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Megatrends shaping the maritime industry

22nd June 2020

The negative economic impact caused by coronavirus will probably only become apparent in autumn when the effects of the crisis will surface in the balance sheets of businesses and thereby also reach the ordinary people. The maritime industry will certainly not be left untouched by the crisis. However, in the long run there is a solid foundation for growth in the sector. Hannes Lilp, the owner of a ship construction and repair company SRC Group AS, writes about megatrends in the maritime industry.

It probably comes as no surprise to someone working in the maritime sector that more than 80% of the world's goods move by sea. Shipping is the force behind the world economy — it is one of the most important and environmentally friendly methods of transportation that humankind has come up with.

The same volumes in the oil industry

The modern developed society cannot function without energy. In my opinion, despite looking at the different scenarios on how to produce energy, today's demand for oil and gas products will not decrease in terms of volume in the next few decades. There might only be changes in the shares of total electricity production — for example the percentage of green energy is increasing and the percentage of oil products is decreasing accordingly.

This is largely due to the fact that it is already apparent now that by 2050 there will not be enough funding for green energy projects to ensure energy security in states. Therefore, oil and gas will most probably remain in use until reserves are depleted. However, the sector will definitely become more efficient and environmentally friendly than it is today. This in turn will provide work for maritime companies.

Offshore wind farms create growth opportunities

In the future, the Offshore sector will not only rely on oil and gas. Until recently, states had to heavily subsidize offshore wind farms and wind technology so that it would make sense to produce electricity by these means at all. Now however, offshore wind farms have become reasonable cost investments that can operate under market conditions.

Floating wind farms, which have already been tested in some places, offer very interesting opportunities for the Offshore sector. Since, the 2017 construction of the first floating wind in Scotland developers have shown increasing interest in floating wind farms. The advantage of floating wind farms is that they can be built farther from the coastline, are better for the environment and less disturbing to people.

Ships will be designed to be more environmentally friendly

The most notable changes in the shipbuilding and ship repair sector (both in which our own company is active) are connected to environmental standards. These requirements often concern ship exhaust emissions and ballast water systems.

Hybrid solutions, whereby ships are made more environmentally friendly and less polluting through battery solutions, have also come into the picture. These types of systems make it possible to visit city harbours without polluting its air.

Battery solutions also suit smaller ferries that travel shorter distances. In principle, with the current technology and with agreeable ships, it is possible to carry goods for shorter distances, such as the crossing of the Gulf of Finland (Tallinn-Helsinki-Tallinn), with the help of battery systems.

The volume of ship constructions will not stop

There are too many ships in the world's merchant fleet. That is why ship chartering prices are low, while causing difficulties for ship owners such as creating the need for ship owners to consolidate.

In principle, the construction of ships could be stopped for several years, they could be modernized a bit and be left to wait until the situation has returned to normal. Nevertheless, we are still seeing quite a big increase in construction volumes.

Why are these new cargo ships being ordered? Mainly because engineering solutions have evolved a lot over time. If a new ship can be operated 20-30% cheaper, it is already a good argument to construct the ship.

New ships also comply with more standards or are just more environmentally friendly. That is an important argument to construct such ships. For example, large oil companies with strong market forces often force shipowners to invest in green technologies so that they can tell their customers and governments that they care about the environment and they also demand the same of their partners. Inter-governmental agreements also impact this process.

Autonomous ships are the future of merchant shipping

One of the major and important trends is the growth of ship automation and the development of autonomous ships. Prototype ships have been built for some time already, especially in the military. In Norway, the world's first emission-free autonomous commercial vessel, Yara Pirkeland, will soon be completed.

Unmanned vessels are safer and more efficient than manned. It is a well-known fact that 80% of all insured events with ships are caused by human error. If we eliminate the human error, we also significantly reduce the number of shipping accidents. Costs will also be reduced, as there will be no need to keep a crew on ships.

At the same time, it must be acknowledged that the crews of larger cargo ships have already been made so efficient and minimal today. Thus, crews are not as significant of a price component for cargo ships as they are for passenger or cruise ships. A cruise ship's crew can often be 1,000 or more people.

In Finland, attempts have been made to make ferries between islands move without people. Nevertheless, whenever there is a passenger, it has to be thought what can be done when a conflict between passengers or a health issue emerges. When it comes to passengers, we will probably not get away without having the ship manned just yet.

Autonomous ships are certainly the future of the industry, but common standards must be agreed before their deployment, in order to ensure safety at sea. This legal framework has not been agreed upon yet, and we will have to wait a few more years.

Information technology is finding its way into the maritime industry

The advent of information technology to sea has certainly already begun, and this is a major trend that we must take into account.

A very important issue with autonomous fleets in the near future will be cyber security, because we will see more and more cyber pirates and terrorists trying to take control of ships.

When it comes to the sharing economy, which has changed the market for taxi or courier services, there will be some changes in maritime transport and the organization of maritime transport ahead of us as well.

Ferries are becoming more and more floating department stores

Tallink, the leader of Baltic shipping, has performed particularly good and has been pioneering in the ferry industry, as they have changed the nature of doing business all over the world.

The Estonian company has made the transport of people as efficient and comfortable as possible for passengers, but more importantly, taking a ship has become a way of spending leisure time for people.

Basically, Tallink's ferries are mobile shopping centers, where people can spend their time shopping, enjoying a delicious meal or having fun. This trend is certainly spreading to other parts of the world, as it makes the provision of ferry services more profitable.

The cruise industry continues to grow

Cruise shipping is a very fast-growing form of entertainment. This sector has suffered a major setback in the context of the coronavirus, but they will certainly come out of it.

Had it been any other crisis, the cruise industry would have continued very successfully. The reason is that their client is a pensioner who has already accumulated their wealth and is receiving a stable pension. Crises do not have as much of an impact on these people as they do on working people.

Despite everything that has happened in the market today, cruise companies have been able to raise money in the crisis conditions - Virgin Cruises finished new ships, the Ritz-Carlton hotel chain also came out with its cruise ships.

Given the rapid growth of the tourism sector, there is certainly space for the cruise industry to grow.

SPS Technology: A Go-To Solution in Maritime and Offshore

22nd May 2020

SRC Group AS is accomplished SPS Technology installation partner with numerous successful projects across two decades. The technology delivers cost and time savings, enhanced protection and safety, as well as improved environmental sustainability. In this article, we explain how to use this technology in maritime and offshore sector.

What is SPS technology?

SPS is a structural composite material comprising two metal plates bonded with a solid polyurethane elastomer core.

Approved by major regulatory authorities, it’s used in a wide variety of civil, offshore, maritime and special applications including repair of offshore structures and maritime vessels.

The technology is much simpler than stiffened steel plate and much lighter, slimmer and faster to erect than reinforced concrete. It is patent protected and has a low carbon footprint and is 100% reusable/recyclable.

How It Is Used in Maritime and Offshore Sectors?

“In Marine & Offshore, SPST eliminates the need to crop out existing steel. Existing structure is retained and reinforced with a new steel plate and polyurethane core resulting in a stronger, flatter surface. This makes reduced repair times possible; often without taking vessels out of service,” said Vadim Ladkin, Chief Commercial Officer & Member of Board, SRC Group AS“In shipbuilding, SPS allows simplified, more robust structures with less welding, labour and material required. The reduction in fatigue and corrosion prone details increase service life and reduces maintenance costs,” he added.

Marine applications include hatch covers, tank tops, vehicle decks and citadel access protection doors. Offshore applications include pontoon reinstatement on semi-submersibles; side impact protection on FPSOs; strengthening helidecks, pipe decks and landing areas; deck reinstatement on all platforms; blast walls; OSV decks reinstatement; dropped object protection solutions; and jack-up spudcan reinforcement.

Experienced Installation Partner

“SRC Group AS are an accomplished multi-skilled global business unit that remain flexible to their clients’ needs,” said Ian Nash, Business Manager of SPS Technology. “Versatile, conscientious and highly motivated to deliver only the highest standards, make them the perfect partner for SPST.”“The team are exceptional communicators and experienced in liaison with national and international organisations, displaying tact and diplomacy by being sensitive to the clients’ needs. A great company ethos mixed with hard work is the perfect combination," he added.

Selection of SPS Technology applications we have done!

SRC Group AS are the most experienced SPST installation partner, building a large portfolio of successful SPS projects spanning across two decades. We selected three, we are some we are very proud of.

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Queen Mary 2

Owner: Carnival Cruises
Class: Lloyd’s Register
Area: 88m²
Date: October 2017 & September 2018

With SPS licensee, SRC Group, an SPS project for Carnival Cruises on board the Queen Mary 2 was completed in September 2018. It follows on from a similar project October 2017. Both projects were undertaken during a scheduled cruise between New York and Southampton. Two areas, 48m² and 88m² were reinstated tween deck 8 and deck A. The repairs were inspected and approved by Lloyd’s Register on both sides of the Atlantic!

“The team was able to complete the repair under challenging circumstances whilst the vessel was in-service. In order not to impact on our guests’ cruise experience, restrictions were placed on when works could be undertaken which the team worked around, delivering the project on time with minimal disruption,” said Andrew Manzies, Deck & Safety, Carnival UK.

Sun Princess

Owner: Princess Cruise Line Ltd
Yard: Sembawang Shipyard, Singapore
Date: June 2018

62sqm on deck 14 (ventilation room) was reinstated using SPS. Pipework etc made access challenging. Project completed on time according to Schedule.

Pride of York & Pride of Bruges

Owner: P&O North Sea
Class: Lloyd’s Register
Date: January and February 2019

Pride of York project was carried out at Damen Shipyard. 58m² reinstated across Decks E&F, plus 17m² on bulkhead of water ballast tank. In Pride of Bruges, 55m² deck was reinstated whilst still in service between Hull and Rottterdam.

Interested to know more? Contact us now!

Shipyards in Europe: Has Normal Work Been Restored?

18th May 2020

Europe’s leading shipbuilders have announced plans to resume operations after more than two months of disruptions. During the peak of the coronavirus, shipbuilders in Italy, France, Spain, and Germany were forced to suspend operations.

After some months of reduced or no activity in Chantiers de l'Atlantique, France the shipyard has announced that all production activities and other functions such as the design office have begun operating on May 11, although some people may continue to work from home.

Another French large company, Naval Group has introduced series of measures to protect the health and safety of its employees and partners. This includes work in separate teams, the redesign of workspaces to respect a distance between people, and the wearing of masks for operations in confined spaces. The ramp-up of activity will be gradual and will respect the recommendations of the authorities in the framework of national solidarity.

Italy shipbuilder Fincantieri has reopened its facilities since April 22. The firm was shut down on March 16 after talks with unions as the virus swept through Italy. The work in Fincantieri is expected to continue in full by the end of May or the beginning of June.

In the meantime, safety precautions will be taken, including staggered entrances to the yards for staff, obligatory masks and gloves at work, temperature checks at entrances to spot fever sufferers and in-house medical staff. Each staff member will be given a packet of 20 masks per week so they can change them multiple times during each day.

Damen Shipyards (Neatherlands, Poland, Romania, Norway, Sweden and France) has responded to coronavirus in a number of ways and has remained open for business. The measures the company has taken include requesting personnel to work from home, wherever possible. Where this is not possible, for example, in the case of production staff, they are arranging shifts and taking other steps to reduce contact to a minimum. Company is also arranging repatriation of our personnel currently working outside their home countries.

Various measures are taken in Meyer (Germany, Finland) shipyards in order to slow down the spread of the coronavirus on the shipyard sites including obligation to wear mouth and nose masks in certain areas, updating daily contact list, query before entering the shipyard, avoiding gatherings of people, keeping distance, etc.

Shipbuilding company MV Werften, with operations in Wismar, Rostock, and Stralsund, Germany, suspended operations in late March and is now targeted early May to resume operations if supply chains are again functioning.

In Spain, Navantia has started some activities at some yards while cleaning efforts are underway at other facilities. Company reduced its activities at the shipyards to the minimum that can be done with enough safety measures, it was not a complete stop but the activity is very limited and very controlled.

While the return to work is a positive development, shipyards are facing high levels of uncertainty. With the cruise lines facing significant financial challenges and commercial shippers dealing with greatly reduced levels of activity, new construction orders have largely ceased. There is also speculation that the cruise lines will seek to delay, cancel or possibly sell some of their current orders creating additional challenges for the shipbuilding industry as it seeks to recover from the disruptions caused by the spread of COVID-19.