July 31, 2019

Automation and Digitisation in Shipping: a Lack of Standardisation and Regulation?

The shipping industry has recently seen a large number of exciting and futuristic proposals for automated and digital innovations. The intention is to increase efficiency, reduce costs, save time, and promote safety at sea. The increasing numbers of automation and digitisation solutions should lead to a corresponding increase in standardisation and regulation. However, this will take some time to achieve, and insurers should therefore be cautious when approaching these new risks.

An obvious example is autonomous, unmanned vessels. This concept has caught the public eye, and testing of small unmanned ships is underway in the Norwegian fjords. While DNV GL is managing those tests, there are multiple similar proposals from other manufacturers which are yet to be studied. The IMO's Maritime Safety Committee has outlined four classes of autonomous vessels, providing plenty of scope for a variety of different designs from innovators.

These new technologies require skilled specialist technicians to operate them, whether working remotely or as additional crew. However, it remains unclear whether there will be sufficient numbers of trained operators for this as-yet undefined equipment. Inevitably, this raises the possibility – if only temporarily – of individual vessels being improperly crewed and maintained. Concerns have also been raised that remote operators and suppliers of equipment for autonomous ships may not fall within the limitation regime of the LLMC1.

Shore-side services have received similar treatment. Innovations include blockchain in cargo sales, cloud storage of ship data, and automated cargo discharge. Concerns over cyber risks have already been aired in the market but, again, the variety of technologies increasingly available to carriers, cargo interests and ports means the level of risk will vary between providers.

This apparent lack of clarity and standardisation in the future of shipping should not cause alarm bells to ring – it is inevitable in the early stages of innovation. However, the marine insurance industry should keep an eye on the variety of solutions proposed and ensure that it appreciates the risks involved as the technologies develop. The usability of many solutions has not yet crystallised and, while that should not prevent investment in the future for shipping, stakeholders should nevertheless proceed with both eyes open.

First published in IUMI Eye Newsletter, June 2019

Convention on Limitation of Liability for Maritime Claims 1976