As the maritime industry settles in on a COVID-19 induced ‘new norm,’ and long-range planning is dramatically shortened,, Nick Brown, Marine and Offshore Director, Lloyd’s Register, said that while much deserved focus must be paid to the current crisis, the industry cannot lose sight of another one looming just as large: climate change.
“We strongly maintain that the climate emergency is an event of the same magnitude, just with a different time domain to COVID-19,” Brown told Maritime Reporter & Engineering News recently. “Whilst shipping only contributes a small amount to the overall climate emergency picture, we as Lloyd’s Register will continue to actively drive the decarbonization of shipping by providing the maritime pathways to illustrate the optimum solutions for future ship technology.”
Brown was part of Maritime Reporter’s report on ‘Class’, with participation by the four largest classification societies. The full report from May 2020 will be available online shortly, but until then below is the full text from our interview with Nick Brown, Marine and Offshore Director, Lloyd’s Register.
To start, put in perspective how COVID-19 has impacted the maritime market?
As is the case for many industries, the COVID-19 pandemic has had significant impact on marine and offshore. The critical nature of shipping in keeping global supply chains moving has been highlighted during the pandemic, but with the necessary travel restrictions implemented globally crew changes have not been possible or at best have been delayed and very challenging. For LR and our customers, who are on call and available 24/7 this has raised serious questions around the safety and wellbeing of crews.
We are pleased to see that in the UK and a number of other countries Seafarers are now considered critical workers – a welcome development for us as we’ve always considered our marine and offshore surveyors in the same light. We are committed to keeping these vital services and the seafarers onboard operating safely.
As the availability and access to dry-docks and maintenance teams is impacted LR is actively encouraging regulators and the other Recognized Organizations to establish a uniform approach on the postponement of ship surveys. Clearly, COVID19 has had an impact on new ships orders and construction schedules, with Clarkson’s revising their forecast for 2020 from 71mGT in their October forecast to 39mGT in the latest March forecasts, a 45% reduction. I am pleased to say that we are seeing the shipyards in Korea and China back up and running already and European and American yards are coming back online now, bringing people back to work safely.
In addition to the marine new ship construction impact, the offshore market is experiencing significant pressure on rationalizing the return on investment necessary for new projects, and many programs have either been delayed or cancelled due to a combination of COVID19 and the oil price war in March 2020. Even with the Opec+ production cuts now kicking in, there is no instantaneous remedy to the current oversupply in the market. Therefore, we will see a continued pressure for the offshore market.
How, specifically, has it impacted your organization?
LR has been managing the Covid-19 situation since January, as it impacted colleagues in China who have now returned to work. To protect our people and the personnel of our clients and partners, we introduced further protocols to assess the risks of specific jobs before work is started and in certain circumstances, we have agreed to postpone and reschedule non-critical work.
Much of the work that we have undertaken in the last few months has required us to respond in difficult quarantine scenarios, managing multiple stakeholders, including Flags and Port Authorities to keep our clients, their people, ships and cargo safe and sailing. A true testament to the efforts of all our shipowner/manager clients and field surveyors for their collaborative team work and determination to keep the critical supply chains open so the food, medical, energy and household supplies that are needed to fight this pandemic are readily available to society.
We have been using remote surveys for many years in the marine and offshore sector, however we have seen a dramatic acceleration in demand for remote surveys, and last month we saw a massive increase in our remote engagement with our clients, rising from our trend of 5-10 % of complex surveys done remotely – which has been our norm for a number of years – to more than 25%.
Many leaders today say that long-term planning has come down to “the next 24-hours.” Discuss how your short-, mid- and long-term planning has evolved.
COVID-19 has required LR leadership to make multiple decisions in a very short time frame, with safety being at the core of each decision. Everything has relied on near-term decision making, centered around the safety of our staff. It was a case of doing what was right in the moment with the information to hand. While many of the ‘big’ decisions were made by the governments where we work, LR had to respond, coordinate across 75 countries, and ensure our plans were cascaded, understood and monitored to ensure the safety of our colleagues, clients and their sites.
We have continued to ensure that our medium- and long-term aspirations are relevant in the context of the short-term challenges that the industry faces. We continue to lead the challenge in the decarbonization of shipping, providing further data driven analysis on zero emission vessels in our investigations into economic viability, technology readiness and stakeholder engagement to drive realistic and feasible options for decarbonization in the years to come. In addition, in offshore we have joined forces with other industry giants to reduce capital expenditure costs as part of JIP33 initiative.
Moving forward, we are clearly all coming to terms with what the “new normal” will look like – and we are planning the safe return to work for all our personnel globally, which will clearly result in a different balance between office based, site based and remote services.
This pandemic will materially impact nearly every industry. How do you see today’s situation impacting ship classification?
There is now an increased acceptance of remote ways of delivering the same value and assurance in many areas across the industries we serve, and one could say that the situation created by COVID-19 has accelerated such new ways of working. We have been digitizing our services in a safe and controlled way for many years, and the use of technology, including remote working, remote surveys and inspections both in maritime and on land, as well as remote auditing for assurance certification will become a greater part of the new normal going forward. The concept of e-interactions is on the rise and this situation will only become more and more acceptable as best practice to improve efficiency, increase safety and maximize the use of our highly qualified employees.
In our marine and offshore businesses, our remote services are underpinned by our LR Remote app. Using the app, crew members can share video and audio with an LR technical specialist and other relevant parties, such as a flag representative. The LR Remote app enables survey requests to be coordinated and channeled to our global surveyor network. To strengthen our support in this area, we have now put in place a global team of remote survey champions – a group of dedicated subject matter experts fully focused on developing our remote surveying capability, The team is located all over the world in key marine and offshore hubs, including: Rotterdam, Hamburg, Bremerhaven, Copenhagen, Piraeus, Cadiz, Southampton, Hull, Houston, Miami, Kobe, Yokohama, Guangzhou, Seoul, Dubai and Singapore, but totally integrated through technology to provide a follow the sun capability to our client and partners.
In addition, LR continues to work collaboratively with flag states, regulators and other industry partners to drive consistency for remote working practices across the International Association of Classification Societies (IACS), transforming the way class societies provide their services in the digital age not just during the COVID crisis, but in a systematic and safe way for the future.
How were you best prepared for this ‘Black Swan’ event?
You can’t prepare for every emergency, but you need to ensure that people are empowered to act swiftly, effectively and safely when faced with crisis. You need to communicate, communicate and communicate. You also need systems that will support you to continue to serve your customers in a flexible way. I’m pleased to say at LR we have invested heavily in such systems over the last 5 years and these systems, processes and people have enabled the transition to working from home for our office-based staff quite smooth. While there are parts of the world still struggling to contain the outbreak, China’s relatively rapid COVID-19 recovery is cause for some optimism and LR teams in the country have returned to the office. Regular and effective communication between our leaders and the wider team and the sharing of knowledge with clients and competitors alike have supported the many decisions we have had to make quickly throughout this unprecedented situation. Many of the lessons we learnt when first responding to the situation in Wuhan have proven invaluable in determining our global COVID-19 response and understanding of how we can better support each other – both within LR and throughout the maritime industry.
When the smoke clears and there is a return to normalcy, what areas will you strengthen to prepare for the next event of this magnitude.
As an industry, we have to embrace the acceleration of the safe use of digital techniques to equip Classification Societies with the means to provide the safety assurance of ships and assets remotely, reducing the necessity to get personnel on board ships.
Therefore, we will continue our investments in digitizing our services so that it becomes more the norm rather than the exception. This would lead to traditional physical attendance surveys becoming enhanced and supplemented by remote surveys and data, through the use of digital technology such as digital twins, which would build our confidence that safety levels and availability of ships can be maintained during periods when we cannot get on board.
In addition, we strongly maintain that the climate emergency is an event of the same magnitude, just with a different time domain to COVID-19, where air pollution kills an estimated seven million people worldwide every year (https://www.who.int/airpollution/news-and-events/how-air-pollution-is-destroying-our-health). Whilst shipping only contributes a small amount to the overall climate emergency picture, we as Lloyd’s Register will continue to actively drive the decarbonization of shipping by providing the maritime pathways to illustrate the optimum solutions for future ship technology, through a combination of technology, investment and community readiness levels to allow the industry to make the right decisions for the future.