The now of autonomous transport Shelley Chapelski with the assistance of and extra material from DNV GL Vancouver (Anders Mikkelsen)
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Speakers Janet Grove Managing Partner Vancouver Shelley Chapelski Partner Vancouver Building on her experience and knowledge from years spent in corporate development and legal roles within industry, Janet Grove helps clients in the technology and health sciences sectors IT, health sciences, telecommunications and clean-tech. She is sought out for her expertise and business approach to structuring and negotiating both merger and acquisition transactions and complex commercial relationships to develop, commercialize and acquire technology. This includes assisting with a variety of research and development, supply and licensing arrangements and developing and advising on novel programs and collaborations involving technology. Shelley Chapelski helps lead a team of experienced shipping lawyers in Vancouver and Montréal. Her practice encompasses both transactional and litigation aspects of maritime law, including maritime contracts, torts, liability claims, creditor's remedies and marine insurance matters. She has been recognized by her clients and colleagues as one of the leading Maritime lawyers in Canada. Shelley's clients include commercial vessel owners and operators, P&I Clubs and marine insurers, ports and terminals and maritime service providers. 3 3
Agenda Current Autonomous Projects Innovation vs Disruption Drivers Outcomes Challenges Crystal Ball 4
5 Source: https://www.youtube.com/watch?v=5vbd7hvrhx0
WORLD S TRADE CARRIED BY SEA 90% keeping one half the world fed & the other half the world warm 6
AUTOMATION Already exists Automated uses a specific and predefined method to execute certain functions without a human controlling it dynamic positioning systems route planning software fuel efficiency analysis AIS automatic identification system VDRs voyage data recorders recording the vessel s navigational commands and bridge communications 7
Terminology remote controlled vessel is navigated from a 24/7 shore based operations centre relying on automated processes autonomous vessel uses automated processes to reach determinations and then implements actions without human intervention unmanned no crew on board the vessel. It is either remote controlled or autonomous, or a combination of both MASS - Maritime Autonomous Surface Ship (IMO definition) 8
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Significant Momentum Is the technology available? Autonomous-related technologies have gathered significant momentum in recent years and it will continue 2017-2020 2018-2025 YARA BIRKELAND, the first commercial cargo vessel will enter service in 2019 for manned remote operation. The targets are unmanned remote operation during late 2019 and autonomous operations in 2020. DNV GL is also supporting three other autonomous or unmanned pilot projects and development of a shore side control room prototype. Maersk, while not interested in unmanned ships, is equipping some of its ships with AI powered situational awareness programming developed by Sea Machines Robotics. Rolls-Royce are driving a number of projects and currently predict a remote control unmanned vessel operating in coastal waters by 2025. 2030 A remote control unmanned ocean-going vessel by 2030. 2035 Autonomous ocean-going vessel by 2035. 10
WHY AUTONOMOUS SHIPS? Innovation comes from within industry. Disruption comes from outside. Frank Coles, The Maritime Executive 2017-08-13 11
WHY AUTONOMOUS SHIPS? Innovation is incremental. Disruption rips up the present model and starts again from scratch. Frank Coles, The Maritime Executive 2017-08-13 12
Who are the innovators? Ship owners and operators who feel besieged by the regulators to produce improvements affecting the safety of seafarers and protection of the environment. Marine industry service providers who assist ship operators with means to reduce costs and maintain (achieve?) profitability. They include Classification Societies, Marine Engineering firms, Naval Architects, some Flag States amongst others. 13
PORT XL promoting innovation Accelerator partly sponsored by the Port of Rotterdam dedicated to helping start-ups with solutions aimed to the port, maritime and logistics sectors. Port XL takes an equity interest in exchange for $$ investment and business advice. Supported start-ups include automated drone water cleaner, picking up floating litter in the port, a floating inspection drone, autonomous buoy and an automated mechanical twist lock and a variety of freight and port software solutions. 14
DNV GL promoting innovation Acting as a catalyst to encourage owners to make wise decisions YARA BIRKELAND based on DNV GL pilot project ReVolt AAWA Advanced Autonomous Waterborne Applications Initiative AUTOSEA project SIMAROS project ROMAS project (On Shore Electronic Control Room ) 15
Who are the disruptors? Cargo interests who want to control price, convenience and speed of delivery Cargo interests who want to reduce logistics costs and minimize warehousing time Dreamers 16
Why are they disrupting? Moving goods around the globe is extraordinarily process intensive. Mountains of data are shared, numerous contracts are signed and executed, and monies are transferred between different participants. The volume and complexity of these transactions grow exponentially as supply chains become longer and more diverse that often leads to data duplication and reconciliation issues. Mike Davies, Chief Underwriting Officer Marine Asia Pacific XL Catlin 17
Why are they disrupting?. major manufacturers have the scale to arrange and negotiate good rates for shipments directly. Everyone else has to engage the services of a freight forwarder.the customerservice aspect of freight forwarding has long resisted automation; there's no easy way to replicate relationships with shipping companies and port officials. But that doesn't change the fact that freight forwarding is opaque and highly inefficient. Amazon and its ilk will want a technologically advanced, highly efficient ship, built for purpose and preferably unmanned or autonomous. Adam Minter, Bloomberg View 14-02-2017 18
Drivers for innovation SAFETY OF EQUIPMENT & CARGO COST EFFICIENCIES SMALLER CARBON FOOTPRINT MANAGING PIRACY? SAFETY OF CREW MEETING GROWTH PROJECTIONS 19
Will early adopters be rewarded? Untried and unproven technology Expensive prototype construction Ports and logistics chains will not be well established to take advantage of efficiencies Uncertain regulatory environment (Class, Flag, ColRegs, domestic and international legal regimes) Untested liability regime Will financiers be confident enough to finance the ships? How will the insurers respond to the challenge? 20
Will early adopters be rewarded? (cont d) Building brand profile (i.e. Yara) Establishing reputation for being technologically savvy and attracting market share as a result Influencing the developing standards and applications Benefiting from Big Data and analytics Lessons learned through the effort to implement autonomy should greatly benefit existing operations. 21
Improving safety In shipping, more than 80%, and up to 96%, of accidents are attributed to human error. Human error is less of a problem in commercial aviation because of autopilot and other automated systems. "There are all these systems in place to make sure the human error is removed but on boats, it's not. Phil Bourque, director of BD, Sea Machines Robotics in MNBC MACH 8-11- 2017 22
Opportunities for human error in practices training fatigue/capacity overload faulty or unenforced company procedures inadequate communication misunderstanding environmental factors relying on short cuts 23
Opportunities for human error in applications manufacture of hull, equipment & machinery repair installation maintenance setting of tolerances responding to alarms 24
Cost efficiencies for operators A fully autonomous ship might cost 20 percent less to operate than a conventional crewed ship. Without the need for crew quarters, a conventional bridge, lifeboats, and other familiar features, ships can be lighter and more compact and thus less expensive to operate although they may be more expensive to build. Oskar Levander, SVP Concepts & Innovation, Rolls Royce Yara Birkeland has a price tag estimated at $25 million. That's about three times as much as standard container ships of similar size. 25
Liability regime & insurance Shift from P&I exposures to product liability insurance claims against for coders, system provider & installers, software designers. Will liability under applicable product liability laws be more onerous than under maritime laws governing manned ships? Will Class and other inspectors/verifiers face more liability as they take a more active role in developing and enforcing standards? 26
Will seaborne trade continue to grow? Seaborne trade volumes have grown on average by 3% per year from 1980 to 2017 reaching 10.6 billion tons. Will that continue for the next 40 years? Regionalization of economic activities driven by robotics & 3D printer technologies. Iron ore is predicted to peak in 2025 and coal even sooner (almost 20% of seaborne tonnage) Oil will peak as reliance on renewable energy grows 27
Consequences? SAFETY OF CREW, BUT ONLY ONCE UNMANNED X SHIFT OF LIABILITIES FROM SHIP TO TECH PROVIDERS XX INCREASED CAPITAL COSTS MAY EXCEED SAVINGS XX SMALLER CARBON FOOTPRINT (if alternate fuel used) INCREASE IN LIABILITY EXPOSURES UNTIL TECH IS PROVEN XX IS GROWTH PROJECTION ACCURATE?? 28
Challenges Decision Making Ability Reliable Satellite Data Links Power Generation and Propulsion Autonomous decision making likely will be a combination of rule-based actions and artificial intelligence (AI). AI systems are not presently capable of the complex decision making required to control all functions and operations necessary for the safe completion of a voyage. How will human ethics be imbedded to chose between two undesirous results? The data exchange between ship and shore for remote controlled and autonomous vessels will be massive. The current bandwidth capabilities are not sufficient to cope with large scale operations. Providers are working to meet these expected demands. Very low maintenance equipment and systems will be needed for unmanned vessels and this precludes diesel engines. Battery technology may be the future but it is not yet sufficient to meet the power demands of a commercial ocean-going cargo vessel. Is the Technology available? Much of the focus has been on the collision avoidance abilities of an unmanned or autonomous vessel. There are well documented concerns on an unmanned vessel s ability to berth, the role of the pilot and the security of shore control stations (both physical and cyber). These are not insurmountable and technological solutions are inevitable. 29
Challenges (cont d) Shore Side Investment Ownership of Software Sister ships at Sea and Shore Investment by ship owners must be matched by shore side infrastructure to facilitate powering battery powered ships or other green fuel technology. Berths will have to invest in mooring techniques which do not require manually handled lines between ship and shore. Shore side cranes will have to be capable of removing cargo from unmanned ships. Who will own or establish the technology platforms? Will the US, Russia and China cooperate to establish standardized technology for international use? Will countries go on their own or agree to cooperate? To efficiently and effectively operate a fleet of vessels, they must be true sister ships in more than just hull design. They should operate virtually identically. Their equipment and machinery need be virtually the same so that maintenance and repair work can be quickly and effectively conducted while at sea or in port. Shore side support follow. Is Big Data available? Data has no value until the ship operator determines how to capture and use it. Analysis of data is necessary to support optimisation tools to increase revenue or control costs. It is needed to establish and verify predictive maintenance, design life and replacement programs. Products are being offeried to improve the ability to log data and get it from and to ships. More innovation will be developed to collect and use Big Data (even if the data is only from one ship). 30
Challenges (cont d) Skill Fade Regulatory changes Maintenance of Machinery The aviation industry has recorded that as planes turn into autonomous machines, their captains suffer from Skill Fade. While the first generation of shore side masters will come from ships, the subsequent ones may not have any real sea time in order to assist them in understanding the dynamic weather, ocean and location conditions being encountered by the ship. The scope and degree of regulatory changes required to support autonomous shipping are immense but not insurmountable. The biggest challenge will come from inconsistent standards between nations as the technology advances. Crew will no longer be on vessels painting the hull and checking and oiling the machinery. The equipment and machinery on board must be of extremely high quality which can go a long time between attendance, especially the rotating machinery. Maintenance and replacement must be very predictive in nature to minimize disruptive events.. Are the Regulations available? IMO is tackling the topic of unmanned ships in the STCW, SOLAS, COLREGS, & MARPOL, but the process will take time. In the meantime, Flag States can provide exemptions within national waters and make bi-lateral agreements with other states. 31
DNV GL Objective of Rule Development Fail to Safe condition Verification Minimal Risk Condition In the instance of a failure, what are the redundancies? What are the options to stop and stay in position, move to a safe location, drop anchor, drift, wait for a support vessel. encountered by the ship or regain remote control? Manufacturers and other entities shall follow a robust design and validation process based on a systemsengineering approach with the goal of designing the vessel free of reasonable safety risks. Defining, testing and validating a fall back minimal risk condition in cases of autonomy system failure or failure in a human operator s response when transitioning from automated to manual control. What Rules are Needed? Autonomous ships must be as safe or safer than manned, traditional ships. Rules are needed for sensor capabilities, decision algorithms, shore-shore communication, machinery design & maintenance, onshore control centres, cyber security, design and verification of the functionality. 32
HYPER LOOPS Yet another Disruptor? low-pressure system that runs inside a tube, with a capsule that hovers inside this tube, using magnetic force to retain its position. little to no resistance. supposed to be very energy efficient. more likely to be used to cargo as it is less sensitive to vibrations and safety issues inland transportation purposes (for now). 33
Global context 20 years out 3 D PRINTING REDUCING TRADE OF GOODS VERTICAL INTEGRATION " IN SUPPLY CHAIN CONTRACTIO N OF IRON ORE AND COAL CARGOES CYBER CONNECTIVIT Y & SECURITY GREENING OF THE INDUSTRY?? CRYPTO CURRENCIES & BLOCKCHAIN 34
Possible Order of Implementation Short Sea (domestic or bilateral) both Cargo & Pax Liner routes: Containers & Bulk Bulk Oil & Gas? Cruise Ships, Pax Vessels on irregular routes Project Cargo and Remote Routes or Ports 35
Questions & answers 36
Contact Shelley Chapelski Partner, Norton Rose Fulbright shelley.chapelski@nortonrosefulbright.com Janet Grove Managing Partner, Vancouver, Norton Rose Fulbright janet.grove@nortonrosefulbright.com With many thanks to the assistance of DNV GL Vancouver (Anders Mikkelsen) 37