Ensuring Maximum Value from Shipboard Data
ESRG's new white paper walks through how a ship owner should think about potential investments in technology and data analytics for their new and existing vessels. The paper walks through the value that is possible using data analytics in the marine industry, the technology and business challenges and critical decisions that leaders in the marine industry are now facing. This white paper builds upon "Bringing the industrial internet to the marine industry and ships into the cloud", which walked through the opportunity in the marine industry for leveraging smarter machines, advanced data analytics and experts to improve marine operations, maintenance, energy efficiency and environmental compliance.
Executive Summary
Using data analytics to improve shipboard operations and maintenance has the potential to create billions of dollars of value in the marine industry today and even more in the future. This industrial internet of things (IIoT) concept, connecting machines and using automated data analytics along with domain expertise to optimize operations and maintenance, has already created significant value in many industries like power generation and commercial aviation and is now becoming a reality for the marine industry. While the opportunity across industries will exceed 10 trillion dollars per year in the next 15 years, the opportunity for asset owners, operators and managers to reduce costs, improve fuel efficiency, and increase uptime and reliability is approximately 20 billion dollars today and will exceed 50 billion dollars by 2030. Potential annual value creation for individual ships could be as high as $1M or greater when considering potential fuel savings, optimizing maintenance, decreasing downtime and increasing utilization.
While the potential value is clear, it is less clear to owners, especially those unfamiliar with technology being used in the marine space and other industries, how to capture this value. Vessel owners need to think carefully about what are the right investments to make, both during the new-build process as well as for retrofits. Owners need to think through what their objectives are today compared to what they might be in the future, as well as compare solutions and technologies that are available today with what could come in the future. Making the right investments today will help increase the Return on Investment in both in new build situations and retrofits by ensuring the investment is minimized and the return is maximized.
This opportunity exists across marine sectors, ranging from super-tankers to inland tugboats and offshore platforms. The value potential includes fuel and maintenance savings, increases in uptime and productivity and decreases in risk associated with non-compliance, specifically with regards to environmental regulations. Recent fines for environmental regulations have commonly been over one million USD, with some fines in excess of ten million USD. Figure 1 lays out major value creation levers for a large cargo vessel (e.g., tanker, container, roll-on roll-off, etc). While newer vessels will have the greatest potential value creation due to existing sensors and technology infrastructure, there are likely between 20,000 and 30,000 vessels in the current global fleet which will likely have an attractive ROI, provided the right investment decisions are made. Many of these vessels already have sufficient sensors and a robust technology infrastructure making the required investment minimal. The value gained from the existing onboard data will enable substantial improvement in how the business is operated. While there is tremendous value at stake, it will also take individual owners and operators time to fully capture the value. In the mean-time, before performance analytics are fully incorporated into all business processes, even partially capturing the value in the short term will be attractive to many owners and operators.
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This white paper walks through how a ship owner should think about potential investments in technology and data analytics for their new and existing vessels. The basic principles for technology investment for new builds and existing assets are the same; how they are applied is where there are often different decisions made. Owners need to think about several different aspects of the ship, ranging from what data is needed to accomplish both current and future objectives, what level of technology infrastructure is needed onboard, what non-engineering data is needed and of course how is the ship connected to the cloud or shore systems. There are many decisions that need to be made and requirements that need to be defined. Often, in a new build situation, many of these decisions are being madeimplicitly without strategic direction from the owner, potentially resulting in costly problems in the future. This white paper is meant to follow the author’s previous white paper, “Bringing the industrial internet to the marine industry and ships into the cloud” and presents a framework for thinking through these issues in a comprehensive way to maximize ROI today and in the future. The previous white paper provides more detail on the value of the IIoT concept and sector specific applications of the IIoT.
For many organizations, the IIoT presents an opportunity to increase profitability, provide greater customer value and create differentiation in the market. Owners are making investments in expensive, complex equipment with the expectation that the equipment will perform for many years or even the life of the vessel. As the complexity of the equipment increases, using data analytics is necessary to determine the condition of the equipment and ensuring proper operation and maintenance. For those who do not proactively begin to incorporate data analytics into their decision making and operations, there is a risk of becoming less competitive in an increasingly challenging market.