Ship Concept 2030: Are the world’s shipbuilders doing enough to foster innovation?

Ship Concept 2030: Are the world’s shipbuilders doing enough to foster innovation? — 2023-09-28

Maritime and Ports

Are shipyards doing enough for foster innovative designs? Sure, they have their snazzy marketing material to hand, their impressive stands at trade fairs, but with the end product – are yards actually willing and able to deliver radically different ships. Many in shipping doubt it.

Speaking at this year’s Maritime CEO Forum in Singapore, Wellington Koo, executive director of privately held Valles Steamship and chairman of the Hong Kong Shipowners Association, told delegates: “I am not too concerned about newbuild prices. The bigger problem is the new designs I get from the yards are not so new, just downgraded engines to comply with regulations. I am frustrated with the yards for not offering better, newer designs.”

Speaking at the same event, Olivia Lennox-King, chief operating officer at Cetus Maritime, one of the largest privately held handysize operators in the world, also expressed her frustration at the yards’ inability to provide solutions for future ships.

They don’t have the solutions to offer for handysize ships, they don’t have the solutions to install on these smaller ships,” Lennox-King said at the exclusive shipowner gathering held at Singapore’s iconic Fullerton Hotel.

Mikael Skov, who heads up Hafnia, the world’s largest owner of product tankers, looking at the comments made by fellow owners earlier in the year, points out that yards are only tasked with delivering ships that comply with the selected flag and international legislation.

“It will be difficult for yards to go further than that,” he says.

It’s a mixed picture, says Alfonso Castillero, CEO of the world’s largest ship registry, Liberia, casting his eye over the world’s shipyards. Some are doing enough, he says, others less so.

There are shipyards that have not yet woken up to the reality of the current and future demand for international shipping,” he warns.

Downsized yards

Commenting on the owners’ dissatisfaction, Andrew Craig-Bennett, Splash’s lead columnist, says it is a result of the dramatic downscaling seen in the shipyard sector since the global financial crisis 15 years ago.

The yards cannot innovate. They have been optimised to the point where they have no talent with the time to think,” says Craig-Bennett.

Far more supportive of shipbuilders’ pursuit of new designs is someone at the coalface; Patrick Ryan, senior vice president and chief technology officer at class society ABS.

Of course they will,” Ryan insists on being quizzed whether yards will do enough to support the green, digital drive of the industry.

Smarter ships are possible now, and increasing in data collection and connectivity everyday,” he says. “Owners, OEMs and shipyards are in the driver’s seat, keen to leverage the benefits of being data-driven in terms of what can be connected and how they can adopt a digital operating model across their fleets.”

It’s easy to be distracted by the drive to be green, but yards also have to ensure that future ships are far more intelligent entities, capable of gathering and analysing substantial volumes of high-quality data, points out Yeontae Kim, executive vice president of Korean Register’s technical division.

“In essence, shipyards stand at the nexus of both challenge and opportunity, tasked with aligning their efforts with the industry’s dual imperatives of emission reduction and the development of markedly smarter vessels,” Kim says.

Nick Chubb, who runs UK-based maritime innovation consultancy Thetius, suggests the real problem are owners unwilling to pay for innovation.

If you want to change behaviour you need to change incentives,” Chubb argues. “The business model for most yards is to produce the cheapest possible vessel. The easiest way to achieve that is by building the same ship over and over again with as little change as possible. They have been incentivised to do this for decades. If owners want the yards to become the industry’s great innovators, they will need to be paid to do it, and handsomely.”

Manish Singh, who heads up maritime advisory Aboutships, says that shipyards by themselves cannot pivot the industry towards smarter vessels.

This,” he says, “requires concerted effort between regulatory policy, fuel infrastructure development, charterer commitment to early adopters, rapid innovation by OEMs and operational gains by owners and managers.”
Shipyards, according to Singh, are a key piece in the aggregation of such a concerted effort to build and operationalise novel technologies.

‘Same boat with too many flaky options’

Dr Martin Stopford, the world’s most famous maritime economist, maintains there’s no point blaming the yards.

“Everyone’s in the same boat with too many flaky options,” says Stopford, the author of Maritime Economics, adding: “Only the owners really know what will work but it’s the classic problem. In a time of change you ask your customers ‘what do you want?’ and they just say ‘what have you got?’”

Stopford maintains there’s no quick fixes on shipping’s path towards decarbonisation.

“It’s a major rethink of ship systems and it’s going to be expensive with no guarantee you get your money back,” he warns.

Bear in mind too, says Sanjay Chandra, executive director at Fleet Management, that shipyards’ return on investment is often uncertain, something clearly in evidence in financial results in the 2020s where despite lengthening orderbooks, profits have been slim.

Regulatory support

Regulatory support, in the form of standards and incentives, can play a crucial role in encouraging shipyards to invest in these areas,” Chandra says, arguing that ultimately the pace of change will depend on a complex interplay of technological, economic, and regulatory factors.

KD Adamson, a maritime futurist, argues owners cannot have it both ways. On the one hand, she says, owners claim there’s no way they’re going to order ships until they have a level of certainty on where the decarbonisation tech is going. On the other, they blame the yards for failing to deliver them a solution.

The reality is that market-led innovation is fundamentally unsuited to addressing systemic problems like decarbonisation, because incentives and margins are misaligned,” Adamson claims.

Finally, there’s the issue of scope 3 emissions, something shipyards have yet to properly address, but by 2030 they will need to be on top of, says Carl Schou, president of Wilhelmsen Ship Management.

There is a growing demand to track the greenhouse gas emissions into every stage of the ship lifecycle from design to construction, to operations and recycling.

We note that shipyards are not ready to incorporate the circularity principles into shipbuilding as measures to reduce owner’s scope 3 emissions,” Schou points out.