How Shipping Can Thrive: Today, Tomorrow and in the Future
Mar 4, 2019
Grahaeme Henderson, VP of Shipping & Maritime, gave the keynote speech at the Greek Shipping Forum in which he addressed the future of the Shipping industry and how it can thrive through the challenges ahead.
Ladies and Gentlemen. It is truly an honour to be in Greece. To be with you …the world’s largest ship owning Nation…to be with the passionate and knowledgeable leaders of our great shipping industry.
What I will be talking about today impacts everyone in this room and everybody in the shipping industry worldwide.
Global trade has transformed life as we know it today, and shipping has been the backbone of this trade.
More than 50,000 ships sail our oceans every day, transporting goods from all corners of the earth.
With the global population growing by 200,000 each day, cargo movements by sea have more than doubled since 1990, from four to nine billion tonnes. Shipping these goods and energy is vital for the world to function.
But, there are challenges. You will say, there have always been challenges, but I believe these are more exacting and happening at a faster pace, than at any time in the past. There are greater expectations of society as a whole…news travels quickly and we are judged as an industry on the front pages of newspapers and on websites.
With challenges come opportunities and what I want to talk about is how shipping will face these challenges and improve to become an even better industry. Essentially, how shipping can thrive, how its people can thrive and how society can thrive….today, tomorrow and in the future.
We cannot predict the future, but what we can say is that regardless of what awaits us, there are three key areas in which we must improve and that is our performance on safety, and on the environment and embracing new technology.
Let me start with safety. On our ships, there are hard-working men and women who play a critical part in driving the economy forwards .
Yet, shipping has one of the poorest safety records of any industry in the world. Unlike other global industries, shipping does not collectively report data, but where it has been analysed, it shows that the shipping industry has a safety performance 20 times worse than the average onshore worker and 5 times worse than construction. During the last 10 years, an average of 113 ships around the world have been lost each year and many thousands of people killed.
These are people…people like you and people like me. The impact is felt deeply and widely. The death of a loved one, a colleague or a serious injury stays with us forever. The reputations of companies and individuals are damaged, and the costs are high.
Last year, I visited one of our ships and was talking to a crew member and I asked if he would tell me a little more about himself.
He said “My name is Joshua and I am 21. I have three brothers and sisters. They are back in the Philippines with my father and mother. My father has lost his job, so what I earn on this ship is keeping our family of six.” I thought to 2 myself, just think of the impact if that young man is injured or worse…we had better look after Joshua extremely well and make sure that he gets home safely.
This is just one story and on every ship on every day, there are similar stories of people who are important to their families and children.
When you and I visit ships, we are treated like VIPs. Yet, the real VIPs are our seafarers, and we have a huge responsibility in everything that we do to ensure their safety.
Let’s be clear…the decisions we make, the tone that we set at the top of our companies, the behaviours that we display…they all impact the safety performance and peoples’ lives.
It is only by continuing to address the sector’s appalling safety record, that shipping will be the thriving industry that we want it to be.
I have two examples to show how dramatic improvements can be made in safety through leadership, taking responsibility and collaboration.
The first is called “Partners in Safety”. Shell introduced this in 2012, working together with the leaders from 500 top shipping and maritime companies around the world, some in this room. The results have been impressive with a reduction in the number of serious actual and potential incidents by four times in just 6 years.
In addition to the improvements in safety, this work is having a very positive impact on the business performance of these companies. When we show genuine care for our people and their wellbeing, then they will want to do well. The teams that work for all of us will be more dedicated and motivated. Business will thrive as a result.
With focus groups in Singapore, Europe and the USA, the “Partners in Safety” programme centres around three key areas:
Firstly, through visible safety leadership by the CEO and the top team. Leaders visiting their ships to let the crew hear and see that safety is the top priority.
Secondly, learning from incidents using new interactive training techniques through videos and photographs.
Thirdly, showing care for people, focusing on seafarer’s health and welfare. Putting in place activities to manage stress and address mental health issues.
The second example is the award winning programme HiLo, which stands for High Impact Low Frequency and aims to eradicate catastrophic accidents. Using mathematical risk modelling and ship incident data, a pattern of events is highlighted that, if left unchecked, could lead to a major incident. It uses digital technology and real time data, with a lasting impact.
HiLo has grown rapidly since its launch last year, quadrupling participation with over 40 of the top tanker operating companies now as members. Originally designed around the tanker sector, it has recently been extended into bulk and container ships.
HiLo is already improving safety within the industry. Successful recent interventions include the avoidance of potentially catastrophic engine room fires, a reduction in the likelihood of injuries from lifeboats, and avoidance of bunker fuel spills.
We are also increasing the number and quality of incident and near miss data, with seafarers taking an active interest in their own safety and allowing us to make further improvements.
Let me now turn to the environment.
Healthy oceans sustain life; not just the animals and organisms within them, but the hundreds of millions of people who rely on them for food. But this is being put in jeopardy by the negative effects of climate change.
So how do we economically ship the increasing amount of goods and energy the world demands, while lowering the environmental impact. In essence, how does the shipping industry “carry more and emit less”?
It is critical that we do not shy away from the climate change debate and instead, are proactive in reducing shipping’s greenhouse gas and other air quality emissions.
Doing so will help ensure a better future for the industry and, given the importance of shipping to trade, a thriving economy.
This will mean embracing new fuels and technologies…and making big decisions. Some decisions require immediate action, such as responding to the upcoming IMO regulations to reduce sulphur.
Shipowners, managers and operators - all of us in this room - must decide how best to address the challenges for their shipping operations.
Shell has a clear vision for IMO2020. We will be prepared, and we can help ship owners and charterers be prepared too. We’re developing a variety of fuel products for the shipping industry that include marine gasoil and very low sulphur fuel oil; high sulphur fuel oil supply for ships with on-board scrubbers; and LNG. The market will continue to need multiple types of fuel to meet the industry’s demand and Shell will provide these products at key ports.
We are currently working with our customers to test our new 0.5% very low sulphur fuel oil. We also are continuing to improve our lubricants to be compatible with the changing fuel compositions that will come with the sulphur cap.
There is growth of the cleaner burning LNG fuel to power ships of all sizes. At Shell, we are using LNG fuelled vessels in our own operations. This includes offshore support vessels in the Gulf of Mexico, inland barges on the Rhine and globally trading Aframax tankers.
Shell is working towards an LNG supply chain, to fulfil our marine customer needs across the world with bunkering infrastructure in place, or in development, across the Americas, Europe and Asia.
At Shell, we are ready to work together with all stakeholders to assist in a smooth transition.
According to the IMO, shipping currently accounts for over 2% of the world's total greenhouse gas emissions and without intervention, this is expected to increase significantly by 2050, potentially contributing 17% of global emissions.
The IMO has issued CO2 emissions targets and although they are someway off, we must start to address these now. At Shell, we have reduced the carbon intensity of our managed fleet by around 40% from 2009 to 2017 and at the same time, reduced operational costs. Let me give you some examples of the work we are doing.
Working with a range of stakeholders and applying LEAN techniques, Shell analysed and identified efficiency improvements in more than 100 activities across a voyage, and during loading and discharge operations.
We have now extended this work into digitalisation. We are collecting 500 data-points every second from our ships. Real-time operational data that is immediately translated into an understanding of the ship’s performance, including engine, cargo and other key systems.
We have improved the weather routing of our ships using the very latest Boeing technology, not only to avoid storms, but to gain the beneficial effects of winds and currents. We are also working on optimising the entry and exit into ports and terminals, with efficient turnarounds, which is very similar to an airport.
All of this information is shown live on large screens in our office, and is being used to help make the best decisions and performance improvements.
The combination of simplified efficient processes and improved operations, together with the early application of digitalisation, has delivered significant cost savings and reduced emissions on those ships, both in the order of 15%.
We are also working to deploy new technologies such as Air Lubrication technology - a blanket of bubbles under the ship’s hull to reduce friction, and trialling Flettner Rotors - spinning cylindrical sails to harness wind power to propel a ship. These technologies are anticipated to further reduce fuel usage, hence emissions and costs, by at least 5% each.
These examples are just the start. We and the industry have more to do to mature emerging technologies and realise the benefits of shared best practice.
But, we also need to have the vision to imagine a zero-carbon future. Investing and working together in research and the development of innovative technologies now, will lay the foundation for the shipping industry of the future.
To thrive, it is clear that we must dramatically improve our safety and environmental performance, and embrace new technology. This can be done if we all commit to three key areas.
Firstly leadership. Leadership is fundamental and without this, nothing happens. So, would you all be willing to put safety and the environment at the very top of your agenda, in making your decisions and in your company communications? “Your actions count more than you think”.
Secondly, taking responsibility. Would you take forward key areas that will have a positive impact on performance, such as visiting your ships, on-the-job training and programmes focusing on care for people? “Don’t leave it for someone else, as there is no one else”.
And thirdly, collaboration. In the space industry, more than 80 nations work together and in pharmaceuticals, individual companies share their data across the industry in the fight to cure cancer. If these industries can do it, so can the shipping industry. “Together we can do so much, alone we can do so little”.
Working together also will allow us to embrace new and efficient business models…new ways of running our business beyond historical silos and actively using data in real time in our day to day activities.
I started by saying that what I will be talking about impacts everyone in this room and everybody in the shipping industry worldwide.
Working together, we will ensure that shipping thrives today, tomorrow and in the future…improving the safety performance, reducing our impact on the environment and becoming more efficient through new technologies.
Let’s make the future. Together, we have the power…let’s make it happen! Thank you.