Written by Sofia Fürstenberg Stott from Fürstenberg Maritime Advisory.
If we are to combat the waste, pollution and inefficiency that still characterize too much of what goes on at sea, many do now agree that the marine and energy industries must undergo a substantial transformation towards digitalized, connected, safer and more environmentally sustainable operations.
Nordic Innovation has over the last six months executed a number of industry workshops to start the ideation phase of their new NOK 8 million Mobility Mission: To decarbonize Nordic ports, transport of people and goods, on and between sea and land.
These workshops have discussed opportunity areas for interconnected ocean operations, with opportunity areas such as connectivity, digitalization, automation and reduced carbon footprints as commonalities.
With focus on Nordic applications, the aim of the mission is to identify and fund opportunities which can both improve and decarbonize the land-to-sea infrastructure and operations, but also give opportunity for competitive advantage for Nordic companies, developing solutions which can be scaled to global level. With increased awareness and aptitude for sustainable solutions, the Nordic region could be a test bed for novel business models, where e.g. a marketplace for sustainable transport solutions could be made available for consumers. For novel business models to be scalable, an easier shift of transport modes between sea and land will be needed, as well as an increase in demonstration initiatives for smart mobility and connectivity, not least to create higher transparency in the interface between transport modes.
Cutting CO2 emissions in half
The need for decarbonization[1] of maritime transport is not a local or regional idea. The International Maritime Organisation (IMO) has after several years of negotiations reached an agreement on an initial strategy for the reduction of CO2 emissions from shipping. In 2018 the member states agreed on a target to cut the shipping sector's overall CO2 output by 50 percent by 2050, to begin emissions reductions as soon as possible, and to pursue efforts to phase out carbon emissions entirely. The agreement includes a reference to bringing shipping in line with the Paris Climate Agreement. To reduce the absolute CO2 emissions by half in 30 years will require not only great leaps of technology advancement, but also shifts in business models and modus operandi, also in the interface between land and sea. A consortium participating in the Nordic Innovation Mobility Mission: Sea Meets Land could build, evaluate and scale these new business models.
The decarbonization effort is not only needed for maritime operations, but very much so for the entire supply chain infrastructure, including e.g. ports and energy utilities. To plot the course towards sustainable marine ecosystems, the SEA20 network, which is an international network of the world's foremost Smart and Ecologically-Ambitious marine cities, dedicated to the radical transformation of the marine and energy industries into one supremely efficient, ecologically sound, digitally connected and collaborative ecosystem was established in 2018. They have begun the work of a report titled The Future of Maritime: A Global Analysis on Marine and the Environment.
This report aims to seeking best practices and identify ways to transform the marine industry, through e.g. redesigning of business models, value chains and city planning. The SEA20 report will try and identify how e.g. the relationship between port and city need to change, and how for instance we, by utilizing the ports, can create a logistics chain and solutions that can better serve the citizens of marine cities. While this is important and needed work, the Nordic region can make use of current momentum, and explore transformation opportunities prior to any report being finalized.
Digitalization enabling transformation
Digitalization has brought many opportunities for improved performance and reduced carbon footprint in many industries. Maritime transport is perhaps one of the industries where this development has been lagging, not least due to great complexity and cost. In the last few years however, development has been visible throughout the industry. One ample example is the Sea Traffic Management (STM) Validation project, which in late 2018 finalized a three-year pilot phase involving Nordic and Mediterranean ports. This pilot project verified that it is now possible to create a so-called common situational awareness, regardless of type of navigation equipment onboard the vessel, where all involved parties can receive information of each other’s routes, intentions and voyage plans. With a common shared real-time update of each vessel’s intentions, true optimization can start taking place, between vessels, ports and port control.
Combining efforts with the STM project, is the Port Collaborative Decision Making Test Bed (Port CDM), where efficiency of port calls is accomplished through improved information sharing, situational awareness, optimized processes, and collaborative decision making. Port CDM services are focused on the synchronization, optimization, monitoring and improvement of port calls. The Nordic ports of Gothenburg, Stavanger, Vaasa and Umeå have been partaking in validating the Port CDM concept, and the Nordic Innovation Mobility Mission: Sea Meets Land could benefit from addressing these ports when exploring collaboration options.
Digitalization is an enabler for transformation of maritime transport and trade. In the 2018 Maritime Trend Report made by Danish Ship Finance and Rainmaking, it is suggested that in a digital industry, classic business models of transporting goods from port to port are losing their value, and that a change in business model will be necessary. They suggest digitalization enables transformation in the following areas:
- Performance management (i.e. cost savings and improving the performance of the vessel)
- Capacity optimization (i.e. transparency in the global movement of goods, with aim to discover and quantify trading opportunities, vessel deployment, cargo routing, repositioning and much more
- Value beyond the vessel (i.e. inefficiencies optimized throughout the customer journey from origin to destination, such as digital freight forwarding, software as a service for freight forwarders, and using shipping data to predict global trade movements)
- Reinventing the operating model (i.e. focus on end-users, changing the customer journey and allowing the shipping industry to become more involved in the whole value chain, providing supply chain transparency.
While these four transformation scenarios are targeting shipping exclusively, land-to-sea operations could take learning here, especially as the two latter cases suggest a need for wider collaboration across the different nodes of transport.
Improved mobility and connectivity for land-to-sea operations, enabled by industrywide digitalization, can unlock new value whilst improving the carbon footprint of seaborne trade. Nordic collaborations can pilot and validate solutions, creating competitive advantage for Nordic companies, attractive benefits for Nordic ports.
Learn more about the Nordic Innovation Mobility Mission: Sea Meets Land and how to get engaged.
[1] This term refers to the phasing out of fossil energy; the reduction of carbon. Precisely meant is the conversion to an economic system that sustainably reduces and compensates the emissions of carbon dioxide (CO₂).
