellite and communication technology to track and monitor vessel trafic


� Sea Trafic Control (STC) system

� Increased effect and precision of safety and eficiency performance

� Increased feed-back loop with regards to integrating human and organisational elements in design and improvements

� Increased awareness of tasks and operations that are being performed

� Reduced disruptions in operation



Emulation is the ability of a programme or device to

mimic the behaviour of another device or system,

recreating its “look and feel” in a controlled, virtual

environment. In the maritime industry, emulation

is currently used mainly for bridge operations and

machinery room training. An ideal next-generation

emulator would provide the user with identical

conditions to those that they would experience on a

vessel during its operation, survey or repair.

This could encompass visual identiication (e.g. cracks,

corrosion), risky areas (e.g. open manhole), realistic

sound conditions (e.g. engine malfunction), realistic

light (e.g. tank inspections), smell, and so on. Such

technology could be used for various purposes,

including monitoring, maintenance and crew training,

with each aspect taken into account early in the vessel

design phase.

EYZbling technologies

Next generation emulation will require more

advanced virtual reality systems, a technology that

creates a 3-D computer-generated environment that

a user can explore and interact with. These virtual

environments can be projected on screen, or through

a head-mounted-display, allowing complete sensory

immersion.

To date, virtual reality technologies have seen limited

use in some maritime simulators, allowing trainees to

acquire virtual experience across the whole range of

vessel operations and maintenance, normal operation,

repairing, surveying as well as risk management,

emergency and evacuation procedures. Information

from such applications can be used as input in the

design phase, optimising the safety, ergonomics and

eficiency of vessels.

In addition, emulators of the future will be equipped

with haptic technologies, which provide tactile

sensations for a user through the application of

mechanical load (forces, rotation, motion, etc.).

This enables the user to connect an action to a

consequence not just visually, but through touch,

enhancing the user’s sense of realism in virtual

environments. A maritime application would not only

give trainees a sense of realism, but also provide a

Next generation emulation



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


better experience when identifying degraded material

through physical control (e.g. knocking), or in avoiding

areas, such as corroded loors, where potential

accidents could occur. Haptic technologies will also be

applied in real bridge designs to provide feedback to

the operator.

Virtual reality systems equipped with haptic

technologies will rely on 3D graphics, which render

objects in three-dimensional graphics. The process

involves 3D modelling (making an object’s shape),

animation (the motion of the object), and 3D rendering

(the calculations required to provide the inal image,

taking into account surface material properties,

light and other parameters). All of these areas have

undergone huge advances over recent years, with

systems now capable of incorporating any variable to

focus on the intended application, such as the effect

of corrosion on marine structures for virtual survey

software.

E[\]^_]d developments

Today’s virtual reality technology caters for only two

human senses (sight and hearing). By improving this

sensual interaction and introducing more senses,

such as touch (haptic technologies) and even smell,

the virtual reality experience can be greatly enhanced

to create a “real world” environment. Meanwhile, the

proliferation of 3D-scanning technology will allow for

simpliied vessel 3D modelling, resulting in usable

representations of actual working environments.

"Emulation is the ability of a programme or device to mimic the behaviour of another device or

system, recreating its 'look and feel' in a controlled, virtual environment"

� Advanced three-dimensional graphics (modelling, rendering and animation)

� Tools for exploration and interaction

� Soft-sensing and augmented reality (smell, sound, light etc)

� Haptic technologies (forces, rotation, motion, etc)

� 3D-scanning technology

� Improved training of crew under a broader spectrum of extreme and adverse conditions

� Improved safety

� Reduced costs related to damages



Increasing systems complexity requires a shift to

multidisciplinary collaboration in ship design. If the

development process continues as expected, the

virtual ship laboratory will gain full maturity by 2030,

becoming the standard work process for designing

ships.

The future development of energy eficient design

solutions will be more varied. Some of the energy

eficiency improvement technologies have already

been embraced by the shipping industry, while

others are expected to have a longer incubation

period. Speciically, electriication, electric storage

and hull hydrodynamic improvement technologies

are likely to develop rapidly, with the irst

commercially available solutions emerging by 2020

Advanced ship design is expected to play a large

role in future marine technology development.

Already, the ship design process has beneitted from

developments in advanced computing and software

engineering. Many of the technologies proiled

in this pathway are being used by other industry

segments and are likely to be adopted by the

shipping industry within the next decade.

We believe that the virtual ship laboratory will

not only have an impact on how ships are built,

but how the industry functions. Already, different

stakeholders, such as shipyards, manufacturers,

system integrators, ship designers, operators and

class societies are working together to develop

systems to enable the virtual ship laboratory.

TODAY

Collaborative design efforts across

geography and diciplines

CFD siginiicantly affecting advanced ship

design including modelling of wind and waves

Electriication and DC-grid technologies

for short sea and offshore vessels

A POSSIBLE FUTUREADVANCED SHIP DESIGN

Next generation hull and hydrodynamic

improvement. Bio-inspired prototypes


and more mature systems available by 2030. On the

other hand, energy harvesting and recovery (as well

as bio-inspired technologies) will enter a prolonged

experimental development phase. Limited numbers

of full-scale prototypes are not expected to appear

before 2030 and mature systems will probably not

be available until 2040.

Emulation technologies already play an important

role in many industrial segments, and have broad

applications for shipping. Similarly to the virtual ship

laboratory, advances in both computer software and

hardware will accelerate the uptake of emulation

technologies. We expect the irst full-scale integrated

emulators will not appear before 2030, and will not

reach maximum maturity until 2050.

These technologies will develop at different

speeds, but they will all contribute both directly and

indirectly to a more sustainable industry. The virtual

ship laboratory and energy eficient design solutions

will help the industry reduce its environmental

footprint, and by increasing eficiency, will help to

keep transport costs per unit within acceptable

boundaries. The technologies required to develop

virtual ship laboratories and emulation will also

have a signiicant impact on both safety (safe-by-

design solutions) and costs related to damages.

Assuming these technologies develop as expected,

we are conident that advance ship design will have

an enormous impact on almost every aspect of

shipping.

2050

Gradually introduction of technologies for

energy harvesting, recovery and storage

Virtual ship laboratory as an integrated

approach to design of vessels

Emulation using virtual reality

techniques widely used in shipping

Full DC electric propulsion concepts

in short sea and offshore

©S

hu

ttersto

ck


THE CONNECTED SHIPDevelopments in ICT will have a profound effect on the shipping industry. Data-driven,

Internet-based models will mirror physical assets, providing new ways for owners

and managers to analyse ship functions to signiicantly improve eficiency and safety

performance. Similarly, advances in automation and remote operations will shape the

ways ships are designed, built, and operated. Sensor technologies and monitoring

systems, combined with seamless ship-shore connectivity and software-enabled

decision support tools, will create a more data-centric, responsive and lexible industry

that is fully integrated with global transportation networks.


Today, we live in a world that is continuously

becoming more data-driven and automated, where

physical systems and people are increasingly

connected and mirrored into a virtual space. Key

developments in ICT include sensor technologies,

improved ship-shore connectivity, advanced software

tools and algorithms, increased computing power

and faster processing times. ICT has also enabled

more far-reaching concepts (e.g. big data, “Internet

of Things”, cloud computing, etc.) which will provide

the shipping industry with new ways to collect, store

and process valuable data.

T`ccjkqosy drives innovation

Advances in ICT have occurred so rapidly that they

have outpaced existing systems used by the shipping

industry to manage a broad range of challenges.

Indeed, as more and more land-based industries

adopt ICT systems to improve performance, the

shipping industry will be compelled to do the same.

In this way, the technology – not the demand – will

drive change in the shipping industry.

ICT will have a dramatic effect on how the industry

manages information. Most systems and components

will be linked to the Internet, making them accessible

from almost any location. This connection enables

a virtual reality made up of data, models, and

algorithms, embedded in software, databases and

information management systems. At the same time,

by combining data streams from multiple sources,

the sheer volume of information available will enable

the industry to make more informed decisions,

faster, leading to more eficient and responsive

organisations. In time, these databases will be

accessible through vast information management

systems combined with fast computing and

advanced software via distributed networks.

The application of ICT on ships will also have a

positive impact on safety at sea. In fact, ICT solutions

can provide control over the status of degradable

systems, increase situational awareness and human

reliability, support in the deinition of corrective

actions, and the reduction of operational risk. More

automated operation will help reduce human errors,

while remote operations may lead to a reduction of

the number of people serving at sea. Finally, while

enhancing safety and eficiency, ICT will also answer

the need for more transparent operations and

help build trust and collaboration between various

industry stakeholders, based on the collection of

objective facts.

Growing complexity

To realise the potential of the connected ship,

different stakeholders must manage a broad range

of challenges, including the growing complexity

of systems, data networks, sensor technologies,

systems integration, tools to manage increasingly

large volumes of data, and processes to ensure

software integrity and data security. Furthermore,

the adoption of any new technology requires users

to change existing behaviours and develop the right

competencies. In our view, the impact of ICT will be

far-reaching and develop quickly. However, it will

most likely take some time before legacy systems

now used by the shipping industry are replaced.

ICT may also challenge traditional competitive

business models, which often act as a barrier to the

sharing of information. Certainly, owners will have to

invest in systems to protect and secure sensitive data

and the integrity of software systems, but the full

beneits of this technology cannot be fully realised

unless the industry learns to be more transparent

and cooperative.

Towards smarter operations

For the shipping industry, ICT will change how ships

are designed and built, what materials are used,

how ships are operated and how shipping its into

the global supply-chain logistics network. These

issues are covered in other parts of this report.

In this section, we will focus on two other areas

where we believe ICT is likely to have a big impact:

smart maintenance and automation and remote

operations.

As advanced real-time condition monitoring

becomes a reality, asset maintenance will broaden

to allow owners to assess vessels in a life-cycle

perspective. Today, some engine manufacturers have

systems in place to collect maintenance data, which

they can analyse and use to recommend actions. In

time, manufacturers, system integrators and related

service providers will be able to support owners

with real-time critical diagnostic and prognostic

information about the conditions of various on-board

systems, providing speciic guidance to maintenance

crews via virtual-space software and hardware.

As sensor technologies and connectivity become

more robust, remotely operated vessels, or even

unmanned vessels, could become a reality. We are

also likely to see many of the traditional activities

performed on-board shifted to shore-based centres,

responsible for vessel condition monitoring, control

and logistics.


Smart maintenance systems will enable owners to

reduce the number and frequency of inspections

and repairs and allow them to anticipate and replace

damaged and worn parts with minimal resources and

downtime. With real-time access to a vessel’s current

and future status, maintenance personnel will have

more accurate information on system capabilities,

allowing for timely action to increase reliability, safety

and eficiency.

Smart maintenance systems support eficient

fault detection and proactive planning in order to

optimise the maintenance processes. They also

serve as valuable decision support tools, enabling

owners to make more intelligent, informed decisions

based on the assessment of the present, and future,

condition of the vessel. Furthermore, by sharing

information, owners and suppliers alike can reduce

supply chain costs.

Counectivity –fast computing, big data and the cloud

To achieve the full potential of smart maintenance,

further development of a number of technologies

is necessary. In many ways, smart maintenance is

a function of predictive data that can indicate a

developing failure. Therefore, smart sensor networks

will be critical, as their ability to work together offers

a detailed and accurate picture of various systems.

Moreover, these sensors will be able to react to

changes in their surrounding environments and

reconigure themselves in order to perform multiple

types of functionalities. When linked together, sensors

can automatically organise to form a collaborative

network that provides more accurate and detailed

information.

In turn, smart maintenance will rely not only on how

sensors are conigured and linked, but also on the

quality of ship-shore connectivity. That is, due to

limited storage and processing power, data cannot be

stored indeinitely on-board. Rather, data must be sent

to shore, where it will be managed by increasingly

sophisticated software tools. These tools will provide

full range analytics and visualisation capabilities, and

be seamlessly linked to on-board sensor and actuation

devices via the internet.

Smart maintenance


PATHWAYS THE CONNECTED SHIP

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


Data analysis systems may also rely on other

technologies, such as cloud computing, (the ability

to run software on many connected computers at

the same time) and algorithms for the analysis of big

data, which require new forms of processing to extract

timely and valuable information. Cloud computing

and big data will revolutionise vessel operations

and how decisions are executed, allowing different

stakeholders to access vital information in a fraction

of the time needed today and answer increasingly

complex questions. While all these technologies exist,

more work is required to adapt them to the maritime

environment.

Migrating to real-time, risk-based maintenance

The development of smart sensors, ship-shore

connectivity, databases and information management

systems will be essential enablers for smart

maintenance. That is, moving from the existing

scheduled maintenance approach, a process often

driven by supplier recommendations, to condition-

based maintenance, a process driven by the actual

condition of on-board components and systems, will

signiicantly reduce costs related to maintenance and

improve safety performance.

Condition-based maintenance will enable relevant

personnel to more effectively address the correct

timing and quantity of maintenance for speciic

monitored components. And as experience with

such systems grows and more data is collected on

failure processes, the accuracy of both diagnostic and

prognostic algorithms will improve signiicantly. In

time, these improvements will enable more proactive

risk-based maintenance, where the health status

of components is evaluated in real-time, allowing

personnel to take action to maintain or reduce the

system’s risk level.

"...advances in algorithms and software tools to effectively manage vast amounts of data will

enable a dramatic shift in how the industry approaches maintenance"

� Satellite and communication technology

� Condition monitoring technologies , smart sensors networks and actuators

� Data storage and software algorithms to process large amounts of data for decision support

� Distributed and cloud computing, (the ability to run software on many connected computers at the same time)

� Diagnostics, prognostics and risk tools

� Increased safety and reliability and industry transparency

� Reduced number and frequency of inspections and repairs

� Improved spare parts exchange and logistics

� Reduced costs related to maintenance and downtime and to preserve asset value

� Improved design



Over the last decade, expanding computing power

and faster processing times have outpaced the ability

of humans to manage complex systems effectively.

Indeed, computers are much more effective

at managing low-level intensity situations (e.g.

monitoring engine performance), than humans, and

have proven effective in supporting personnel during

high-intensity events (e.g. anchor handling). In other

industries, more and more systems are automated or

controlled from remote locations.

Over the next decade, it seems likely that the shipping

industry will increasingly look to the offshore industry,

which has developed a number of automated systems

with marine applications, to improve performance.

And while the idea of remotely operated vessels

remains controversial, the development of such

systems will not be limited by technology. Rather,

the industry will have to weigh the beneits of remote

operation, which include reduced manning costs,

increased safety and improved vessel condition,

against their perceived risks.

The ship gets a nervous system

The use of sophisticated robotics and automation is

now commonplace for many land-based industries,

particularly in manufacturing. In the past decade, we

have seen the deployment of a number of unmanned

autonomous and remotely operated vehicles,

including Unmanned Aerial Vehicles (UAVs), Remote

Operated Vehicles (ROVs), and the development of

driverless trucks and autonomous cars.

For shipping, remote operations will require

automation of the engine and other integrated

systems, alongside advanced navigation systems and

sophisticated software that can manage smart sensor

and actuator networks, maintain a vessel’s course in

changing sea and weather conditions, avoid collisions,

and operate the ship eficiently, within speciied safety

parameters. This system will also rely on robust and

secure communications via satellite and land-based

systems. The on-board ship control and decision

management system can be adjusted to allow

different levels of autonomy, but with further advances

in these enabling technologies, we can imagine a

completely autonomous ship that reports to shore-

Automation and remote operations


PATHWAYS THE CONNECTED SHIP

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


based operators only when human input is

needed or if emergency situations arise.

The advent of onshore control centres

Shipping will beneit from developments in the

offshore, aviation, aerospace, and automotive

industries which have been the primary drivers for

advances in automation and remote operations.

Shipping will likely apply these technologies to

instrumented machinery irst and then gradually to

vessel navigation, which will be operated remotely

from shore-based centres. These solutions will

increasingly rely on sensor technologies and

computers to manage on-board systems from

remote locations. As more on-board systems

become automated, the number of on-board

personnel will be reduced, and more decisions

will be made from shore-based control centres.

Onshore control centres will be responsible for the

condition management of the ship and risk related

to the failure of on-board equipment or broken

communication links. These control centres will be

responsible for operating vessels in congested sea

lanes, or in proximity to ports and terminals, and in

emergency situations. To manage these tasks, control

centres will be equipped with system simulators

designed to select optimal routing procedures and

interfaces with land-based supply chain networks. As

with many emerging technologies, the ability of the

system to manage the interaction between man and

machine will be critical. Such systems should provide

accurate representations of risk and allow humans

to take full control of vessels from a remote location,

when necessary.

"Over the last decade, expanding computing power and faster processing times have outpaced

the ability of humans to manage complex systems effectively"

� Satellite and communication technology

� Sensors, automation and monitoring technologies


� Software algorithms for analytics and decision support

� Robotics, smart materials and automated maintenance

� Improved safety performance

� Reduced manning costs, fatigue and routine tasks workload

� Improved operational eficiency

� Improved quality management, monitoring and reporting

� Increased reliability, risk awareness and responsiveness



The steady advance of ICT and access to

vast amounts of data will continue to drive

unprecedented human connectivity. For the

shipping industry, the digital age will open up a new

landscape of opportunities to “get smarter”. In the

short term, several relatively minor subsystems in

ships are expected to grow more automated. One

such important system is instrumented machinery,

which can be monitored from a centralised, shore-

based data centre. At irst, maintenance and logistics

planning may be performed by human analysts,

but over time, these tasks will increasingly be

handled by computers, which will make decisions on

maintenance, ordering parts and scheduling work.

Today, some manufacturers offer systems to monitor

on-board conditions. This process is likely to become

more mainstream in the next decade and, by 2020,

data collection from machinery will be performed

on advanced ships, such as offshore vessels. Data

collected on-board will be used for diagnostic

testing to determine the condition of various

components and if they need to be inspected,

overhauled, or replaced.

The irst prototype of a fully autonomous ship may

appear as early as 2015, with fully automated ships

entering the market by 2025. In 2035, many types of

ships may routinely be delivered with autonomous

operation capabilities. At the same time, ports will

have more automated systems for the loading and

unloading of cargo. If so, it is conceivable that some

segments, like container transportation, may be fully

automated by 2050.

TODAY

Monitoring of ship machinery components by

sensors enabling condition based maintenance

Introduction of performance-based agreements

where OEMs take responsibility for maintenance

Maintenance data gathered from operations

as part of input to the design phase

Use of prognostics for maintenance scheduling and to

determine the remaining useful life of components

A POSSIBLE FUTURETHE CONNECTED SHIP


Other expected developments include collaborative

software tools to enable seamless co-ordination

between various stakeholders, on-board robots,

modular designs, autonomous decision support

systems, and tools for virtual operations, such as

virtual surveys, virtual guidance from land-based

operators, etc. While the deployment of ICT in

shipping is likely to reshape established business

models through more data-centric and more

collaborative, extended value chains, we believe that

these technologies will enable safer, smarter and

greener operations and maintenance procedures.

"In 2035, many types of ships

may routinely be delivered with

autonomous operation capabilities"

2050

Risk based maintenance based on accurate

real-time data integrated into risk models

Robots will be used for many maintenance tasks,

like painting and faulty components substitution

Introduction of remotely controlled ships

and in some cases fully autonomous ships

Design for maintainability will be

integrated into the lifecycle design of ships


FUTURE MATERIALSImagine a ship with self-healing skin, capable of continuously adjusting to changing

sea and wind conditions, one that can generate its own energy and is equipped with

embedded sensors that can provide real-time information to the bridge and shore-based

facilities. Thanks to the developments in materials technology, these and other beneits

will have an enormous impact on shipping, enabling new vessel concepts, saving energy,

minimising maintenance, and extending the life cycle of vessels by decades.


Today, many new materials are rare and expensive,

but further research and development as well as

introduction of new manufacturing methods will

bring these costs down, making these materials

available to the shipping industry in the decades to

come.

The revolution in materials technologies will have

an enormous impact on ships, allowing them to

carry more payload at the same displacement as

today, and at higher speeds using less energy. These

capabilities are not science iction; such a ship could

almost be built today with existing technology,

budget permitting.

Beyond steel

Since the late 19th century, steel has been the

primary material for shipbuilding. This essential

material is cheap and readily available. With a

global recovery rate of more than 70 per cent,

steel is also the most recycled material on the

planet. However, history suggests that signiicant

developments in materials technology can have a

dramatic transformative impact on the industry. Just

as steel replaced wood and the microchip replaced

the electron tube, emerging materials technology

will enable owners to produce safer, lighter and

maintenance-free vessels.

The shipping industry is increasingly looking towards

technology to manage stricter regulations, rising fuel

costs, tighter margins and increased maintenance

costs. At the same time, the industry is expanding

into deeper waters and operating in colder, harsher

climates, exposing their personnel and assets to

greater risk. Indeed, sub-sea activities are already

pushing the material properties of steel to their

limits. In order to take the next step within shipping

operations, new materials may be the only solution.

High cost, high reward

At present, new materials tend to be expensive

to develop and produce, and therefore require

signiicant capital to utilise. In addition, new materials

must compete with the steel industry, which

continues to produce steel with more strength and

less weight. Steel is cost-effective, versatile and easily

recycled, and because it remains a preferred material

for shipbuilding, it will take some time before new

materials can begin to replace or augment it. At the

same time, shipyards are conigured for steel mass-

production, and there are no signs indicating that the

mainstay of ship structures for most segments will

change in the foreseeable future.

As with many other technologies adopted by the

shipping industry, future materials are likely to be

developed, tested and used by other industries

(e.g. aviation, aerospace and automotive) before

being applied to the merchant leet. Innovation in

the shipping industry is often slowed by high unit

investment costs, uncertainties related to the global

availability of new material, competence necessary

for maintenance, short ownership horizons and asset

play in a compliance-driven industry.

Future materials solutions

Materials impact upon safety, the environment and

commercial sustainability. For example, dangerous

materials, such as asbestos, PCB and lead are today

banned or strictly controlled to minimise risk to

seafarers. Materials with special properties are also

important to ensue hull integrity and therefore the

safety of the crew. Environmental performance can

be inluenced by the properties of various materials

and surface quality, helping to reduce fuel usage and

extending the life of a ship. Issues such as insulation,

heat absorption, energy generation and preservation

are all related to materials technologies.

The industry continues to seek alternatives to steel

to produce lightweight ships, which reduce fuel

consumption, corresponding emissions and speed,

impacting upon competitiveness. Developments

in composites and aluminium have been utilised

in some segments, but these materials currently

have no viable application for deep-sea shipping.

For example, the use of glass ibre reinforced

composites is currently very limited in deep-sea

shipping, due to SOLAS’ requirements on ire

performance. However, as equivalent ire safety

measures are applied to composites, we may see

more interest among owners.

In this section, we have identiied three promising

future materials, and how they might be applied

to the shipping industry: lightweight materials,

intelligent materials and powerful materials.


Ultra-strong, lightweight materials will ensure safer,

lighter and more robust structures that will improve

range, payload, fuel consumption and operational

expenses for ships at sea. As we have seen in the

defence industry, Glass Fibre Reinforced Plastics

(GRP) and aluminium are being used on increasingly

larger warships, subject to strict naval regulations and

standards, and increasingly on major components in

the civil maritime industry. Further developments in

lightweight materials will allow for operations in more

extreme conditions and extend the lifetime of a vessel

signiicantly.

Evwbling technologies

Graphene, the irst ever two-dimensional material,

was discovered around 10 years ago. Made up of

one-atom thick layers of carbon, a single strand of

graphene is the thinnest material ever observed. Up

to 200 times stronger than common steel, graphene

is lexible, light, nearly transparent and an excellent

conductor of heat and electricity. As it is both stronger

and stiffer than any known material, it could be used

to manufacture products and structures that would

be a fraction of the weight and exponentially stronger

than anything produced today. Graphene could also

be used to strengthen polymer or metal composites.

Another exciting development within the ield of

lightweight materials is 3D woven fabrics. Until

recently, the increasing application of composites to

make structures lighter and more corrosion-resistant

has been slowed by the ineficient manual joining

processes used today. Improving the reliability and

eficiency of composite joining processes requires

replacing traditional hand-lay-up processes with

new 3D weaving technologies. The new approach

to joining structures signiicantly simpliies the

complexity of parts and reduces the number of

components used, dramatically improving the viability

of composite lightweight solutions.

Aluminium oxynitride or AlON represents another

promising development in lightweight materials. Once

considered science iction, lightweight transparent

alumina is now a reality. AION is a transparent

polycrystalline ceramic that is optically transparent

and about three times harder than steel of the same

Lightweight materials


PATHWAYS FUTURE MATERIALS

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


thickness. The material remains solid up to 1200°C,

and has good resistance to corrosion and damage

from radiation and oxidation. Typical applications are

domes, tubes, transparent windows, rods and plates.

Finally, the introduction of metal foam will change how

ships are designed, constructed and operated. Metal

foam dramatically improves the weight-to-stiffness

ratio, energy dissipation and it will have a positive

effect on a vessel’s vibration, thermal, and acoustic

performance. Another advantage is the mitigation

of buckling, both for rods and plates, which will help

improve safety and reduce maintenance costs. Metal

foam decreases density and weight while increasing

apparent thickness - a new design variable in steel

material selection.

By controlling density, the properties of steel

components can be signiicantly modiied, expanding

design space for steel applications towards more

collision resistant structures. Properly constructed,

foamed components can have higher bending stiffness

and weigh less than solid steel. A sandwich panel with

steel faces of one millimetre with a 14 mm metal foam

core has a comparable bending stiffness of a 10 mm

solid steel plate, at merely 35 per cent of the weight.

Eypected developments

In less than 10 years, graphene has gone from the

lab into pilot products all over the world. Recent

developments in graphene production methods

indicate the feasibility of mass production from

numerous raw materials, including environmentally

friendly and relatively low-cost chemicals. For joining

technology, adhesive bonding is common today, but

one should see more widespread use in lightweight

structures – not only for composite structures but also

steel. Weaving technology, perhaps in combination

with 3D printing, will also be used to ind solutions

for structural damage repair. Future applications for

AION include sensor windows, transparent armour,

insulators and heat radiation plates, opto-electronic

devices, metal matrix composites, and translucent

ceramics. In the future, cruise ships may have large

structures made of transparent alumina to provide

passengers with better views while staying in

compliance with strength integrity regulations.

� Glass Fibre Reinforced Plastics (GRP)

� Aluminium

� Graphene (one-atom thick layers of carbon)

� 3D weaving technologies for composites

� Aluminium oxynitride, AlON (transparent alumina)

� Metal foam

� Lighter structures and reduced fuel consumption

� Less need for ballast

� Increased speed

� Safer structures

� Improved noise and vibration properties

� Improved corrosion-resistance and reduced maintenance

� Extended lifetime

� Allow operations in more extreme conditions



Intelligent materials offer a broad range of beneits

to the shipping industry. Structures embedded with

millions of miniaturised “smart” sensors can generate

vast amounts of information, which can be streamed

to relevant onshore personnel. Friction-reducing riblet

technologies not only reduce drag, but also help

to mitigate risks associated with the transportation

of invasive species from one ecosystem to another.

Some intelligent materials are self-healing, able to

sense cracks or failures before damage occurs, while

functionally graded materials will contribute to the

increased lifetime of vessels by eliminating corrosion

and metal fatigue.

Ez{bling technologies

Self-healing materials are deined by their ability

to detect, heal and repair damage automatically.

Different types of materials, such as plastics, polymers,

paints, coatings, metals, alloys, ceramics and concrete

have their own self-healing mechanisms. Some

materials may include healing agents, which are

released into the crack-plane through capillary action.

When a crack ruptures the embedded microcapsules,

a polymerization process is triggered, bonding the

crack faces. This technology can be utilised on any

surface on a ship, including tanks and hard-to-reach

structural areas.

Materials of the future will also have sensing

capabilities that will allow them to provide information

about their immediate environment and their own

condition. Relevant sensing technologies include

laser-based interferometry, LED-based optical sensors,

spectroscopy and spectrophotometry. Advances in

production will allow sensors to be manufactured

on a microscopic scale. Today, sensors can measure

as small as 0.05 mm by 0.05 mm, but as new

manufacturing techniques are developed, they will

become even smaller.

Intelligent materials also include smart coatings, which

incorporate functional ingredients such as nano-

particles, micro-electromechanical systems (MEMS)

and Radio-Frequency Identiication (RFIDs), among

others. These technologies enable self-repair, self-

healing and sensing. In the future, smart coatings may

incorporate pH sensitive microcapsules for corrosion

monitoring and deliver corrosion inhibitors. Likewise,

work to develop and produce “smart dust” – a network

Intelligent materials



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


of microscopic wireless MEMS sensors – may provide

a whole range of beneits to the shipping industry.

These microscopic sensors act like computers that

function together as a wireless network. Applications

related to the maritime industry include tracking of

sea surface temperatures and circulating currents, or

monitoring of the corrosion rate of hull structures.

Over the past decade, researchers have turned to

the natural world for inspiration in developing smart

materials. For example, studies have shown that the

unique properties of shark skin not only reduce drag

by 10 per cent, they also hinder microscopic aquatic

organisms from adhering to the shark. Riblet surfaces

are made up of very small grooves with sharp ridges

aligned with the mean low. Reducing friction is

achieved by the reduction of the turbulent span-wise

motion near the wall. Developments on mimicking

the properties of shark skin riblets may soon lead

to coatings that would reduce drag and limit the

bio-fouling on surfaces, and prevent transportation

of biological substances. The industry is also likely

to beneit from developments in functionally graded

materials. These types of materials have properties

that change with location, e.g. surface properties are

different to core material properties. Functionally

graded materials may be used to inhibit the

development of cracks, which can occur in engines,

hulls or other vital parts of the ship. They can also

have a unique ability to act as a thermal barrier, ideal

for use on structures or engine parts exposed to high

extreme temperatures.

E|pected developments

While many smart materials already exist, further

research and development is required to reduce

manufacturing costs. For example, functionally

graded materials remain prohibitively expensive

due to existing limitations of the powder processing

and fabrication methods. Solid, freeform fabrication

techniques such as 3D printing offer greater

advantages for producing functionally graded

materials, but more work needs to be done.

Advances in sensing technologies will allow more

sensors to be manufactured on a microscopic scale.

While it is still unclear when these technologies will be

commercially viable, future materials will have sensing

capabilities allowing them to provide information

about their condition and the immediate environment.

In this context, the two technologies that have the

potential to be used on a global scale, regardless of

material, are smart coatings and smart dust.

� Self-healing properties

� Sensing capabilities (microscopic sensors, LED-based optical sensors, MEMS, RFID)

� Nano-technology

� “Smart dust” – a network of microscopic wireless sensors

� Functionally graded materials (properties that change with location)

� Reduced hull friction and fuel consumption

� Increased lifetime

� Reduced maintenance

� Improved safety

� Reduced transportation of invasive species between ecosystems



Developments in this ield will turn composite

structures into huge capacitors, powering a ship

using printable photovoltaic cells that cover the entire

ship exterior. Electric carbon nanotubes will carry an

immense amount of current and minimise energy

loss. Likewise, stricter environmental regulations may

encourage the development of both electrical energy

storage and on-board solar energy production, such

as printable plastic solar cells that can signiicantly

reduce energy consumption and reduce emissions.

Work is being focused on increasing the eficiency of

the organic thin ilm cells, while keeping the cost of

mass production low.

E}~bling technologies

Developments in carbon ibre and specially

formulated polymers have enabled light electrical

energy storage. The charge is stored electro-statically,

rather than as a chemical reaction. The energy device

then behaves more like a capacitor, or ultra-capacitor,

than a battery. The device can store and discharge

electrical energy in addition to being strong and

lightweight, suitable for use in structures.

For power generation, the industry may turn to

printable plastic solar cells. Solar cells can be printed

directly onto steel or other surfaces, acting as

photovoltaic material made from semi-conducting

polymers and nano-engineered materials. The active

material absorbs photons to trigger the release

of electrons, which are then transported to create

electricity. Photo-reactive materials can be printed

or coated inexpensively onto lexible substrates

using roll-to-roll manufacturing, similar to the way

newspaper is printed on large rolls. The process is

non-toxic and environmentally friendly, and because

it’s conducted at low temperatures, it is less energy

intensive than other production technologies. The

process is ive times more affordable than producing

traditional solar panels and has the added beneits of

being lightweight, versatile and lexible. In the future,

we may see large areas of ship structures covered with

printable solar cells.

For the storage and transfer of energy, the shipping

industry will welcome developments in carbon

nanotubes. Unlike copper wires, these hexagonal

strand formations are 40,000 times thinner than a

Powerful materials



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


human hair. Carbon nanotubes are ideal for use with

high voltage power lines. Mechanically strong, yet

lexible enough to be knotted or woven together into

long lengths of wire, they are capable of carrying about

100,000 amps of current per square centimetre of

material – about the same amount as copper wires, but

at one sixth of the weight. Carbon nanotubes are able

to carry more electricity over longer distances without

losing energy to heat - a problem with today’s electrical

grid and with computer chips. Since the nanotubes are

made of carbon and not metal, they don’t corrode.

E�pected developments

Electricity storage, solar cells and carbon nanotubes

are existing technologies, but more work is required

before they can be applied to the shipping industry.

However, it is likely that photovoltaic and battery

technology will soon be available to help power hybrid

engines. Also, the industry is likely to adopt relective

coatings for ships operating in temperate climates,

which will help reduce energy consumption and

corresponding emissions.

"Solar cells can be printed directly

onto steel or other surfaces, acting

as photovoltaic material made from

semi-conducting polymers and

nano-engineered materials"

� Composites for electrical energy storage

� Printable plastic solar cells

� Carbon nanotubes (for transfer of energy)

� Relective coatings

� Reduction in fuel consumption

� Improved on-board power management



Developments in materials technology are likely to

have a profound impact on shipping. New material

solutions are needed to meet future environmental

regulations and to replace fossil fuels with renewable

energies.

Due to the number, diversity and complexity of

materials now being developed, it is dificult to

predict which, and in what order, solutions will be

available to the shipping industry in the decades to

come. However, by 2020 we expect the introduction

of lightweight structures and metal foamed sandwich

structures, nanotech coatings for the prevention

of marine growth on the outside of the hull, and

photovoltaic and battery technology development

for hybrid engines.

In 2030, we are likely to see very large, lightweight

superstructures built on some ships (e.g. cruise

ships), while small and medium sized vessels made

entirely out of composites will begin to be more

common. Maintenance will be optimised using

massively distributed sensor networks, and more

ships will be equipped with carbon nanotubes and

micro-turbines with advanced alloys to reduce fuel

consumption. Also, spray-painted or printable micro

batteries will be available to generate energy and

supply energy to smart grids.

By 2050, the irst large all-composite commercial

ships will be constructed, while the use of hybrid

and metal foam sandwich structures will become

TODAY

Composite superstructures common

in offshore and short sea shipping

Printable photovoltaic cells covering

an entire superstructure and hull

Relective coatings for cruise ships in hot

climates to reduce energy consumption

First secondary structures made of hybrid

construction and metal foamed sandwich structures

A POSSIBLE FUTUREFUTURE MATERIALS


more common. Smart materials will develop to the

point where vessels can be customised, designed

and fabricated in a fully digital value chain. More

and more ships will have spray-painted or printable

micro-batteries to generate energy and supply

energy to a smart grid. Nano-technology fuel cells

and high-density energy storage materials will

enable ships to run entirely on renewable energy

and create zero emissions.

"New material solutions are needed to

meet future environmental regulations

and to replace fossil fuels with

renewable energies"

2050

Composite structures are inherent

capacitors that will act as huge batteries

Super-smooth, bubble-emitting riblet coatings repel

marine species and ice, and decimate hull friction

Sensing and self-healing

technology introduced

Introduction of cables with conducting

electric carbon nano-tubes

©S

hu

ttersto

ck


EFFICIENT SHIPPING We can see how developments in alternative fuels, ICT, materials technology and

advanced ship design will enable more eficient ships. But until the industry works

with other stakeholders to address ineficient value chains and logistics networks, it

cannot capture the full beneit of any individual technology. To meet its sustainability

targets, the shipping industry must optimise shipping’s role in global transportation

networks by reducing costs per transported unit, increasing asset utilisation and

adopting new technologies and operating practices.


Shipping has capitalised on economies of scale

(cargo capacity) to become the most eficient form

of transport available to man. Yet a comprehensive

view of today’s land-sea transportation networks

reveals signiicant potential to improve eficiencies

throughout the value chain. For the industry to

capitalise on this potential, the size, operations and

functionality of ships must be aligned with land-

based infrastructure and solutions, logistics systems

and supply chain management. Furthermore, with

rapid growth in inter-regional trade expected, the

industry can capture signiicant eficiency gains in

short-sea shipping.

Today, short-sea shipping is highly fragmented, but

with the development of improved ICT solutions and

industry consolidation, future supply chains will be

far more integrated. To achieve eficiency gains in

this segment, the industry and related stakeholders

must work together to reduce transhipment time and

costs through eficient terminal operations and port-

and hinterland structures.

The pressure to perform

Demand for seaborne transport is projected to

increase, especially in intra-regional trades. At the

same time, pressure from society on the shipping

industry to improve environmental performance

will grow. Eficient shipping will thus have a double

objective: To remain competitive, each player must

strive to reduce costs per transported unit. And to

satisfy sustainability requirements, more eficient

value chains for new and existing trades must be

developed, asset utilisation must be increased and

new technology and operating practices must be

adopted.

Breaking barriers

It won’t be easy. The scale and complexity of

global transportation networks - a system that has

developed over many decades (if not centuries) -

makes it dificult and expensive to change. Legacy

industry practices, culture, and established supply

chains resist a quick ix, and for a system that

involves so many stakeholders, coordinated action

or synchronised behaviour represents a signiicant

challenge. Moreover, eficient shipping solutions

often rely on advanced ICT systems to optimise

logistics through the value chain. Yet today’s systems

are fragmented, characterised by proprietary or

legacy systems, limited standardisation of data

formats, inadequate data sharing and poor systems

integration.

Today, individual players are more likely to

adopt minimum standards due to regulation and

competitive pressure in the absence of industry-level

requirements and incentives to improve eficiency.

As such, triggering the overall eficiency potentials,

a process that will require concerted efforts by

multiple stakeholders, will be dificult, as the value-

capture mechanisms for each player are complex

and uncertain. In many cases “the greater good”

will also require that certain stakeholders sacriice

some of their proits or beneits (or bargaining

power/control), which will of course not happen

without some kind of pressure or regulation. Finally,

improving logistics and value chain networks will

often also require the construction or expansion of

costly land-based infrastructure that may face local

opposition.

Harmonising the value chain

Assuming a continuation of the status quo (e.g.

that the industry is not subject to any systemic

upheavals or radical shifts), we believe that eficiency

improvements are still achievable by focusing on

the following aspects: economies of scale, which

refers to size of vessels, operational organisations

and supply chain networks, value chain eficiency,

which refers to improved operational lexibility and

optimisation, improved value chain integration and

information low, and more eficient and integrated

supply chain networks, and short-sea shipping,

which has a large potential for improvement through

improved cargo handling and modal shift eficiency,

local issues related to contract structures, and further

integration of supply chains.

"Demand for seaborne transport is projected to increase, especially in intra-regional trades"


Economies of scale apply to multiple areas of the

supply chain network. In brief, by “rightsizing”

throughout the value chain, the industry can reduce

unit costs and transaction costs, increase bargaining

power and asset utilisation, achieve improved supply

chain integration, and capture eficiency beneits with

expanded logistics networks.

As we have seen in the past, ship transport is an area

that scales well, meaning that costs of constructing

and operating larger vessels does not increase in

proportion to the capacity. Furthermore, studies have

shown that even the largest vessels constructed in any

given segment are well under the maximum physical

or practical limits of existing design and technical or

structural parameters.

However, the advantages of increasing vessel capacity

vary from segment to segment. For example, while

increasing the size of bulk carriers and crude oil

tankers may generally offer lower sea freight unit

costs, history shows that vessels larger than the

established “market standard” will not be able to

capitalise on their theoretical advantage. This is due

to issues such as restricted port and terminal capacity,

inventory cost optimisation, limits to commercial

trading lots and systems, and the physical barriers

encountered by large ships transiting narrow canals or

straits.

On the other hand, container shipping has probably

not reached the point of maturity with a maximum

size. Indeed, upsizing cargo capacity has represented

a tremendous value to container shipping, where the

deployment of ever-larger container ships on primary

trades has improved the eficiency throughout the

entire value chain.

The industry would also beneit from larger

organisational units, both on a corporate level and

through pooling of resources, as we see in container

“alliances”. “Horizontal integration” increases

eficiency by improving organisational eficiency

and scale-effects in operations. Furthermore,

larger organisational units will have increased

bargaining power, a higher degree of integration

and harmonisation between different business and

systems, and it will also be more lexible, thanks to

Economies of scale


PATHWAYS EFFICIENT SHIPPING

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


� Improved local air quality and lower pollution

� Reduced freight costs per unit

� Increased reliability of service

� Higher asset utilisation in all parts of the value chain

� Port and terminal capacity

� Further development of ICT and supply chain management systems

� Consolidation and pooling of ships

� Containerisation of semi-inished goods and high value raw materials

� Automation of terminal and port operations

the ability to create a larger pool of assets that can

be marshalled to meet the speciic transportation

requirements of certain goods.

Economies of scale may also be achieved via

the “vertical integration” in value chains. Vertical

integration increases eficiency by allowing one

organisation to take control of more than one link in

the chain, such as owning or operating both ships and

terminals or the logistics operations and warehousing

and terminal facilities, thereby reducing transaction

costs. Vertical integration is supported by advances

in ICT systems and Supply Chain Management (SCM)

systems, which also improve competitiveness by

offering more diverse services. Vertical integration

may also be combined with efforts to achieve volume

increases to release “regular” scale eficiencies, which

will in turn produce larger value chains.

E��bling technologies

At present, the physical/technical constraints on the

size of ships have not been reached, although as

noted, limited port and terminal capacity (among other

issues) acts as a cap on vessel sizes in many segments.

Technologies to develop and improve organisational

and supply chain integration economies of scale will

require the further development of ICT and SCM

systems. Such systems will enable a higher degree

of automation of terminal and port operations, the

ability to track and trace goods, delivery of forecasts,

synchronisation of logistics processes and modes to

achieve “lean and agile logistics”.


We expect signiicant increases in ship sizes

employed in regional trades: as volumes grow, larger

vessels will be employed. For deep-sea trades, the

anticipated development is different: The dry bulk

and container segments will continue to see ever-

larger vessels entering into service. And as the scale

of these vessels grows, it will drive the development

of expanded port and terminal infrastructure, which

will in turn encourage the upsizing of land-based

infrastructure. Further consolidation will increase the

size of organisations, while larger and more complex

and integrated value chains will play an increasingly

important role, particularly in the box trade and for

inished goods.

"We expect significant increases in ship sizes employed in regional trades: as volumes grow,

larger vessels will be employed"



Eficiency potentials in existing or new transport

chains can be realised by implementing systems to

improve how the different links in the chain interact.

Optimising value chain eficiency will require an

improved utilisation of ships and other infrastructure,

including reduction/elimination of waiting time,

removal of established practices and behaviours that

act as barriers for change, a reduction of transaction

costs and interface costs via ICT system compatibility,

supply chain management systems, terminal

operations and modal shifts. While the total cost

savings are dificult to estimate, some studies indicate

that the energy savings potential associated with such

logistics and supply chain improvements could reach

20 to 30 per cent.


While many of the systems, technologies and

solutions required to achieve improved value chain

eficiency are available, they will be dificult to

implement due to the number of stakeholders, legacy

systems and a perceived reluctance by value chain

owners to abandon existing practices. Nevertheless,

systems for the “virtual arrival” of vessels and for

pre-assigning slots would allow all vessels to sail at

the most economical speed instead of dashing to

the port to secure a spot in the queue. The direct fuel

savings from such an approach are substantial. Also,

such systems would allow cargo owners to reduce

warehousing costs and improve planning eficiency.

At the same time, further development of ICT systems

will address ineficiency related to transaction costs,

transit time, transparency, tracking and punctuality.

An enabler to this development will be the availability

of common standards for transparent supply chain

information available to all stakeholders. Finally, more

robust on-board ICT systems can provide veriied and

trusted data related to vessel operations that may

form the basis for performance-based energy eficient

operations and practices, contractual clauses that

stimulate and reward energy savings, and accurate

documentation of deviations that result in lost time

or higher costs.

Value chain eiciency



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill



We expect that the capability to manage larger

and more complex supply chains will increase

substantially due to the continued, rapid

development of ICT and supply chain management

solutions. This capability will be a strong incentive

to realise economy of scale beneits by increasing

the vertical integration and develop leaner supply

chains. Naturally, the players with the largest

potential beneit will have the largest incentives.

If so, we anticipate that it will be the owner of the

value chain who drives this development. It should

be noted that characteristics of supply chains vary

considerably between shipping segments, so

whereas best-practice solutions will be outlined

or identiied, the actual application will vary,

depending on the needs of speciic segments.

"The capability to manage larger and more complex supply chains will increase substantially

due to the continued, rapid development of ICT and supply chain management solutions"

� Pre-assigned port slots

� ICT and supply chain management solutions

� Sensor and communication technologies for tracking and identiication of vessel and goods

� Contractual clauses that stimulate and reward energy savings

� Signiicant energy savings

� Reduced emissions

� Improved local air quality

� Reduced unit freight costs

� Improved reliability of service

� Improved utilisation of assets



Perhaps more than any other segment, short-sea

shipping stands to gain by improving eficiency along

the lines described above. Towards 2050, global

seaborne trade will see a rapid growth of intra-

regional trade and (in relative terms), this will be much

higher than the growth in the deep-sea transport.

This trend will lead to new trade patterns and a

growing demand for new eficient shipping solutions,

including more eficient interaction between short-sea

and deep-sea shipping, inland shipping and rail and

road transport. Eficient short-sea shipping of unitised

cargo relies on the integration with other transport

systems in the value chain, from origin to inal

destination. These networks must factor in total lead

time, frequency and capacity of the transportation

adapted to the cargo volumes and capacity of

hinterland infrastructure, reliability of on-time delivery,

eficient port terminals, eficient pick-up and delivery

hinterland distribution networks from/to the ports

and cargo carriers (e.g. containers, pallets, trailers and

other standard units).

E��bling systems and technologies

Short-sea shipping can beneit from the utilisation of

a number of systems and technologies to improve

eficiency. These include technologies for more

effective modal shift (such as automated cargo

handling systems between ships and rail/truck, or via

a depot or port terminal), improved contract structures

that enable the integration of the supply chain both

through consolidation and vertical integration, and

more advanced ICT systems, including supply chain

planning and optimisation tools. However, unless the

infrastructure to support increased volumes is in place,

speciically referring to upgraded ports, terminals and

road and rail networks, these solutions will have

a limited total impact.


Development will be driven by competitive pressure

from road transportation, further developments in

Eicient short-sea shipping



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


technology and government-driven regulations,

schemes and incentives. We expect that

development will mainly occur in regions with

large economic and population growth, densely

populated countries with inadequate inland

infrastructure (e.g. India, Vietnam) and in areas with

pressure on their hinterland infrastructure driving

schemes to change transport structure (e.g. Europe).

As many short-sea vessels trade in ECAs, we expect

the segment to be the irst to embrace new, low

emissions fuel sources such as batteries, fuel cells

and LNG. The segment will also employ more

eficient cargo handling systems, and new terminal

and crane solutions will allow for considerably higher

loading/unloading capacities, automated mooring

and in some ports, fully automated cargo handling.

We could also see the emergence of new solutions

for reducing costs and transit times via direct ship-to-

ship and ship-to-road transfer.

"Efficient short-sea shipping of unitised cargo relies on the integration with other transport

systems in the value chain, from origin to final destination"

� Technologies for more effective modal shift such as automated cargo handling systems, and new terminal and crane solutions

� Improved contract structures

� ICT systems including supply chain planning and optimisation tools

� Reduced local pollution and lower emissions

� Reduced freight costs per unit both for sea transport leg and total supply chain

� Reduced lead time and increased reliability

� Higher utilisation of ships and other assets in the supply chain

� More “it for purpose”, lexible ships

� Increase asset utilisation, lower unit costs



Signiicant shipping eficiency improvements are

attainable without radical systemic changes to the

industry, utilising technologies and solutions that are

either available today, or that will be shortly. Over the

next decades, we expect the structure of shipping

to gradually shift towards a higher focus on regional

shipping, driven by continued economic growth in

Asia, leading to growing trade volumes in the region.

Port and hinterland infrastructure will require huge

investments; without these upgrades the shipping

eficiency improvements will be severely limited.

In our view, the largest eficiency improvement

potential is related not only to the relative size of the

value chain, but how it is structured.

By 2020, we expect to see more consolidation,

pooling of ships and other resources among ship

owners in order to reduce costs, and increase

lexibility and bargaining power. While port

development and investment projects will continue

to be slowed by politics and public opposition from

interest groups (particularly in Europe and the US),

development of test installations of highly automated

cargo handling systems will gain pace. Massive

investments in port and distribution infrastructure to

support the development of trade and consumption,

particularly in Asia and Africa, will emerge towards

2030. New terminal facilities will apply automated

cargo handling and terminal equipment.

Meanwhile, regional changes in economy and

production, consumption and transport of resources

will result in rapid growth in intra-regional shipping,

creating increased demand for vessels in all

TODAY

New contracts and incentive schemes

between owner and charterer

Regional shipping growing rapidly with

rising demand for feeder-size vessels

Increased consolidation, pooling ships

in order to increase bargaining power

Integrated supply chains with transparent

information for all players in the chain

A POSSIBLE FUTUREEFFICIENT SHIPPING

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segments operating within the regional logistics

networks. Also, we expect more containerisation of

semi-inished goods and high value raw materials,

which will lead to development of new solutions,

based on standard container formats, to allow

handling of multiple containers or mega-boxes.

Due to the superior eficiency of large and fully

integrated supply chains, huge logistics networks

will emerge by 2050, requiring a higher degree

of specialisation in all ship segments. As ships are

more speciically tied to value chains, this will take

much of the volatility out of the shipping markets,

and will also shrink the market for traditional asset

players. Regional and short-sea shipping will see a

much larger growth (both in volume and number of

vessels) than deep-sea.

Large-scale consolidation will give highly automated

and eficient logistics networks, driven by the

intra-regional development in Asia, requiring new

specialised vessel types in all major segments.

Eficient shipping is perhaps the most challenging

and complex pathway to sustainable shipping, but if

the industry and other stakeholders are committed

to reducing the environmental impact of the entire

transportation sector, it is a logical place to start.

2050

Massive investments in port and distribution

infrastructure, particularly in Asia and Africa

Equatorial trunk lines with megaships

(30-35000 TEU) between trans-shipment hubs

Container and break-bulk terminals and

distribution network heavily automated

New solutions allow handling of multiple

containers or mega-boxes in one move


LOW CARBON ENERGY For more than a century, the shipping industry has relied almost exclusively on heavy

fuel oil. But with the introduction of strict environmental regulations, rising fuel prices

and concerns regarding the security of energy supply, the industry is on the brink of

a revolution in marine fuels. What will fuel the ships of tomorrow to help the industry

reach the CO2 reduction ambition?


To ensure a sustainable planet, humanity must limit

global temperature increases to 2°C, achievable

primarily by lowering carbon emissions. The

shipping industry can be expected to reduce its total

carbon output by at least 60 per cent below present

levels.

Achieving this ambition will not be easy. Consider

that the world leet is expected to expand over

the next four decades to meet expected growth in

global trade. And while improving on-board energy

eficiency certainly plays a role in meeting carbon

reduction targets, such measures alone will only go

so far in reducing emissions. If so, the development

of low carbon sources of energy represents the

industry’s best option for lowering its total carbon

output.

Moving away from fossil fuels

There are two primary trends driving developments

in low carbon energy. First, growing public concerns

regarding the industry’s impact on health and the

coastal environment has led to increasingly strict

regulations on emissions – a trend likely to continue.

At present, regulators have introduced stringent SOx

and NOx emission limits in some regions, and the

IMO has introduced mandatory eficiency standards

(EEDI and SEEMP) to help address CO2 emissions.

In the future, we may see shipping included

in additional state-sponsored CO2 reduction

agreements, such as a carbon tax or an emissions

trading scheme. If so, these regulatory requirements

could drive the introduction of various alternative

fuels.

Second, the growing scarcity of fossil fuels has

resulted in the steady rise in bunkering costs,

concerns related to energy security and the long-

term availability of fossil fuels. At the same time,

sustained political unrest in energy producing

countries could lead to an extended global

energy crisis, driving oil prices up further. Indeed,

a long-term energy crisis would likely trigger

rapid developments in technologies to manage

shortages of fossil fuels – especially alternative fuels.

On the other hand, high oil prices have led to the

development of unconventional fossil fuels, such

as shale gas and shale oil, which may help stabilise

energy prices over time.

Breaking the deadlock

New fuels require new on-board systems and

machinery, so changing from one fuel (HFO,

MDO) to another (e.g. LNG) will take some time.

For pioneers – owners who take the risk to invest in

new solutions – unforeseen technical issues often

result in signiicant delays, requiring additional

capital. At the same time, bunker costs for certain

shipping segments are paid for by the charterer,

removing incentives for owners to explore alternative

fuels. Patchwork regulations, enforced by different

government bodies that often apply different

standards, have also slowed coordinated action.

Lack of appropriate infrastructure, such as bunkering

facilities and supply chain networks, and the long-

term availability of certain fuel types are additional

barriers for the introduction of any new fuel. That

is, owners will not start using new fuels if the

infrastructure is not available, and energy providers

will not inance expensive infrastructure without

irst securing customers. Breaking this deadlock will

require a coordinated, industry-wide effort and the

political will to invest in the development of new

infrastructure.

Low carbon energy solutions

Over the next four decades, it is likely that the

energy mix will be characterised by a high degree

of diversiication. LNG has the potential to become

the fuel of choice for all shipping segments,

provided the infrastructure is in place, while liquid

biofuels could gradually also replace oil-based fuels.

Electricity from the grid will most likely be used more

and more to charge batteries for ship operations in

ports, but also for propulsion. Renewable electricity

could also be used to produce hydrogen, which

can in turn be used to power fuel cells, providing

auxiliary or propulsion power. If drastic reductions

of greenhouse gas emissions are required and

appropriate alternative fuels are not readily available,

carbon capture systems could provide a radical

solution for substantial reduction of CO2.

Expectations for a broader application of nuclear

power for commercial vessels are limited. While

a proven solution, uranium-based nuclear power

is currently considered too controversial to be a

viable alternative for ships. That being said, a shift in

opinion may happen. We could see fossil fuels being

banned or heavily regulated, to the point of forcing

the public and politicians to reconsider their attitude

towards nuclear powered ships. Developments in

thorium-based nuclear power, which remove many

of the security and waste disposal risks associated

with uranium-based systems, may progress to the

point where marine applications are possible and

acceptable.


Using LNG as fuel offers clear environmental

beneits: elimination of SOx emissions and particulate

matter; signiicant reductions of NOx and about

20% reduction of CO2 emissions. While LNG fuel

cannot reduce CO2 emissions to the required levels,

it remains an attractive option to meet current

emission requirements. Furthermore, the number of

LNG-fuelled ships is rapidly increasing, encouraging

investment and construction of infrastructure projects

along the main shipping lanes in the world, making

LNG the leading short-term alternative fuel.


LNG as fuel is now a proven and available solution,

with gas engines being produced covering a broad

range of power outputs. Engine concepts include

gas-only engines, dual fuel four-stroke and two-stroke

engines. Some of the latest two-stroke engines help

avoid “methane slip” (release of methane) during

combustion, and further reductions are expected

from four-stroke engines. On the production side,

the recent boom in non-traditional gas (shale) has had

a dramatic effect on the market for gas, particularly

in North America. Exploitation of shale gas in other

parts of the world could also prove to be signiicant

for a more rapid uptake of LNG as fuel for ships.

However, the extraction process (hydraulic fracturing

or “fracking”) remains a controversial technology, due

to growing public concerns over its impact on public

health and the environment.


Rapid LNG uptake is expected in the next ive to 10

years, irst on short sea ships operating in areas with

developed gas bunkering infrastructure, followed

by larger ocean-going vessels when bunkering

infrastructure becomes available around the world.

Liqueied natural gas


PATHWAYS LOW CARBON ENERGY

CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


� Gas engines (gas-only, dual fuel four-stroke and two-stroke engines)

� Fuel tanks

� Production of non-traditional gas (shale gas)

� 20% CO2 reduction

� Up to 90% NOx reduction

� Eliminated SOx and PM emissions

� Eliminated oil spills


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Recent developments in ship electriication hold

signiicant promise for more eficient use of energy.

Renewable power production can be exploited to

produce electricity in order to power ships at berth

and to charge batteries for fully electric and hybrid

ships. Enhancing the role of electricity on ships will

contribute towards improved energy management

and fuel eficiency on larger vessels. For example,

shifting from AC to on-board DC grids allows engines

to operate at variable speeds, helping to reduce

energy usage. Additional beneits include power

redundancy and noise and vibration reduction.

Renewable electricity can also be used to produce

hydrogen, which can power fuel cells on-board ships.

This solution will also help owners manage challenges

related to the intermittent nature of many renewable

energy sources. Indeed, hydrogen is the lightest of

all gas molecules, thus offering the best energy-to-

weight storage ratio of all fuels. However, hydrogen as

fuel can be dificult and costly to produce, resulting in

the signiicant loss of energy. Compressed hydrogen

has a very low energy density by volume, requiring six

to seven times more space than HFO. Alternatively,

cryogenic storage in well-insulated tanks at very low

temperatures (-253°C) can be used, but this process is

associated with large energy losses.

If renewable energy from the sun or wind is not readily

available, conventional power plants can be used. If

so, greenhouse gases and other pollutants will still

be emitted, but they can be reduced through exhaust

gas cleaning systems or carbon capture and storage.

Alternatively, nuclear power on shore could be used

for emissions-free electricity production.


Energy storage is critical both for the use of electricity

for ship propulsion and to optimise the use of energy

on hybrid ships. At present, there are a number

of energy storage technologies available. Battery

powered propulsion systems are already being

engineered for smaller ships and for larger vessels,

with engine manufacturers focussed on hybrid

battery solutions. Challenges related to safety and

the availability of some materials must be addressed

to ensure that a battery driven vessel is as safe as

Ship electriication and renewables



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


an ordinary vessel, but the pace of technology is

advancing rapidly and solutions to these issues are

likely to be developed.

Fuel cells are commonly used to convert the chemical

energy of hydrogen into electricity. When a fuel

reformer is available, other fuels, such as natural

gas or methanol, can power a fuel cell. Although

research has indicated that fuel cell technology can

be applied successfully to the maritime environment,

further R&D is necessary before fuel cells can be used

to complement existing power systems on ships.

Challenges with fuel cell technology include high

investment costs, the dimensions and weight of fuel

cell installations and the expected lifetime of the

system. Also, more work must be done to ensure

the safe storage of hydrogen on-board ships.


For ship types with frequent load variations such as

harbour tugs, offshore service vessels, and ferries,

electriication is increasingly seen as an effective

means to reduce fuel usage and corresponding

emissions. At the same time, the construction of more

hybrid ships is expected to be common towards

2020. After 2020, improvements in energy storage

technology will enable some degree of hybridisation

for most ships. For large, deep sea vessels, the hybrid

architecture will be utilised for manoeuvring and

port operations to reduce local emissions when in

populated areas.

Signiicant reduction in costs is required if fuel cell

technologies are to become a viable solution for

maritime transport. With the recent commercialisation

of certain land-based fuel cell applications, there

is reason to believe that costs will fall. For ship

applications, a reduction of the size and weight of fuel

cells is critical. However, fuel cells are likely to play

a larger role in future power production on ships. In

the short-term, it might be possible to see successful

niche applications for fuel cells on some specialised

ships, particularly in combination with hybrid systems.

� Battery technology

� DC grid

� Fuel cell (based on hydrogen)

� Storage of hydrogen

� Land based renewable energy production (wind, solar, etc)

� Signiicant reductions of CO2, NOx and SOx, depending on how electricity/hydrogen is generated

� Opportunity to use renewable power production

� Reduced transport cost

� Reduced maintenance

� Power redundancy

� Noise and vibration reduction

� Elimination of oil spills



Biofuels can be derived from three primary sources:

edible crops, non-edible crops (waste, or crops

harvested on marginal land) and algae, which can

grow in water. In addition to having the potential

to contribute to a substantial reduction in overall

greenhouse gas emissions, biofuels derived from

plants or organisms also biodegrade rapidly, posing

less of a risk to the marine environment in the event

of a spill. Biofuels are also lexible: they can be mixed

with conventional fossil fuels to power everything

from city buses to larger power trains, while biogas

produced from waste can be used to replace LNG.


Biofuels derived from waste have many beneits,

but securing the necessary production volume is

a challenge. Consider that the land required for

production of biofuel supplying the shipping industry

(300 MT per year) based on today’s irst-generation

biofuels technology is equal to the size of Norway

and Sweden combined – or about ive per cent of the

current agricultural land in the world. While second

and third-generation biofuels will not compete with

agricultural land, more research is required before

these next-generation biofuels will be viable.

Algae-based biofuels seem to be the most eficient

and have the added beneit of not competing with

arable land, while consuming signiicant quantities

of CO2, but more work needs to be done to identify

algae strains that would be suitable for eficient large

scale production. Concerns related to long-term

storage of biofuels on-board ships also need to be

addressed.


Experimentation with biofuels has already started on

large vessels, and preliminary results are encouraging.

However, advances in the development of biofuels

derived from waste or algae will depend on the price

of oil and gas. As a result, biofuels will have only

limited penetration in the marine fuels market in the

next decade. However by 2030, biofuels are set to

play a larger role, provided that signiicant quantities

can be produced sustainably and at an attractive price.

Biofuels



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


� Second and third-generation biofuels

� Technologies for long-term storage of biofuels

� 20-80 % reduction of CO2

� Eliminated SOx emissions

� Oil spills less dangerous, due to biodegradable fuels



While not an alternative fuel, carbon capture and

storage (CCS) tackles carbon emissions at its source:

exhaust gas. CCS systems are a proven solution,

having been used since the 1970s mainly for

enhanced oil recovery, but few commercial plants

are in operation for the sole purpose of emission

reduction. As for marine applications of CCS, only

simulation studies have been carried out so far. The

results are promising, but the process consumes a lot

of fuel.


Currently, three different types of carbon capture

technologies exist: Chemical absorption, which uses a

chemical solvent to absorb the CO2 from the exhaust

gas; membrane separation, which involves passing

the exhaust gas stream through a set of membranes

which separate various components in the gas from

each other; and pressure swing absorption, which

exploits the tendency of gasses to be attracted to

solid surfaces under high pressure, allowing for

the separation of CO2 from exhaust gas. These

systems are energy-intensive and can be expensive

to operate, and researchers are working to mitigate

the environmental risks of storing carbon on land or

sea, but if carbon is commercialised into a tradable

product, developments in CCS technologies could

potentially accelerate rapidly.


Developments in carbon capture technologies have

slowed down in recent years, due to high capital

requirements, operating cost, and lack of incentives or

of a CO2 market. The cost of installing and operating

CCS systems on-board ships will be prohibitive, unless

an appropriate carbon market is established in the

future with prices making these operations attractive.

Otherwise, the introduction of this technology would

only take place in response to increasingly strict

regulations on targeting greenhouse gas emissions.

Alternatively, CCS could be used on land based power

plants to produce carbon neutral fuels.

Carbon capture and storage



CO2 emissions

Recycled materials

SOx emissions

NOx emissions

Invasive species

Freight cost

Lives lost at sea

Insurance claims

Oil spill


� Carbon capture technologies (Chemical absorption, membrane separation, pressure swing absorption)

� Storage of CO2

� At least 50% reduction of CO2

� Assuming carbon is commercialised, CCS could provide an additional revenue stream



Initially, the introduction of any alternative energy

source will take place at a very slow pace, as

technologies mature and necessary infrastructure

becomes available. In addition, the introduction of

any new fuel will most likely take place irst in regions

where the fuel supply will be secure in the long-

term. Due to uncertainty related to the inancing

development of appropriate infrastructure, the new

energy carriers will irst be utilised in smaller vessels

designed for short-sea trade. As technologies mature

and the infrastructure starts to develop, each new

fuel can be used in larger vessels, and eventually

on ocean going ships, provided that global

infrastructure becomes available.

Renewable energy sources, such as solar and

wind power, are not seen as a viable alternative

for propulsion on commercial ships at this time.

Certainly, vessels equipped with sails, wind

kites or solar panels may be able to supplement

existing power generating systems, but the relative

unreliability of these energy sources make them ill-

suited for deep sea transport or operations in some

latitudes at certain times of the year and/or seasonal

weather conditions.

At present, LNG represents the irst and most likely

alternative fuel to be seen as a genuine replacement

for HFO for ships constructed after 2020. The

adoption of LNG will be driven by regulation,

increased availability of gas and the construction

of the appropriate infrastructure. The introduction

of batteries in ships for assisting propulsion and

auxiliary power demands is also a promising

TODAY

Testing of methanol, ethanol,

DME, biodiesel and biogas

Hybrid systems in deep sea for auxiliary

systems during cargo operations

LNG bunkering infrastructure improving

High uptake in short sea segment

LNG penetrating the deep

sea shipping segment

A POSSIBLE FUTURELOW CARBON ENERGY


source of low carbon energy. Ship types involved

in frequent transient operations (such as dynamic

positioning, frequent manoeuvring, etc.) can beneit

most from the introduction of batteries. Cold ironing

will probably become a standard procedure in many

ports around the world, helping to reduce harmful

local emissions.

The pace of development for other alternative fuels,

particularly biofuels produced from locally available

biomass, will accelerate, and may soon complement

– or challenge – LNG and electriication. Indeed, it

is likely that a number of different biofuels could

become the norm in different parts of the world after

2030. However, acceptance of biofuels in deep-sea

transportation can only take place if these fuels can

be produced in large volumes and at a competitive

price around the world.

There are many possible solutions the industry can

adopt to achieve the sustainability ambitions for

shipping in 2050, but no alternative fuel solution has

yet emerged as the most likely candidate. Therefore,

there will be a more diverse fuel mix where biofuels,

hydrogen and batteries are the main energy carriers.

Electriication and energy storage will enable a

broader range of energy sources, while renewable

energy, such as wind and solar, will be produced

on land and stored for use on ships either using

batteries or as hydrogen.

While HFO and MDO will likely be a (declining) part

of the maritime energy mix for decades to come,

the development of alternative fuels represents the

future of a more sustainable industry.

2050

Piloting of fuel cells running on hydrogen

as auxiliary propulsion power

A diverse fuel mix with LNG, biofuels,

batteries and hydrogen in use

Fuel cell with hydrogen fuel

produced from renewables

Biofuels and biogas part of the fuel

mix for niche trades and regional use

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THE WAY FORWARD SHIPPING TOWARDS 2050


Rising public demand for sustainability and more transparency is re- writing the rules

for all industries. For shipping, the future will be characterised by tougher regulations

and ierce competition, as owners seek to gain a competitive advantage by investing in

systems to increase eficiency, lexibility and reliability. But to become truly sustainable,

the industry must embrace new technologies and practices to improve safety

performance and reduce its carbon footprint.

THE WAY FORWARD – SHIPPING TOWARDS 2050 103

�ustainability – a game-changer for shipping

The growing frequency of natural disasters

associated with climate change and increased

public awareness of the impact of local pollution

on health, have resulted in a rapid decline in public

tolerance for environmental damage. Over the past

two decades, environmental awareness has become

a public policy issue that is re-shaping business,

politics and individual businesses all over the world.

The trends are clear: The world population will grow,

and an expected increase in economic activity and

global trade will lift millions of people out of poverty.

An expanding, educated middle class will have

access to technologies that will enable them to learn,

gather and share information about everything,

including the degradation of the environment.

As our world becomes smaller and increasingly

interconnected, public awareness of environmental

issues will rise, leading to more vocal and organised

demand for transparency and sustainability from

all industries, including shipping. The industry must

rise to this challenge by taking action to improve its

safety and environmental performance.

A whole new safety mindset

By 2050, we can expect the shipping industry to

embrace a new safety mindset, resulting in a step-

change in how the industry understands human

psychology and the interplay between humans and

machines. Dramatic advances in information and

communication technologies, materials and design

will demand a holistic approach to developing

systems that align technologies, organisations and

strategies with human behaviour.

At present, about 900 people die in ship-related

accidents per year in international shipping. If we

include occupational accidents, the crew fatality

rate is 10 times higher than “best-practice” rates

for industries in OECD countries. Major accidents,

especially those in the ferry and cruise segments

that involve many passengers and events resulting

in signiicant environmental damage, remain a

particular concern. In addition to the human cost

of fatalities at sea and the long-term impact of

environmental damage, accidents attract extensive

and negative media coverage, which can represent

an existential threat to a shipping company following

a disaster.

Avoiding accidents and ensuring the safety of

on-board personnel represents one of the most

complex challenges faced by owners and ship

managers. Unlike mechanical or technical systems,

safety systems must account for the seemingly

ininite variables of human behaviour. On-board

personnel regularly interact with each other, heavy

machinery and a broad range of control and data

systems in a loating workplace, often subject to

severe weather and harsh conditions far from land.

Rather than focusing on individual components,

the industry would beneit by embracing a more

comprehensive approach to safety, one that

establishes effective barriers that prevent or mitigate

the impact of accidents.

Today, more and more systems are controlled

and integrated by software, which introduces new

challenges for operations, maintenance, testing

and veriication – a trend likely to continue. These

increasingly complex on-board systems will require

a new safety mindset. At the same time, advances

in digital technology will play a greater role in the

design phase, allowing for more accurate modelling

of hull forms that take into account wind, weather

and the vessel’s operating proile. Virtual emulation

(or “mirroring”) will enable on-board personnel to

acquire virtual experience across the entire range

of vessel operations, from normal operations to

maintenance, repairs to surveys, risk management to

emergency and evacuation procedures. The further

development of automated systems and advanced

decision support tools will contribute signiicantly to

on-board safety.

In the subsea industry, remote operations

are already a reality, and systems with proven

marine applications are likely to be adopted by

merchant shipping. In time, the development of

fully automated, unmanned, remotely operated

vessels could be a reality. Combined with advances

in materials requiring limited maintenance,

autonomous shipping would eliminate occupational

risks on-board. While the unmanned vessel concept

would likely face signiicant public scepticism,

we believe that many on-board systems will be

autonomous by 2050, reducing the number of

on-board personnel and therefore improving the

industry’s safety performance.


Organising for safety

Dynamic risk management

System resilience

Virtual ship laboratory

Energy efficient design

Next generation emulation

Smart maintenance

Automation and remote operations

Lightweight material

Intelligent material

Powerful material

Economies of scale

Efficient short sea shipping

Value chain efficiency

Ship electrification and renewables

Carbon capture and storage

Biofuels

LNG

Safe operation

Advanced ship design

The connected ship

Future materials

Efficient shipping

Low carbon energy

Environment

Efficiency

Safety

PATHWAYS TO SUSTAINABILITY

Figure 11. The igure shows an

overview of the solutions and pathways

and how they contribute towards

a sustainable shipping industry


C��bo�-��utral shipping

Shipping is the most climate-friendly form of freight

transport, yet the fuel that powers the industry is

a cocktail of pollutants, emitting not only climate-

warming carbon to the atmosphere but also SOx

and NOx which represent a signiicant public health

hazard. Growing awareness of these issues will put

increasing pressure on regulators and industry to

take action.

To ensure a sustainable planet, humanity must limit

global temperature increases to 2°C, achievable

primarily by lowering carbon emissions. Today,

shipping contributes to three per cent of global

anthropogenic CO2 emissions and is a major

contributor to local pollution in densely populated

coastal areas. For shipping to do its part, the industry

must reduce emissions by 60 per cent of today’s

emission levels. Incremental wins in energy eficiency

will not be enough; the industry will have to seek

alternative solutions to power vessels.

We are entering the age of alternative fuels. The irst

stage will see more vessels powered by LNG,

a process driven by high oil prices and regulations

on NOx and SOx. Over time, other low-carbon

solutions, such as ship electriication, biofuels,

batteries and fuel cells powered by renewable

energy sources will be adopted, increasing the

diversity of the industry’s fuel mix. More controversial

solutions, such as nuclear power and carbon

capture and storage, are not likely to be seen

aboard merchant vessels anytime soon, but given

advances in technology and the introduction of more

emissions regulations, these solutions may gain

wider acceptance.

Digital technology – a catalyst for smarter shipping

A sustainable world will also be a digital world.

The steady advance of communications technology

and access to ever increasing amounts of data

will continue to drive unprecedented human

connectivity. For the shipping industry, the Digital

Age will open up a new landscape of opportunities

for the industry to “get smarter” – from ultra-

eficient supply chain coordination to virtual design

laboratories capable of producing next-generation

vessels with radically reduced operating costs and

energy consumption.

AMBITION REDUCE FATALITY RATES 90 % BELOW PRESENT LEVELS

Achieving this target

requires a new safety

mindset and continuous

focus on multiple issues

related to technologies

and how organisations are

structured and function.

Building a robust safety

culture where humans,

organisations and

regulators systematically

gather information and

learn from failures will

be critical to achieving a

90 per cent reduction in

fatalities.

AMBITION REDUCE FLEET CO2 EMISSIONS 60 % BELOW PRESENT LEVELS

Currently, no single

solution can ensure the

industry achieves a 60

per cent reduction of

CO2 emissions, especially

considering the expected

increase in transport

demand. Energy efficiency

is certainly part of the

solution, but the target

cannot be reached unless

the industry shifts to low

carbon solutions. The

technologies are there, but

the barriers are significant

– the lack of adequate

infrastructure and security

of energy supply

AMBITION MAINTAIN OR REDUCE PRESENT FREIGHT COST LEVELS

The potential for the

shipping industry to

reduce costs and increase

reliability by embracing

smarter solutions is vast.

Owners will have to

increase investments in

systems to enhance safety

and reduce emissions,

but to maintain cost

levels they can apply new

technologies and solutions

to become more efficient,

thereby keeping freight

costs within acceptable

limits.

Increased connectivity has already changed the

shipping industry. With more ships connected to the

Internet via broadband satellite networks, and more

on-board systems connected to each other and the

Internet, merchant shipping is becoming a more

data-centric industry. Increasingly, on-board systems

are being integrated, automated and controlled

through software. At the same time, the ability to

collect, store, manage and utilise large volumes of

data has improved.

Communications and data analysis can improve

logistics operations with a focus on the total value

chain. More powerful computers will be able to

model realistic conditions a vessel may face at sea

and in different weather conditions, and be used to

design more optimal hull and machinery systems.

Advances in sensor technology will enable improved

condition-based monitoring and maintenance

procedures and allow owners to run remote

diagnostics and, when necessary, recommend ixes.

U�derstanding the barriers to change

The most common barrier for the introduction

of any new technology is the capital investment

required. Research has indicated that owners are

reluctant to invest in cost reduction measures and

technologies, even in those with a relatively short

payback time. Many owners often struggle to ind the

capital resources internally to invest in new systems,

and those seeking external inancing are often

disappointed. Likewise, owners operating tonnage

in segments where the charter pays for the fuel may

have few incentives to explore alternative fuels or

invest in energy eficient measures.

Many owners are wary of implementing new

technologies that represent a inancial risk.

Unforeseen technical issues often result in signiicant

operational problems, requiring additional capital

to remedy, and causing loss of revenue. At the

same time, new systems require additional training

of personnel to ensure that the operation of new

technologies will actually meet future regulations

and requirements. Likewise, the introduction of

certain alternative fuels has raised reasonable

concerns among owners regarding how inadequate

infrastructure and uncertain security of future fuel

supply will impact operations. In addition, the

introduction of new technologies often requires new

regulations, standards and software tools. Finally,

deep-seated industry practices, established supply

chains, legacy IT systems and organisational inertia

may slow adoption of low carbon solutions.

The way forward

Three forces are acting on the shipping industry

to drive change: increased regulations, which set

more stringent minimum safety and environmental

performance requirements; competitive pressure,

which encourages more cost-eficient operations;

and public demand for more transparency and

sustainability. This societal pressure is not only

directed at government authorities and ship owners,

but also at cargo owners, who are under increased

pressure to do business with owners who operate

vessels beyond compliance.

Regulations will continue to be an important driver

for sustainability in three critical areas: safety,

eficiency and the environment. However, regulators

should be sensitive to the inancial impact of these

requirements and work with the industry to ind

workable solutions. As we gain more knowledge

about the impact of shipping on the environment,

the industry will be in a better position to evaluate

various regulatory solutions that both create value

for society and provide a level playing ield for

various segments and companies.

Shipping companies and cargo owners may also

adopt new inancial models where both parties

share the beneits of fuel savings and investments

in energy eficiency. By incentivising the entire value

chain, the industry can act decisively, creating a more

eficient and sustainable leet. Government also

has a role. By funding research in co-operation with

shipping companies and cargo owners to manage

technical issues, and investing in the construction

of required infrastructure, the shift towards a low

carbon industry will occur at a faster rate.

We recognise that the pathways towards a more

sustainable industry will occur incrementally and

that not all the solutions described in this report are

available today. Likewise, we are aware that, as in the

past, game-changing events could impact shipping

in ways impossible to foresee. As noted, this report

is not intended to forecast the future of shipping,

but rather to offer a set of achievable ambitions the

industry can and should pursue. Looking ahead to

2050, we are conident that the impact of tougher

regulations, competitive pressure and advances in

technology will create new opportunities for the

industry to become safer, smarter and greener.

Those players that lead the way will deine the new

competitive landscape.

After all, the future does not start tomorrow

– it starts today.


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A broader view: The Future of Shipping

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