Key trends influencing the maritime sector
- Climate change
- Continued population growth and urbanization
- Food and water demand
- Increasing expectations for health, safety, and security
- Developing countries will increasing their share in global economic growth
- Increase in energy consumption
- Fast development of information and communication technologies
It is expected that climate will dramatically change, namely increase of cold temperature and warm temperature extremes, more severe rainfall and flooding, higher frequency of storms and continuous and increasing polar ice melting.
The impacts of climate change are regionally different. Investments are needed to make transport infrastructures, but also assets like aqua farms, oil and gas platforms, etc. more robust against the expected more severe weather conditions.
For shipping, the increased intensity and frequency of oceanic storms will increase weather routing, which could lead redirecting of ships along longer but less storm-prone routes. Ferries and fishing vessels are expected to experience more events in which operation will not be possible. Continuous and increasing polar ice melting will result in the utilization of accessible new sea routes, especially the Northwest Passage, along the northern coast of North America and the Northeast Passage, along the northern coast of Russia. The exploitation of expected significant oil and gas resources in arctic areas will be seen.
Based on a higher public awareness towards energy efficient and environmental friendly operations environmental regulations related to environmental impacts from offshore production facilities like (carbon) emissions and water usage are expected.
With the expectation of increasing exploitation of oil and gas resources in deeper waters and harsher environments, of increasing number and size of wind and aqua farms in combination with the expected increase in more severe weather conditions the blue growth industry will face more regulatory pressure for safe and environmental friendly operations.
With the increase of more severe weather conditions coastal infrastructure, such as ships fairways, dikes, but also wind and aqua farms, oil and gas platforms will be subject to more stress and damages and need to be designed and/or improved in order to withstand these more severe conditions. The increasing possibility due to polar ice melting to navigate in the arctic region will need to build up and/or improve existing infrastructure for safe shipping and/or exploitation of resources.
Continued population growth and urbanization will increase demand for focused waterborne services and for the upgrading of infrastructure.
With continued population growth in Africa, Asia and South America during the coming decade and the continuing trend towards urbanization, demand for waterborne services will increase between these growth regions and will in particular need to focus on serving future mega-cities. This also requires an upgrade of the respective infrastructure.
Population growth leads to:
- Increasing urbanisation will lead to new and upgraded port infrastructure
- Increased waterborne transport in general
- Increased use of ferries, cruise ship and leisure craft in particular
Food and water demand
Population growth, increasing urbanization and industrialization lead to increased food and water demand and at the same time availability of food and water is reduced, principally because of deteriorating conditions to grow food and access to clean water due to climate change effects. This will lead to an increasing demand for waterborne transport and related infrastructure as well as aquatic food production volumes.
The rush of people to coastal areas and their urbanization will continue, reducing the agricultural capacity while demand for food will rise at least 35% by 2030. While nearly half of the world population will live in areas experiencing severe water stress, demand for water will rise at approx. 40% by 2030. The rapidly growing water demands from cities, industry and electricity suppliers will challenge water available for irrigation which in turn challenges food production.
Population growth directly increases scarcity in almost every aspect of life; from food and water, to production materials, to clean air and also to ocean pace. This will lead to an increasing demand for waterborne transport and related infrastructure as well as aquatic food production volumes.
Water becomes a more important location factor for people and production. At the regional level, scarcity of water compromises economic growth. This will lead to more concentration of population and economic activity in location with a more secure water supply, provided by either local production or increased transportation of water.
The distance between the location of food production and where food is needed will increase due to concentration of people in urban agglomerations. This leads to increased transport between production locations and consumers and transport of food and water from areas with a surplus to areas with shortage.
Due to increasing prosperity, urbanization and industrialization leads to changes demand and availability of food and water. The availability is under pressure, because of climate change and sustainability issues. Increased prosperity leads to changes in diet, especially increased consumption of meat and fish.
With the growing demand for food and fresh water aquacultures and desalination will become key drivers. Multi-use offshore platforms will be developed, aiming at reducing costs, by combining different offshore production facilities like wind energy with aquacultures.
Looking at the fishery industry, there is a growing concern for sustainability issues. These include overutilization of fishing grounds and declining fishing populations and the influence of large fishing vessels on the economic viability of local fishers in developing countries. The abundance and distribution of fish populations shifts because of climate change, decreasing fisheries outputs.
Health, safety & security
Civil society, consumers and workers will become less willing to accept negative environmental and social externalities of economic activities in the maritime sector such as, e.g., accidents, water pollution, and unsafe working conditions. The expected increasing scarcity of qualified personnel will also motivate the sector to improve working conditions.
Societal expectations will, therefore, lead to the maritime sector becoming more socially and environmentally responsible by complying with stricter regulations and possibly by adopting voluntary standards. The impact of societal expectations related to health, safety, environmental and security on the maritime sector is rather moderate and will not fundamentally alter the sector’s future prospects.
Fuel oil maximum Sulphur content as loaded, bunkered and subsequently used on board were introduced for Sulphur Emission Control Areas (SECA) and outside them with a stepwise increase in the Sulphur content restrictions. Similarly, NOx emission reduction from 2016 require newly built ships to meet the 80% Tier III criteria when operating in a NECA, as shown in the figure below. Increasingly stricter regulation of emissions and widening of respective control areas is expected to continue. Abatement technologies have therefore been under development for the maritime market for several years based on technologies from the energy utility industry and transport sector.
Considering that Society’s tolerance for social and environmental externalities will decrease and stricter regulations will follow, the waterborne sector will have to implement more measures to prevent accidents, reduce air emissions and water pollution as well as improve working conditions and security.
Regulations are in place and more under discussion to limit emissions form international shipping in the near future. New safety and security regulations are also continuously released for application to international shipping, with less public notice, however. Health standards will remain national or even local implementations.
Initiatives and standards will increasingly take into account the whole life-cycle of a ship, from raw materials used in shipbuilding to final dismantling.
Growing public expectations related to environmental protection will result in more non-governmental and industry-led initiatives with new and additional voluntary standards.
The increasing expectation of society to the necessity of a sustainable use of the fishing resource will result in a slowdown and eventually stop of overfishing the seas and in a restoration of the fish stocks. The trend for higher population density in coastal areas in combination with Society’s increased environmental awareness will require developing coastal areas in a more sustainable manner.
Increasing ship sizes will require fairway and port infrastructures to be further expanded and developed to ensure safe ship transport and maneuvering. Waterborne infrastructures will also have to account for first (semi) autonomous ships operations.
Future economic growth will be increasingly driven by innovation instead of population growth. The middle class in the developing countries will increase and will drive consumption of technological products which will increase the need for raw materials and manufacturing and will also increase waterborne transport of manufactured goods. As Africa will gradually replace Asia as the region with the highest growth rate, waterborne trades to and from Africa will increase.
While in many OECD countries GDP development is predicted to grow steadily in a lower single digital number (e.g. Germany approx. 1%-2% p.a.), developing countries will have higher growth rates, e.g. China and India are predicted to at least double their GDP from 2015.
[Economic growth is usually measured as the percentage growth rate of real gross domestic product or the real GDP (Statistics of the Growth of the Global Gross Domestic Product (GDP))]3
The progressive economic development of countries in Asia and Africa will drive the growth in the demand of bulks, oil and gas for their industrial development, will increase the output of manufactured products to the world market and also increase their populations’ demands for consumption. Transport of goods to and from these countries and exploitation of natural resources in their economic zones will increase.
The increasing volume and the improving competitiveness of products produced in African and Asian countries will increase manufactured goods seaborne transport between these countries and the developed world.
The increased demand of the increasing Middle Classes for “high tech” products and the scarcity of onshore mineral resources will lead to an increased exploitation of raw materials offshore, requiring seabed mining and related technologies to be developed for safe and environmental friendly exploitation of the ocean space.
Increasing trade from and to developing African and Asian countries will require upgrading existing and building new port facilities.
Worldwide in 2030, the majority of the required energy will still be produced from fossil sources. There will be a nearly equal share between coal, oil and gas. Largest growth rate, however, will be seen for alternative energy sources.
Based on an increase of oil price in the long-term, the trend for exploration of fossil energy sources will continue to offshore locations rather than onshore and to deeper waters and also harsher environments. Also, more complex energy sources such as tar sands or methane hydrates will be exploited.
Energy production on offshore wind farms will significantly increase and also other water-based energy production devices using wave and tidal current energy will have a larger market.
The world primary energy production grows at 1.5% p.a. from 2012-2035. The region Asia Pacific provides 47% of the increase in global energy production. There will be a similar share of fossil energy consumption between oil, gas and coal, these remaining to be the main energy sources. While energy consumption will grow marginally for OECD countries developing countries will increase their energy consumption by approximately 75%.
Concerns about the environmental impact of the current energy system in combination with an expected long-term increase in oil prices, increasing concerns about the geopolitical situation in major energy producing countries in combination with the EU target to increase energy autarchy and in particular, by 2030, to have a 27% share of renewable energies in the energy mix, will result in an increasing diversity of energy sources in all waterborne sectors.
With the aim of reducing greenhouse gas emissions in the EU and globally, the production, consumption and transport of “clean” fuels such LNG, methanol, hydrogen, bio fuels will increase significantly.
The trend for exploration of energy sources in deeper waters and harsher environment will require development of ships and production platforms capable of operating in these areas in the most safe, efficient and environmental friendly way and relevant infrastructure development for supporting, monitoring and maintaining the assets.
With the global aim at reducing greenhouse gas emissions environmental metrics such as SEEMP, EEDI will be further developed and become stricter and the number of ECAs will further increase. This will require ships to become for environmental friendly and energy efficient. Hybrid propulsion systems, using alternative energy sources, hydrogen in fuel cells and “cleaner” fuels in combustion engines will address this trend.
The volatility in oil and gas prices will lead to the need of “future-proof” vessels, which have built-in a design flexibility to allow for easy retrofitting and adjustments of propulsion plants in accordance with market conditions and regulatory requirements.
A high oil price level and the pressure on emission control will result in an increased transport of natural gas and other “clean” fuels around the world. With the U.S. shale gas revolution LNG exports will increase from the U.S. to Asia Pacific and other markets, where gas prices are much higher than in the U.S.
Current gas tanker sizes will increase due to economy of scale effects and the enlargement of the Panama Canal allowing VLGC (very large gas carriers) to cross. The increasing tanker size will need new tank technologies to be developed.
The pressure to reduce fossil energy sources from the energy mix will increase the production of renewable energy significantly. Offshore wind farms and floating energy devices for wave, tidal current and ocean thermal energy conversion (OTEC) plants will significantly increase in number and size.
The significant increase of offshore wind energy production, the need for wind energy buffers and the trend for “clean” fuels for ships and other transport devices will result in developments to transfer wind energy on platforms into other sources like hydrogen. Platforms will need to have gas storage and transfer-to-ship facilities as well as bunker facilities for ships using hydrogen as fuel.
Increasing awareness of environmental impact of offshore production facilities will require that the industry follows higher environmental and safety standards.
With the increase in production and consumption of alternative fuels like LNG and hydrogen the infrastructure in ports need to be developed covering storage facilities for further distribution with ships and other transportation means, charge and discharge facilities for tankers, bunker facilities for ships using such fuels for propulsion. This will be required for ports in the coastal areas, for inland waterways, but also for offshore platforms which generate “clean” fuels from wind energy.
With the aim of reducing greenhouse gas emissions and generate own power supplies cleaner and cheaper ports will make more use of renewable energy sources on their own premises.
Based on the expectations that economy of scale effects will be further used for especially gas carriers and container vessels, relevant port infrastructures will need to be improved/developed for such ship sizes.
Based on the current difficult market situation it is expected that the number of ships to be scrapped will increase at least in short-term. In combination with an increased pressure on ship owners to use scrapping facilities with adequate environmental friendly production standards there is opportunity for more European yards to develop scrapping services and provide the relevant infrastructure.
With massive growth in computational capacity and data storage capabilities, globally accessible networks and cloud infrastructure with increasing bandwidth, availability of smart devises (Internet of Things) and smart and cheap sensors, a significant increase of digitalization in all waterborne sectors is expected.
The increasing ICT capabilities will lead to a higher interconnectivity of systems, which are more software dependent and contain of smart devices. Higher automation of systems and the availability of smart sensors will provide the opportunity to operate assets remote controlled, semi or fully autonomous. Complexity of systems will further increase and challenges the way they are tested and maintained throughout their entire life-cycle.
With the availability of globally accessible and more powerful data networks and cloud infrastructure interconnectivity between sea and shore will increase significantly, meaning that sea-based operations will become more supported and controlled by land-based operation centers.
The increasing interconnectivity between technical systems, the opportunities to have autonomous operations offshore, or to support and control offshore operations from shore, requires to secure systems and operations against cyber-attacks, but also against expected more severe weather conditions due to global warming.
The growing digitalization in all waterborne sectors will result in using electronically data as substitute for current legal paper documentation. It will also require solutions related to data ownership, data access, intellectual property right issues.