The development of large autonomous merchant vessels, also known as Maritime Autonomous Surface Ships (“MASS”), has progressed at a significant pace with new vessels entering operation every year. Almost every maritime nation is engaged in developing autonomous vessel technologies, and several countries have designated parts of their national waters as test sites for MASS.
In Norway, the YARA BIRKELAND recently began a two-year testing period of the technology that will certify the vessel as an autonomous, all-electric container ship. In Japan, the first tests of the fully autonomous container ships MIKAGE and SUZAKU took place recently in coastal waters of the Sea of Japan and Tokyo Bay. The unmanned ships transited between ports using a system of radar and lidar sensors, cameras, and a satellite compass to navigate and pulled themselves into berths at the end of their journeys.
Big data is not a “trend” or fad; big data is a concept of gathering, deciphering, and analyzing massive quantities of information to ultimately reveal patterns and associations, and it’s here to stay. Companies have proven how useful it can be to interpret performance trends to expose areas of vulnerability or underperformance within a company. Big data can be used to make strategic decisions within a company’s operating profile. In particular, the maritime industry is using big data to revolutionize the way engine performance and maintenance is carried out aboard vessels. Understanding how to effectively capture data—and the risks involved—will enable users to apply big data in ways never considered before.
The Value of Big Data
The maritime industry has progressed at a moderately stable speed with various innovations to proven mechanical systems, such as energy reducing pumps and updated models of equipment; however, compared to other industries it is decades behind digitally. To capitalize on the benefits of big-data technology, maritime companies must define the goals they will achieve, such as reducing fuel consumption. By clearly defining a goal, systems can be constructed to deliver the required data points.
Once the goals are defined, sensors and instruments can be installed onboard to capture new data points that, when spliced with existing readings already extracted from the vessel’s automation, such as weather patterns and engine load signals, create interconnected data ecosystems that can be used to examine performance.
The Baltic and International Maritime Council’s (“BIMCO”) Documentary Committee adopted several new clauses and contracts at its recent meeting held on January 25, 2021. Included were: (1) a new charter sanctions clause, (2) a clause promoting transparency and dialogue between owners and charterers, and (3) tug, barge, and floating hotel contracts. Given the prevalence of U.S. sanctions against myriad governmental and private-party actors worldwide, the scourge of the COVID-19 pandemic, and the construction advent of new offshore wind farm structures, each of these clauses and contracts warrant consideration by maritime law practitioners and commercial operators alike.
Sanctions Clause for Container Vessel Time Charter Parties 2021
In recognizing the complexity of international sanctions regimes, coupled with the fact that they consistently change as the number of new restrictions continues to increase, BIMCO issued a sanctions clause for charter parties in the container trade in an effort to assist interested parties in complying with the worldwide sanctions regulations. This new clause was designed as part of an initiative to create a library of sanctions clauses that reflect the individual needs and characteristics of different trades and operations, as well as provide greater understanding of the responsibilities assumed by owners. It is the last step in a triad of sanctions clause updates, which comes more than a year after BIMCO’s revised standard sanctions clauses for time and voyage charters. As the various shipping subsectors possess separate risks associated with different market realities, BIMCO tailored this clause to address the characteristics of the container industry, specifically to address: (1) transactions with a “Sanctioned Party,” and (2) voyages involving a “Sanctioned Cargo.”
Blockchain technology ensures security and transparency within transactions. The endless possibilities and solutions that blockchain can provide to a multitude of industries and consumers created a surge of interest over the past several years. Recently, the need for blockchain technology was amplified when a single microbe showed just how interconnected the world is and how fragile supply-chain networks and logistics providers are when unexpected demand for critical goods (personal protective equipment and testing kits) arose due to the COVID-19 pandemic.
Global Supply-Chain Disruption
The various levels of regulations imposed by national and local governments throughout the world because of COVID-19 concerns delayed and disrupted virtually all supply-chain networks. For example, customs clearance processes have become more laborious and many factories have converted into producers of essential equipment, resulting in the delayed assembly of integral components relied upon by other manufacturers.
Before the global pandemic, companies were racing to become as lean as possible, cutting costs and sourcing multiple components from a variety of manufacturers in different countries. Reducing the costs of making a product would allow for more profit. Producers and manufacturers used complex supply-chain networks to maximize comparative advantage strategies. Often, products would be shipped to another country merely to perform a certain task, or to simply add a singular component, and then the item would be returned to origin for sale to a consumer. Continue reading “The Impact of COVID-19 on Blockchain Advancement”
The House of Representatives passed legislation, H.R. 4447, the Expanding Access to Sustainable Energy Act of 2019, on September 24, 2020, that included a provision from Representatives Garamendi and Lowenthal (“Amendment 33”) to amend the Outer Continental Shelf Lands Act (“OCSLA”) that would confirm the Jones Act applies to all offshore energy development on the Outer Continental Shelf (“OCS”), including wind energy. Passage of this provision now appears imminent, as it has been recently included in the National Defense Authorization Act (“NDAA”). From an operational standpoint, while most offshore projects are planned with Jones Act compliance in mind, enactment of this provision would be a welcome development to stakeholders and bring needed clarity to renewable energy development offshore.
Background
The Coastwise Merchandise Statute, commonly known as the Jones Act, has evolved over time. The U.S. cabotage laws date back to the founding of the Republic and were enshrined in their current form in the Merchant Marine Act of 1920. These were originally laws that dealt with transportation issues for domestic voyages. However, as time progressed and production of marine resources became feasible, the U.S. Congress passed OCSLA, which extended federal law to installations on the OCS.
In the past few years, the commercial use of facial recognition technology has advanced at an explosive rate, expanding into numerous industries and trades. For instance, facial biometrics is increasingly relied on by airlines and airports across the globe; a similar trend is starting to take hold in the maritime industry, particularly in the cruise sector.
While this expansion is occurring, states and cities across the country—as well as the federal government—are attempting to enact strict laws regulating the use of facial recognition technology by commercial entities. Facial recognition has also recently emerged as an increasingly popular target for bet-the-company privacy class action litigation.
As the cruise industry moves toward the widespread adoption of facial recognition technology, companies should implement robust, adaptable biometric privacy programs to ensure compliance with today’s growing body of law to reap the benefits of this exciting technology while mitigating liability exposure.
Overview Facial Recognition Technology
Facial recognition technology involves the use of facial “biometrics”—i.e., the individual physical characteristics of a person’s face—to digitally map one’s facial “geometry.” These measurements are then used to create a mathematical formula known as a “facial template” or “facial signature.” This stored template/signature is then used to compare the physical structure of an individual’s face to identify that individual.
Long-awaited amendments to the International Convention for the Prevention of Pollution from Ships (“MARPOL”) entered into force on October 1, 2020, which expressly permit the use of electronic record books for certain MARPOL-required logs. Although the United States reserved its decision regarding adoption of the amendments when they were approved by the International Maritime Organization (“IMO”) in May 2019, the United States ultimately accepted their adoption in accordance with the tacit acceptance procedure. This is a significant and welcomed development.
Background
Electronic record books have been the subject of much debate and consideration at the IMO and within the United States for a number of years. During MEPC 74 in May 2019, amendments were approved, revising MARPOL Annexes I, II, V, and VI to allow the use of electronic record books approved by the vessels’ Administration for the Oil Record Book (“ORB”), Cargo Record Book, Garbage Record Book, and Annex VI air pollution prevention recordkeeping requirements. In adopting the amendments, the IMO stated the use of electronic record books “should be encouraged as it may have many benefits for the retention of records by companies, crew, and officers.” These amendments entered into force on October 1, 2020, although a number of flag States believed the previous MARPOL language provided them with the discretion to allow the use of electronic record books and had already approved their use on vessels for some years. Even so, the permissibility of using electronic record books to meet MARPOL requirements is now clear.
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”
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?”
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”
