The Greek shipping in the 4th industrial revolution

NICK VOSNIAKOS

Department of Business Administration

University of Macedonia

The framework of the Greek shipping

Trade constitutes a crucial factor for the development of a nation. It helps the countries to exploit their comparative advantages in the production process of some of their products and benefit through their exports. From ancient times, Greece has developed strong maritime power and a long tradition to help that. Undoubtedly Greek shipping holds the 1st place in international trade, compromising one of the greatest industries in the country, contributing 7% to the GDP. The Greek-owned fleet adds up to 4585 ships, with a total capacity of 342.75 million tons deadweight (dwt), representing 19.19% of the global fleet in dwt and 48.29% of the European Union fleet, exceeding 100 billion dollars in value.

The separation of the shipping industry can be done either based on the carry load or based on the ships that are used. This way we can group the shipping industry into 4 sections, ferry shipping, pleasure shipping, energy shipping, and trade shipping. Ferry shipping includes the transportation of people and vehicles either for professional-personal purposes or for tourism. In this segment the Greek ferry shipping, according to the Foundation for Economic & Industrial Research (IOBE), remains one of the biggest in Europe as through this is carried out 17% of the maritime passenger transportation of the EU, having a great market share.

In the pleasure segment, Greek shipping has a very limited presence in the global market, with very few Greek cruise ships. In previous years there were many more owned cruise ships and the ship owners were the first that invested in this segment, during the 50s, while in the 70s Greece had the biggest fleet of cruise ships around the world, organizing voyages in different places of the world, combining its two strongest industries (shipping and tourism) into one. However, after 1990 the powerful labor unions, the revocation of the cabotage rights, and the high operating costs, Greek cruise ships faced severe problems, due to the protectionism of this industry. As a result, Greek cruise companies withdrew their investments giving their place to big American, Italian, and Norwegian companies. Now there are not many cruise ships with the Greek flag and this creates an opportunity to open the market of homeporting, the allowance of foreign cruise ships to have their home ports in Greek islands and not just passing by through them, boosting other segments of the Greek economy, like tourism. It is worth noticing that within the pleasure shipping category is included the yachting industry which shows an upward trend in recent years but it refers to a niche market, with a smaller demographic group than this of cruises.

The greatest competitive advantage of Greek shipping is the segments of energy and trade. The Greek fleet has a strategic role in the transportation of trade and energy worldwide and particularly in the EU, which depends on shipping for the transportation of the 75% of its global trade volume. In the energy market, Greek shipping controls a cumulative 52,23% of the global liquid cargo transportation. It consists of the transportation of oil, using oil tankers, the transportation of liquefied gases with gas carriers L.N.G. / L.P.G., and the transportation of chemicals or other products, using tankers. On the other hand, Greek shipping takes the lead in trade. The transportation of bulk cargo represents 49,58% of the global market, while owns a small but significant percentage (5,94%) in the transportation of containers with container ships. The figure below represents the framework of Greek shipping collectively.

It is obvious that Greek shipping has a leading role in the global energy and trade market, retaining constantly the first place and influencing international relations. This can constitute a source of diplomatic and geopolitical power for the Greek side. Nevertheless, in order to retain its leading role, this exciting trajectory and growth of shipping should continue and be sustainable in the future, following the future trends and needs of every era.

Future trends in shipping

The future of Greek shipping is inseparably linked to the 4th Industrial Revolution. According to Klaus Schwab, an economist and founder of the World Economic Forum, this is a series of new technologies that preserve the natural, digital and biological world and have an impact on all sectors, economies, and industries. Automation, artificial intelligence, robotics, nanotechnology, big data, cloud computing, machine autonomy, cognitive computing, machine learning, and the Internet of Things are some concepts that will play a decisive role in the years to come. Shipping should adapt to these concepts and adopt them to continue to play a leading role in the international arena and also to expand its market share.

Every day, an incredibly large amount of data overwhelms shipping groups in terms of prices, timetables, routes, costs, merchandise, returns, revenues, expenses, accounting, etc. All of these are just being used to complete day-to-day operations and are, at best, assembled into annual reports, to help in the strategic planning of companies. However, if these data are stored and analyzed over time, they may show a different picture of both the shipping company and the external economic environment of the entire market, creating new opportunities. This analysis is carried out with the use of big data, historical data that has accumulated over time and comes from various company functions, including complex information and machine learning, the development of algorithms that can learn from the data and make predictions about them, in order to show us different patterns from another perspective that we wouldn’t be able to know otherwise. Thus, with the use of technology and computers combined with statistical science and operations research, we can get better information on the course of the shipping company and get optimized strategic decisions.

Machine learning can be combined with Artificial Intelligence, the IT field that deals with the design and implementation of computational systems that mimic elements of human behavior to better solve problems. Particularly it can be important in the transportation of energy where the liquid cargo is particularly dangerous and a human error can be devastating. They can also be used, in conjunction with other techniques, for risk assessment, risk measurement, and business fraud with the help of the new cognitive computing science.

Finally, the Internet of Things can radically change the way that a shipping company operates and manages its fleet. The Internet of Things allows the connection of all electronic devices to each other and their remote management. This means that the only prerequisite for remote control is the Internet connection. These devices can be machines, computers, sensors, circuits, cameras, or anything else electronic on board. With this capability, specialized personnel can remotely deploy from the company's offices and resolve complex problems on any ship of the company's fleet wherever it may be. Furthermore, IoT combined with cloud computing that allows access and sharing of stored data, which may be available at any time, can create a very powerful information exchange network. This information can be produced from data from all ships of various shipping companies, stored in a common space, and exploited by all Greek shipping companies, following strategic alliances by the ship owners of the industry. These data may refer to live prices, weather conditions, common problems, fares, etc. creating a live interactive platform for all companies in the industry, giving an international competitive advantage for the Greek shipping companies against their foreign competitors, rapidly solving problems and making quick decisions.

However, the adoption of these technologies poses risks and makes shipping groups prone to cyber-attacks. That is why they should be developed in a sustainable way, in conjunction with the development of security and control systems, not to risk confidential information becoming public, lost, or falling into the wrong hands. With the advent of the 4th Industrial Revolution, the important role is not played by the information - which is abundant and constantly generated - but by the management of information and the creation of knowledge from it.

Connecting shipping with the supply chain

In recent years, particular emphasis has been given to logistics and, more generally, supply chain management. Several companies have begun to place greater emphasis on transport, procurement, and storage of products in a more organized way, while infrastructure projects are rapidly advancing in Greece on either land or sea transport, privatization of ports, airports, and rail infrastructures.

The rising of the 4th Industrial Revolution, in particular the development of robotics, automation, and machine autonomy, can change the production process. Jobs requiring enough workforce will be replaced by robotic machines, transforming the production from labor-intensive into capital-intensive. This can be exploited by the shipping industry by participating more actively in the supply chain.

It is well known that in maritime transportation the negative elements are the long voyage times and waiting in ports between different destinations. These delays can be exploited by shipping companies, placing robotic machines inside the ships to produce the final product. Instead of simply transferring a finished product from the factory to the final consumer, they can perform the final production stage, during this waiting time, using autonomous machines that can be managed remotely by their charterers through the Internet of things. For example, beverage bottling or product canning, or the assembly of various parts that are the final stage of the production process and routine procedures, can occur. This would reduce overall time throughout the supply chain and increase profits for shipping companies as they would offer a new extra service. Apart from product refinement, it is possible to work in reverse, i.e. raw materials are converted into semi-processed materials as they are transported from the supplier to the factory for processing, such as grain cleaning. In this new way of production-transportation, all you need is the transfer and fast adjustment of the robotic machines for each customer. No additional human capital is required from shipping companies, as automated machines will take on a production stage during the voyage without the active involvement of people. This creates a new market with the minimal competition that we can exploit instead of continuing the tough competition in saturated markets, according to the blue ocean strategy. This is an innovation that can open up a new shipping industry that has not existed so far.

With the use of new technologies, shipping increases the quality of transportation and offers new services. This contributes positively to the Greek economy because it stimulates the extroversion of Greek companies and gives them the opportunity to use new services and make their goods competitive. However, some professions may be lost, but new, with higher added value, will be created, with technology and information as their main pillar. Today the cost of using robotic machines and stand-alone machines is prohibitive. But in the next 15 years, with the evolution of technology, it will become viable. Greek shipping should be prepared and ready for the transition so that it maintains its leading presence.

This was my winning paper that gave me the first place and many awards at the "24th economia student contest" in Greece. This is a very reputable economic contest that takes place every year in Greece. The 2018 topic was about the future of the Greek shipping, calling all Greek university students to write a paper presenting their economic ideas and support them with scientific arguments. My paper was entitled "The Greek shipping in the 4th industrial revolution" presenting the future trends of shipping. I was very honored to receive the 1st award on 31 May 2018, for the best paper between approximately 200 participants in a very lovely ceremony in Athens.

Nick Vosniakos at the end of the prize giving ceremony with the awards