Jeremy A. Herschaft and Matthew J. Thomas
February 6, 2020, marked an important milestone for the implementation of blockchain technology in the container shipping sector, as the Federal Maritime Commission (“FMC”) completed its review of an agreement among five major carriers to collaborate on a new blockchain platform called “TradeLens,” which aims to modernize the international logistics arena. Blockchain itself has already received considerable attention in other commercial areas (particularly digital currencies), and we have previously penned various articles on the basic structure of the technology, including Heads or Tails? Making Sense of Crypto-Tokens Issued by Emerging Blockchain Companies (Mainbrace, April 2019). The purpose of this article will specifically focus on the TradeLens concept, which leverages the shipping industry’s unique antitrust exemption to create standardized blockchain tools for a number of major carriers.
The TradeLens Concept
TradeLens was launched on August 9, 2018, through a joint collaboration between Maersk GTD and IBM. The TradeLens model seeks to apply distributed ledger technology to the global logistics industry and is described as an effort to “reduce the cost of global shipping, improve visibility across supply chains and eliminate inefficiencies stemming from paper-based processes. In short, to bring global supply chains into a more connected and digitized state—for everyone.”1 Shippers, freight forwarders, ports, terminals, ocean carriers, intermodal operators, government authorities, and customs brokers are the intended users of the electronic platform. Continue reading “All Aboard! Major Shipping Lines Secure Antitrust Immunity for TradeLens Blockchain Agreement”
Frederick M. Lowther
Much has been made of the future of electronic vehicles (“EVs”). Governments around the world are setting ambitious goals for EVs based on the notion that the vehicles themselves are carbon-free and thus a climate-friendly alternative to internal combustion vehicles. Among other things, the prospect of millions of EVs has supercharged the battery industry and spurred efforts to develop new energy storage technologies. So why not electric vessels, or vessels which are in other respects carbon-free?
There are many obvious differences between EVs and oceangoing vessels: size, weight, distance traveled, water-resistance, etc. Nonetheless, there is no inherent limitation on using an electric propulsion system for a vessel; it’s more a matter of scale rather than feasibility. The real issues are cost (capital and operating) and, just as important, the net environmental impacts.
Cost and Operational Considerations
On the cost and operational side, there are a number of key considerations. In listing the issues, I am focused on newly constructed vessels versus retrofits (but some of the same considerations would apply to retrofits). What is the weight of a battery/electric propulsion system versus diesel or turbine engines and a load of fossil fuel? Batteries are very heavy, and weight is a significant factor for vessel operations. What is the cost of the system(s) to keep the batteries charged, both at sea and in port? The single biggest issue with EVs is the operating distance between charges, and that would be a significantly greater issue with oceangoing vessels, especially those traveling over vast stretches of water. It’s the difference between hundreds of miles and increasingly frequent options for recharging EVs versus thousands of miles with no “in transit” recharging stations for oceangoing vessels.
To the extent that batteries are recharged in port, the time required for recharging becomes crucial since the in-port turnaround time for many vessels is very short, often measured in hours. If (as is highly likely) the vessels are hybrids (i.e., include engines or other devices that can charge batteries while the vessel is in motion), that adds to the cost/weight equation (as well as the environmental equation). What is the operating life of the batteries and what is the cost of replacing them and disposing of the spent batteries (another environmental issue)? Battery life/disposal has not (yet) been a major problem with EVs, but that platform is far different from an oceangoing vessel platform where the constant demand for power over long periods of time and against the resistance of water impacts battery functionality and life. Finally, batteries stacked in large bundles (as is the case for wind and solar generator storage installations) are known to have elevated fire risks. What is the cost of appropriate onboard vessel fire suppression systems? Continue reading “Carbon-Free Ships: The EVs of the Seas?”
Jeremy A. Herschaft and Michelle Ann Gitlitz
Over the past 18 months, members of the international maritime community have expressed a keen interest in exploring how 21st century blockchain technology can modernize the ancient world of seaborne commerce. Blockchain has in turn spawned many novel business ideas from various startup companies throughout the marine industry. These new business ventures all generally seek to employ blockchain to streamline the logistics process and to provide greater security and transparency to the commercial endeavor. At the same time, these companies are setting a new course through uncharted waters with respect to how they 1) generate startup capital, and 2) propose to conduct day-to-day business in the electronic, digital asset (or crypto) realm.
This article explores these dual business components using two types of digital assets: the “security token” to attract capital, and the “utility token” to carry out business interactions. Both are well suited for the maritime area, though maritime blockchain startup companies should be mindful of the regulatory requirements for implementing tokens into their business in the United States. Continue reading “Heads or Tails? Making Sense of Crypto-Tokens Issued by Emerging Blockchain Companies”
Joan M. Bondareff
The United States is on the precipice of developing a robust offshore wind (“OSW”) industry. This article reviews recent developments on the federal and state level that have made it so.
The Trump administration, while demonstrating a clear preference for fossil fuels, has continued the past precedents of permitting offshore wind farms. To date, the Bureau of Ocean Energy Management (“BOEM”) at the Department of the Interior has approved 16 commercial wind leases, and more sales in wind energy areas (“WEAs”) along the Atlantic Coast are expected later this year. A major auction was conducted on December 14, 2018, for three leases off the coast of Massachusetts, resulting in a total auction price of $405 million. Even BOEM found this to be a “bonanza.” The winners were Equinor (former Statoil), Vineyard Wind (Copenhagen and Avangrid renewables), and Mayflower (Shell and EDP Renewables). The West Coast and Hawaii are considering floating wind platforms.
The first commercial OSW farm has been in operation for over one year in state waters without any hiccups in providing clean reliable energy to the residents of Block Island, Rhode Island. European developers are partnering with U.S. companies to share their expertise in OSW development, and the production tax credit was left intact in the 2017 tax reform legislation.
These are all positive signs for the U.S. OSW market. In addition, the price of both wind and solar is declining and becoming more competitive with natural gas. Continue reading “The Vision Is Clearer—Offshore Wind Farms Are Appearing on the U.S. Horizon”
Joan M. Bondareff and Jonathan K. Waldron
We are seeing strong signs of a burgeoning offshore wind industry off the Atlantic Seaboard. While modest, the first offshore wind project, Deepwater Wind, is fully operational in Rhode Island state waters, bringing low-cost renewable energy to the residents of Block Island. In addition, new projects in Massachusetts and Rhode Island, described further below, are setting the stage for the construction of much larger offshore wind farms in federal waters. From Maine to North Carolina, governors and states are lining up to be a part of the offshore wind revolution. This is good news for developers, suppliers, consumers, and the environment.
Why This Is Happening Now
There are several reasons why offshore wind is taking off now. In the first place, the price of offshore wind is coming down—largely based on Europe’s experience with offshore wind and bringing this experience to the United States as lessees, partners, and contractors, as well as the development of improved and more efficient turbines and other related technologies. Indeed, European developers and contractors are now looking to partner with U.S. interests. In addition, companies are finding ways to work within the framework of the Jones Act, as discussed in more detail below. Continue reading “Stronger Winds Blowing Off the Atlantic Coast”
Sean T. Pribyl
Advanced automation in the international maritime industry has officially arrived on the international stage, as the International Maritime Organization’s (“IMO”) Maritime Safety Committee (“MSC”) 99th session furthered the discussion on Maritime Autonomous Surface Ships (“MASS”). The topic garnered a great deal of attention, with the IMO receiving 19 papers from industry and various countries in support of the MASS regulatory scoping exercise. The international interest in this topic echoes sentiments of the IMO Secretary-General Kitack Kim, who recently acknowledged that digitalization—including autonomous ships—remains at the top of his agenda, along with climate change and seafarer issues.
It is clear that technology continues to outpace the regulators, however, and more is still needed in the way of cultural acceptance. In fact, the industry challenges that the IMO faces over the next decade harkens those of disruptive technologies at the end of the 19th century with the advent of the automobile. Continue reading “Advanced Automation in Shipping Takes Center Stage at IMO”
Mainbrace | March 2018 (No.1)
Sean T. Pribyl
Emerging technologies continue to permeate various sectors of the maritime industry. As with the advent of steam power, electrical energy, and computerized automation in prior industrial revolutions, the maritime industry is experiencing advances in cyber-physical systems and digitalization in this “fourth industrial
revolution.” Innovative technologies are transforming industries across the globe, and in 2018, these three technological developments are worth watching: Smart Ships, drones, and innovative collaboration. Each will continue to impact maritime operations.
In 2018, expect the marine sector to continue the trend towards advanced automation in so-called Smart Ships. We previously outlined (see Mainbrace: June 2017, No. 3) the benefits, practical uses, and challenges of Unmanned Surface Vessels (“USV”) or Maritime Autonomous Surface Ships (“MASS”) (hereafter “Smart Ships”), and how evolving ship intelligence will impact future vessels, shipyards, vendors, and design and engineering firms. Continue reading “Three Technological Developments for the Maritime Industry to Watch in 2018”
Mainbrace | October 2017 (No.4)
Keith B. Letourneau and Lauren B. Wilgus
As we previously discussed in our March 2017 issue of Mainbrace, blockchain technology is continuing to prolifer- ate throughout all aspects of industry, including shipping, with Hyundai Merchant Marine (“HMM”) recently completing its first pilot voyage from the South Korean port of Busan to the Chinese port of Qingdao employing blockchain technology. Continue reading “Fintech Alert: Marine Insurance Embraces Blockchain Technology”
Mainbrace | June 2017 (No. 3)
Alan M. Weigel and Sean T. Pribyl
Once thought to be a mere concept on the distant horizon, Unmanned Surface Vessels (“USVs”) are garnering increasing attention in the maritime industry as a means to cut costs, increase efficiency, and enhance safety. While some view USVs as more akin to futuristic science fiction, in reality, unmanned vessels are far from a novel concept—Nikola Tesla envisioned maritime drones in his November 8, 1898, patent for “Method of and apparatus for controlling mechanism of moving vessels or vehicles.” More recently, unmanned and autonomous technology has been developed in multiple industries, in particular in the subsea sector.
Projections of practical implementation into the maritime surface sector have rapidly shifted from a mere concept decades away to the immediate future. Today, innovators are not only developing USV technology, but are also conducting on-the-water testing of USVs. As a result, the potential applications and benefits of unmanned technologies are driving investment and shaping the conversation of both regulators and the industry. The question is no longer if, but when. And the answer to when, in some regards, is now.
Continue reading “The Future Is Now: Unmanned and Autonomous Surface Vessels and Their Impact on the Maritime Industry”
Mainbrace | March 2017 (No. 2)
Keith B. Letourneau
A recent news article about an oil commodities transaction sparked considerable interest in the maritime transportation sector when worldwide commodities trader Mercuria announced it would employ “blockchain” technology to carry it out. Previously, blockchain technology served as the foundation to secure bitcoin transactions. Now, this technology promises to supersede hundreds of years of maritime commercial practice by replacing bills of lading and attendant transactional documents and substituting a secure online mechanism to buy and sell goods. IBM CEO Ginni Rometty, in an opinion piece in the Wall Street Journal on November 7, 2016, wrote that “[t]oday, blockchain—the technology behind the digital currency bitcoin—might seem like a trinket for computer geeks. But once widely adopted, it will transform the world.”
Continue reading “Blockchain Technology: Securing and Transforming Commercial Transactions, and Its Implications for Maritime Trade”