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Digitalisation and automation in transport: a necessity unfolding into new opportunities

August 3, 2020 Leave a Comment

In a world where human interaction and socialisation constituted the epicentre of our day-to-day lives, few could have predicted the day when human connections and globalisation could end up posing the largest risk to our own health and well-being.

The purpose of this paper is to analyse those areas of digitalisation, which have allowed shipping and aviation to innovate and succeed over the last few decades. This will enable us to better define the direction in which such sectors should be heading in the coming years, taking into due consideration the latest hazards posed by the pandemic. 

Although shipping and aviation share the same goals (transport of persons and goods), they are based on different models.

i) Aviation is a predominantly passenger-oriented industry, while shipping is primarily focused on the carriage of goods. Although during the last few months airlines have shifted their operations onto cargo, this was limited to a few aircraft per company and to the carriage of medical equipment and supplies. Such conversion was dictated by necessity, rather than by a particular business target. On the contrary, although cruise liners had to interrupt their passenger transportation activities, the shipping bulk cargo segment proceeded at a normal pace.

ii) In the aviation industry, demand is generally stable and based on seasonal travel and macro-events (ie sporting events such as the Olympic Games and World Expos). On the other hand, shipping is largely dependent on economic and geopolitical variables, or fluctuations on the prices of commodities.

iii) Efficiency and environmental goals were introduced and pursued in the aviation agenda much earlier than in the shipping sector.

iv) Public opinion tends to perceive the economic impact of shipping in a different manner to aviation, with the consequent effect that relevant authorities tend to distinguish and prioritise their objectives in the two respective sectors accordingly. In practical terms, the fact that shipping is not under the constant spotlight brings with it a more lax approach in terms of adoption of new objectives and policies.

While for the majority of businesses Covid-19 represented a major showstopper, many have also considered the pandemic as an eye-opener as to the untapped potential offered by particular business segments, such as door-to-door food deliveries. In aviation, some of those involved in the aircraft business also opted to explore new opportunities by channelling their business, with some adjustments and notwithstanding the multiple obstacles, into the cargo segment. Only time will tell whether these attempts might represent a new stable stream of revenue for airlines. In the meantime, recent estimates indicate that airlines will still be forced to ground parts of their fleet during the coming years and therefore the possibility of such aircraft being relocated to the cargo segment is not unrealistic.[1] Aircraft manufacturer Airbus recently launched its ‘e-delivery process’, a system that ensures ‘continuation of Airbus’ delivery stream, while integrating the required health and safety requirements during the ongoing Covid-19 pandemic’.[2] Airbus disrupted its ordinary aircraft delivery procedures through an electronic Transfer-of-Title based on the ‘e-SalesContracts’ platform that enables the parties involved to complete the transaction entirely through digital means and in paperless format, without the need for any individuals to be physically present.[3]

Another area where technology has, out of necessity, required resilience from its operators, is that of data collection in the context of the Carbon Offsetting and Reduction Scheme for International Aviation (‘CORSIA’). CORSIA requires airlines to:

(i) monitor emissions on all international routes; and

(ii) offset emissions by purchasing emission units.

The aim is to halt net carbon emission growth at 2020 levels.[4]

CORSIA has opened up the market for emission tracking tools, which track CO2 consumption, as well as encourage efficiencies. Although Covid-19 might impact the definition of the baseline mechanism, digital solutions will play a key role in ensuring that information is accurately collected in a timely and efficient manner.

Disruptive events like the 9/11 terrorist attacks, the terrorist attacks in Europe and the 2008 Crisis, have all shaped the world we are living in and so will Covid-19. Survival is certainly in the hands of those who are ready to adapt and therefore innovate to new realities. Client expectations have changed considerably during the course of the last few years and notwithstanding recent events, these remain of fundamental guidance. Something that the pandemic brought to the surface, with the inevitable delays in services, is how the ‘insta-generation’ significantly impacted changes to client expectations in recent years. Goods are expected to be delivered within a couple of days, no matter which part of the world they come from. Final destination flights should not include more than one stop, no matter if the point of departure is located in a remote region of the world. This has obviously increased pressure among producers, shippers and passenger transport operators. Although we do not know if such client expectations will be realistically satisfied in the near future, the recent events have clearly highlighted the importance of technology and digitalisation in the sustainability of the demand/supply mechanism.

Aviation and shipping embraced technology at a different pace and extent, starting off in entirely different decades. Aviation companies are highly dependent on the human capital workforce (crew members and large maintenance teams) and oil price fluctuations. Technology was a means to streamline and render more efficient aspects concerning aircraft maintenance, passenger reservations, boarding procedures, claim handling and customer care protection, as well as the tracking of goods carried on a particular aircraft. While in aviation, innovation was led mainly by customer-oriented necessities and was introduced gradually throughout the last two decades, hand-in-hand with software development, often interacting with airport infrastructures; shipping converted its approach towards technology only during the last few years, with serious inconsistencies and deficiencies among the various port hubs across the world.  Although distributed ledger technology could have rendered the shipping industry paperless years back, the transitioning phase started only in the last few weeks due to the medical emergency led by Covid-19, which prompted shipping and customs operators to do away with unnecessary paperwork. 

Cyberattacks on worldwide major transport and logistics operators a couple of years ago led to a standstill of operations, shutting of IT systems across multiple sites and stranding of ships all over the world, with serious revenue impacts, brought under the spotlight the necessity of having sound cyber-attack mechanisms, aimed at reducing external attacks. This prompted IMO to amend the International Safety Management Code, in order to cater for such events and also for operators to understand the need to consistently invest in digitalisation and not to carelessly outsource this to third parties.

Another sector within the aviation sphere that has encountered a rapid spike over the past decade, is related to the use of drones, which have become operational on a vast scale and widely within the European Union territory. Predictions show that the European drone sector will eventually employ more than 100,000 people and have an economic impact exceeding €10bn yearly over the next two decades.[5]

The versatility of drones within the military sector is recognised, however the uses of drones during the Covid-19 pandemic has been novel, and in some cases, crucial to continued operation with companies like Zipline offering the delivery of vital medical supplies via drones for remote areas since 2014.[6] Throughout the Covid-19 pandemic, Zipline has upped its efforts. The use of drone operations minimises human contact by firstly removing the human element from the delivery service and secondly by assisting people to stay safely indoors and allowing the supplies to reach them. The use of technology in support of drones is a truly remarkable progress that has been leveraged by a number of similar drone companies and has borne fruit at a time when the world needed it most.

The potential of technology in this age is vast, from robotic process automation to data analytics.  Driverless means of transport are now being used among various sectors of European public transportation and private transportation by car. Even shipping is not immune to such novelties with different grades of automation, which go from semi to complete automated vessels. Furthermore, the benefits arising out of technology and digitalisation are not limited to ship operators and airlines themselves but also extend respectively to ports, airports and subsidiary service providers, such as air traffic control, ship and port operators.

However, while automation could represent an opportunity to increase cost efficiencies, reduce costs on workforce and enhance opportunities for companies involved in the IT and cybersecurity arena, it also comes with multiple challenges. While start-ups with sufficient will and capital to invest might make the most of the competitive advantage offered by the newest technologies, older companies might see this as an unnecessary burden. Automation requires individuals having a strong IT and technical background, as well as substantial adaptation planning from an internal organisational point of view, which not every shipping company may wish to pursue. This is somewhat similar to what was required by the banking sector in embracing the Fintech revolution.

Conclusion

In light of the above observations, it is evident that the world of technology and transport must work in tandem, in order to facilitate and help one another. The cooperation of these industries could result in significant benefits for all involved. Although innovation most certainly comes at an initial cost, it is vital that the transport industry remains progressive, modern and current. Development and innovation has most often been a matter of necessity and urgency. Success, in particular during such hard times, lies in the ability to predict, intercept and safely anticipate – where possible – such necessities. It is our opinion that the digital world provides and will keep on providing the perfect platform for an improved service. Harmony between technology and transport has the potential for unlocking great opportunities and we look forward to this future with great enthusiasm.

by Stephan Piazza and Francesca Ferrando, KPMG Malta

This article first appeared on the website of the Maritime and Transport Law Committee of the Legal Practice Division of the International Bar Association, and is reproduced by kind permission of the International Bar Association, London, UK. © International Bar Association.


[1] Centre for aviation, ‘Lufthansa Europe’s first fleet cut; will go deeper, others to follow’ (CAPA – Centre for Aviation, 10 April 2020) https://centreforaviation.com/analysis/reports/lufthansa-europes-first-fleet-cut-will-go-deeper-others-to-follow-520959 [Accessed 22 May 2020].

[2] Martin Fendt, ‘New aircraft “e-Delivery” process assures health & safety for customers and Airbus employees, and enables business continuity’ (Airbus, 21 April 2020) www.airbus.com/newsroom/press-releases/en/2020/04/quick-news–april-2020.html [Accessed 15 May 2020].

[3] Ibid.

[4] ICAO, ‘2 What is CORSIA and how does it work? ‘ (ICAO Environment, n/a) www.icao.int/environmental-protection/Pages/A39_CORSIA_FAQ2.aspxaccessed 22 May 2020

[5] European Commission – Internal Market, Industry, Entrepreneurship and SMEs. (2018). Unmanned aircrafts – Internal Market, Industry, Entrepreneurship and SMEs – European Commission.

Available at: http://ec.europa.eu/growth/sectors/aeronautics/rpas_en [Accessed 15 May 2020].

[6] Zipline, ‘Zipline’s COVID-19 Response’ (Fly Zipline, n/a) https://flyzipline.com/covid-19 [Accessed 18 May 2020].

Filed Under: Autonomous ships, COVID-19, Digitalisation

Regulating autonomous ships

September 19, 2018 Leave a Comment

What are the challenges of autonomous navigation on board masterless vessels?

Challenges, whether legislative, sociological or technological, form part of our daily work routine. Contrary to previous decades, innovative models do not require years or even months to cross an ocean. Evolution tends to spread very fast, more so nowadays when millennials are rapidly engaging themselves in managerial roles largely concerned with quick and effective product placement.

The recent emergence of blockchain technologies, the steady infiltration of cryptocurrencies in our lives and the recently introduced GDPR rules have proved that shipping, like any other sector involved in the carriage of persons and goods, is also not immune to such novelties.

Unmanned technology is also gaining particular momentum within the shipping industry. The aim of such technology is clearly that of supporting the ship operator, cargo owner and ultimate consumer by reducing human-derived risks and operational costs connected with the carriage of goods by sea. However, when it comes to ships and navigation one must keep in mind that the lawmaker often ranks the protection of seafarers and of the sea environment at the top of its priorities, ahead of such strictly navigational or commercial aspects which also arise from the use of autonomous ships. It will be interesting to see how these two differing interests can and should coexist next to each other.

Use of driverless means of transport has become common across various sectors of public transportation. Many capital cities have adopted driverless metro systems for years now. The same is happening with respect to the private transportation by car, although the latter is still going through (an advanced) testing phase.

The difference between such means of transport lies mainly on the number of variables that these come across throughout their operation. As metros operate on a one-direction line, collisions can be easily reduced through a number of mechanical and electronic precautions. On the other hand, during their journey, cars come across other cars, buses, trucks, pedestrians, animals and different meteorological events, and so cannot make a linear journey.

What does autonomy mean with particular reference to ships? The International Maritime Organisation has identified four different types of vessel autonomy.

The first are ships with automated processes and decision support where seafarers operate and control systems and functions directly from the vessel and only some operations may be automated. The second are remotely controlled ships where seafarers are on board the vessel although the ship is controlled and operated from another location. The third are remotely controlled ships without seafarers on board where the vessel is controlled and operated from another location with no seafarers on board. Finally, the fourth are fully autonomous ships where the operation is performed automatically by the vessel’s operating system.

Trials on autonomous ships have already commenced in Norway and Finland. Denmark has also taken steps to regulate this particular aspect of navigation; with the first autonomous ship to be used for subsea positioning, surveying and environmental monitoring currently registered under the British flag. The European Union has also invested in research projects such as the EU’s FP7 project (Maritime Unmanned Navigation through Intelligence in Networks).

The introduction of automation, as happened in other industries, would produce an immediate and tangible effect on the workforce on board ships and port operators engaged in the loading and offloading of cargo. On the other hand this would be beneficial for IT developers involved in the creation of software meant to govern navigation and protecting same from the risk of cyber-attacks. Automation might be welcomed by insurers, and a bit less by ship litigators, since with respect to the cargo loading and unloading procedures it will reduce the amount of mistakes deriving from human error.

However, one of the main obstacles faced by autonomous ships lies in the current legal framework within which their manned counterparts operate. In fact most – if not all – maritime conventions (and charter parties) assume that vessels operate with crew on board – this is the case, for example, of the Maritime Labour Convention or the International Convention on Standards of Training, Certification and Watch keeping for Seafarers – a requirement an autonomous ship would unlikely be able to satisfy.

Another challenging aspect concerning autonomous ships revolves around the implementation of the International Regulations for Preventing Collisions at Sea (COLREGS) in particular when these will be navigating alongside manned ships. The COLREGS often contain provisions referring to the human element; referring for example to “the ordinary practice of seamen” test, that is, what a reasonably competent mariner should do in a given situation (similarly to the bonus paterfamilias test used in civil law).

Automation would require practitioners to start considering accidents which might arise, for example, when an operator makes a poor decision in reliance on wrong information provided by the vessels’ sensors due to a technical failure. Such instances are bound to raise further questions on the apportionment of liability between the operator, manufacturer or software developer and ship-owner.

Moreover, within a shipping ambit different types and degrees of liability already coexist next to each other: that of the ship-owner (or the bareboat charterer) for crew’s actions (i.e. COLREGS); or that of the registered owner (i.e. pollution at sea conventions) while other forms of liability make the ship liable in its own right (e.g. maritime liens).

Apportionment of liability between the ship-owner, software developer and manufacturer is an aspect not to be underestimated even in such a context. How would an autonomous ship be expected to intervene in case should it encounter, throughout her route, another ship in distress? Also, where would responsibility lie in the case of environmental damage? Will the ship-owner be held accountable or will responsibility for the ensuing damage lie on the software provider, for example, for not having developed a sound algorithm or on the vessel’s sensors’ manufacturer for their technical failure?

Legal clarity around cyber liability and collision regulations is fundamental if autonomous ships want to sail free on our seas and oceans, especially before the maritime industry starts investing in infrastructure and skills needed to for unmanned ships to reach a commercial level.

The answers to these questions are far from clear, and much work needs to be done before international solutions are in place. The Comité Maritime International (CMI), of which the Malta Maritime Association is a proud and active member, has recently established a working group on maritime law for unmanned craft, aimed at analysing how international conventions and regulations can adapt themselves to autonomous ships.

Many in the industry, in view of a lack of clear regulations in this respect, have welcomed this news in a conservative manner. Truth is that you cannot stop innovation from happening. Not, at least, in today’s world where ideas travel at the speed of sound from one corner of the world to another and with such a multitude of players wishing to gain new shares in an often saturated market. The interests in such area are many, from that of ship builders wishing to consolidate or grow their market share, to that of the ship owner wishing to cut costs or that of IT developers wishing to expand their reach in this industry, to that of crew members wishing to safeguard their jobs.

The importance of such a new means of navigation, although still far from becoming an everyday reality, has generated such an interest that even the IMO’s Maritime Safety Committee kicked off the procedure leading to the regulation of Maritime Autonomous Surface Ships (MASS). This exercise aims at regulating aspects concerning safety, security and environment. IMO’s focus is international trade facilitation, analysis of potential costs of the industry and the impact on individuals operating both off and onshore. The IMO will first look into the application of current legislation onto MASS and ascertain whether each specific provision can be applied to it and the regulations that need to be amended or introduced.

A possible key to facilitating navigation of autonomous ships on our seas and oceans could lie in the adoption of a uniform and linear set of rules modelled on the current IMO framework. It is submitted that a mere temporary or piecemeal update of regulation is not sufficient. Rules should, as much as possible, contain self-updating provisions able to cater for current as well as future technological advances. Shipping, more than any other sector in view of its global breadth, requires common and uniform standards and this can clearly only be achieved through the intervention of the International Maritime Organisation.

by Stephan Piazza, member of the MMLA Executive Committee and Manager Transport & Leisure – Shipping, Aviation & Infrastructure at KPMG in Malta

Source: Times of Malta, Maritime & Logistics Supplement

Picture: new atlas, Rolls-Royce

Filed Under: Autonomous ships, International Law News, International News, Latest

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