Unmanned vessel

Automated ships are almost here – What is going to be their impact in shipping?

We have all heard about autonomous ships, but do you really understand what is it about and what is their impact on shipping industry? It sounds really impressive or even strange, however the explosion of new technologies and automation could bring the biggest revolution in shipping since the years when diesel-engine ships replaced the steam-ships. “Automated ships” is the next big thing in shipping and we are probably not far from the day that such unmanned ships will cross the oceans. But what is this project about? What are going to be the main advantages for the shipping industry and what are the major challenges so as the automated ships to be totally established?

Automated ships are the next generation vessels with no crew members onboard which will be commanded from a shore operating center, where shore masters and engineers will be monitoring and controlling their navigation and performance through detectors, sensors, high-resolution cameras and advanced satellite communication systems. The concept of autonomous ships was first introduced during 1970’s in the Rolf Schonknecht’s book “Ships and Shipping of Tomorrow” where mentioned that in future the Captains will perform their duties from an onshore office building and the vessels will be navigated with the use of computers. During 1980’s Japanese explored this concept deeper in an effort to minimize the expensive crew costs, though the introduction of a cheaper foreign crew with the use of flags of convenience abandoned their promising research program. Later, during 1990’s a ship designer argued that vessels could sail short distances unmanned with the use of GPS while a naval architect mentioned that artificial intelligence could be applied also to ships. Despite the research which took place during these two decades, the concept remained out of Shipowner’s interest mainly due to high investment and maintenance costs involved. With the continuous expansion of technology though, the big step happened during the next decade when in 2007, Waterborne TP, a team of maritime stakeholders, in a paper clearly defined how an autonomous ship would look like and they mentioned that more automation would be desirable to the maritime community.

The European Union research: Maritime Unmanned Navigation through Intelligence in Networks

This paper of Waterborne TP gave the initiative for a complete research project which was commenced in 2012 and ran with the collaboration of 8 partners, mainly universities, research institutes and companies offering automation and technology products/ services and which was co-funded under the European’s Commission FP7 research program. For almost three years, these experts worked into the possibility of developing an unmanned and autonomous vessel by exploring the viability in regards with her navigation, the automated engine and propulsion, its communications and connectivity with the shore personnel and issues related to the International regulations and liability of the people involved. The project concluded that such a vessel would be possible, but only for a deep-sea voyage and not in congested or restricted waters, in which case a crew should operate the ship. However, the project team mentioned that the restricted satellite bandwidth in certain regions and the high communication costs would make the operation of a remote-control vessel uneconomical. Therefore, they concluded that the ship could be autonomously operated by advanced systems onboard, while her monitoring and controlling to be executed by an operator in a Shore Control Centre.

The Rolls-Royce project

The Rolls-Royce project

The AAWA project is conducted by Rolls-Royce and it is the most recent and most promising project in this field. Rolls-Royce is cooperating with universities, shipbuilders & designers, equipment manufacturers and classification societies to explore the economic, social, legal, regulatory and technological factors which need to be resolved so as to make the autonomous ships a reality and It will produce the specification and preliminary designs for the next generation autonomous ships. The first phase of AAWA has already been completed while now Rolls Royce is moving to the next phases of the program. The outcome of Phase II will be the technical, legal and safety specifications of such vessels while phase III will aim to produce a such a complete real intelligent ship, subject to funding. Embedding smart ship equipment into an existing vessel, by decreasing the number of crew, is the first step along the Rolls-Royce roadmap to a fully autonomous intelligent ship. The company plans so as a remotely operated local vessel being the first stage and in operation by 2020. By 2025 the company hopes to have a remotely operated autonomous vessel in international waters. Five years later Rolls-Royce hopes that autonomous ocean-going vessels will be a real fact. As time goes on, such ships will become ever more intelligent and capable of more advanced autonomous operation.

Hrönn: The first automated ship

Hrönn: The first automated ship?

While Rolls-Royce is working on its project for the development and construction of the automated ocean-ships, a UK-based company called “Automated Ships Ltd” has signed an agreement with Kongsberg Maritime of Norway so as to construct the first small automated ship which will be utilized in the off-shore industry. According to the current schedule, the vessel is expected to be delivered during 2018 and she will service the offshore energy, hydrographic and fish-farming industries. Automated Ships Ltd who will also be the manager of the vessel is already looking for potential employment contract of this off-shore vessel. The vessel will initially operate remotely from an on-shore pilot however she is expected to become fully autonomous as soon as the required algorithms are developed during the first period of its operation.

Advantages of the automated ships

Automated ships will bring a technological revolution in the shipping industry focusing on increasing the vessels’ efficiency and in fact to offer higher benefits to the shipping companies which invest in such technologies. But how can these vessels contribute in this respect?

  • Lower operating costs: The biggest part of vessels’ operating cost is the crew wages along with all the living expenses for the crew (i.e. stores, provisions etc). According to OpCost report of Moore Stephens, the crew expenses are more than 50% of the vessel’s total daily OpEx. This cost is about $2,500/day for the handysize bulkers which results in a saving of about $1 million per year. The saving will be much higher in the case of tanker vessels or larger bulkers, where the crew expenses are also increased. Indicatively, the crew costs for handysize product tanker is estimated at about $4,000/day resulting in an annual saving of approximately $1.5 million only from crew expenses.

  • Higher Revenue: The revenue of Cargo ships depends on the quantity of cargo they can load. In case that no crew will leave onboard, the accommodation installations of the vessels will be much smaller and this will allow more spaces to be utilized for loading cargo which in fact will increase the vessel’s profitability. As an example, the increase of vessel’s deadweight by 10% will increase her revenue for about $40,000 per month (as estimated on a handysize vessel performing one Indonesian-India trip per month) which is almost $0.50 million higher revenue during the period of one year.

  • Lower voyage expenses: According to Rolls-Royce research, autonomous vessels will be up to 5% lighter in case the accommodation and therefore they will use about 15% fewer fuels which subsequently will also lower the vessel’s voyage expenses. If we assume that a handysize bulk carrier now consumes about 26 mt fuel oil (at a price of $300 per ton) and sails for about 250 days per year, the total saving is expected to be about $0.30 million annually.

The lower operating and voyage costs of the vessels along with the higher revenues will boost the companies’ profitability. However, in order to have a clearer picture of the project’s return, we would also need to also see the investment cost (capital expenses) of such automated ships and compare with the existing vessels. Though, the saving of about $1.3 million per year and the higher revenue of about $0.5 million (as per above example) -which is going to be much higher for larger vessels- seems more than sufficient to cover any increase in vessel’s price and boost vessel’s profitability.

Challenges and Market Concerns

Since all the above are exciting facts, the question is why the automated ships are not yet a reality? All such magnificent revolutions usually take time however in our case there are also a few issues that they remain under consideration and make a lot of industry players not yet convinced of the project’s viability. Let’s see a few of them.

  • Regulatory framework: For the time being, the legislation which will regulate the autonomous ships are quite unclear. The main concerns refer to the manning and safety regulations as well as the constructions standards. According to IMO International regulations, all vessels should be manned with a minimum number of crew members so as to be seaworthy. This principal should materially change so as to include vessels with specific characteristics which will be allowed to sail with less or no crew onboard. Same should also happen with the vessel’s safety, where minimum standards of vessels’ and equipment condition should apply. Since the autonomous vessels will be sailing in the same seas with standard manned ships, the legislation of navigation and collision liability might need a holistic review. The standards of construction and maintenance which is also followed by the Classification Societies should be materially amended and thus the Class societies may need staff with new expertise in the autonomous technologies and new designs. The members of the AAWA project have extensively worked on these issues and at least two other European groups are working on the potential regulatory changes. The first group is called SARUMS (Safety and Regulations for European Unmanned Maritime Systems) which is led by Sweden and other six countries are participating. In the United Kingdom, the Maritime Autonomous Systems Regulatory Working Group is also working on the regulatory framework of the autonomous ships so as to ensure that the International Convention on Safety of Life at Sea can adopt these technological developments.

  • Safety in navigation and liability: This is probably the main concern of those people who still remain cautious for the autonomous ships. A vessel sailing in the open seas, faces many risks which are related to the weather conditions, other obstacles which can be met around her or under her keel or even risks coming from third parties (e.g. pirates). Therefore, such an autonomous ship should be very intelligent so as to be able to control any potential risk by herself or the help of the shore master so as to control all current risks and mitigate any new risks which may be related to the use of the automated vessels. But is this possible to happen in every part of the world and for any risk? This question is not yet clearly defined. Furthermore, the levels of liability should be expressly cleared so as all market players to be fully aware of the levels of liability of the shore master or the shipowner/ ship manager.

  • Insurance cover: The existing insurance covers (Hull and Machinery, P&I Cover, War risks, Piracy risks, Cargo Insurance) should remain in place. However, the premiums might change depending on the levels of actual risks involved in the navigation of those vessels. Furthermore, the insured risks should materially change especially in P&I or Piracy Risks insurance. Initially, since the risks involved will be theoretical, the covers and premiums might be indicative. It will require a few years of market practice in order for the insurance covers and premiums to be finalized while the risk for an uninsured risk, during the first years of vessels’ existence, remains despite the tests and trials which will be effected until the vessels’ introduction in real market conditions.

  • Cyber Security: A new risk which may arise with the use of remote navigation is the cyber security. A flow in the computer systems may give unauthorized access to hackers who will be able to take control of the ships. This way, a new type of piracy may be developed. Therefore, the systems should be developed in such a way that they will exclude unauthorized access but also give the shore master overriding authority over any unauthorized instruction. Furthermore, a new insurance cover may be required which will cover such type of risks.

The autonomous ships in the freight market

When the autonomous unmanned ships come into reality, the market will consist of both manned ships and unmanned ships. However, as we saw above, these two type of vessels will have a high difference in their operating and voyage expenses as well as their revenue. Therefore, in fact, there will be two sub-markets in one broad freight market. The freight rates paid for an autonomous ship may be much different than the freight rates paid for a manned ship or even if the actual freight rates will not be different, shipowners with autonomous ships seem to have a competitive advantage since their operating profit might be much higher as compared with the same freight run by a standard ship. Therefore, the freight markets will also be completely renovated.

The autonomous ships are almost here and the industry players are becoming more and more concerned and sensitive in this field. In this respect, the “Autonomous Ship Technology Symposium”, a 3-day conference is scheduled to take place during 6-8 June 2017 in Amsterdam, Netherlands. During this event, all recent developments along with the outstanding issues will be discussed among the participants.

OpenSea team follows closely all the developments in the field of autonomous vessels in an effort to be absolutely ready when the autonomous ships come in our life. Our vision is OpenSea to become a commonly used ship chartering marketplace for manned as well as unmanned ships and to be well integrated with the flow of the big-data from autonomous ships. AI powered algorithms could give an additional layer of efficiency in the prediction of the best paying routes, the decision on front/back-haul voyages and freight earnings planning on a long-term basis.

And one more important thing! We are switched into "fundraising mode" in order to speed up the development process and expand in additional areas. We have designed more exciting features for the ship chartering market (i.e.: freight analytics powered with machine learning) and going to bring advanced technologies to the market. So if you know some institutional investors or want to become part of the tech revolution in the shipping industry, just drop us a line.

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