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”
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.
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”
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”
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.
Smart Ships
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”
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”
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.
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.”
Cyber risk management continues to be one of the most significant challenges currently facing the maritime industry. With an overreliance on information technology (“IT”) and operational technology (“OT”), the shipping industry is vulnerable to cyber risks, cyber threats, and cyber attacks that could result in significant damages and loss, including loss of business and damage to reputation and property. While the maritime industry has yet to be regulated, various stakeholders have recognized the need for the industry to address cyber risk. As the United States Coast Guard continues to assess and evaluate cyber risk throughout the marine transportation system, the International Maritime Organization (“IMO”) and various industry organizations have issued guidelines on cyber risk management this past year. Most notably, on May 20, 2016, the IMO approved Interim Guidelines on Maritime Cyber Risk Management (“IMO Interim Guidelines”). Continue reading “IMO Interim Guidelines: Recent Developments in Maritime Cyber Risk Management”
