How big a threat are autonomous vessels to seafarer demand?
Vessel automation and digitisation will reduce future seafarer demand, but the medium-term impact is expected to be limited.
The evolution of autonomous ships will have significant implications for seafarer demand, training needs and manning costs. Crewing remains the single largest cost head within vessel operations, representing almost half typical ship operating costs. But over the medium term what do these developments mean for seafarer demand and what trends should shipowners and managers be preparing for?
In Drewry’s view the take-up of autonomous shipping may not be as rapid as many industry observers expect. Reasons for this include: unclear economic benefits, high investment costs, significance of required regulatory regime changes and likely variable adoption rates dependent on sector and geography.
However, despite this shipowners and managers should still be planning for the medium term future crewing requirement of semi-autonomous vessels. In Drewry’s recently published Manning Annual Review & Forecast 2019/20 we identified some of the likely upcoming changes to the seafarer employment market as a result of greater automation.
Changes to seafarer wage structures
Seafarer roles with the necessary skills and experience to operate in automated environments will likely command premium payments.
By way of example, a Dynamic Positioning officer on board an offshore vessel is paid 10% to 20% higher than seafarers of the same rank. Another is that on LNG vessels both tours of duty and leave per month are generally shorter than for other deep-sea trading vessels. This situation has developed as a way of attracting and retaining seafarers with the necessary experience and skills.
The effect of such premium wages and employment conditions will be to drive up unit manning costs, though the overall impact may be tempered by reductions in on-board numbers.
Depending on how quickly automated systems are put in place, a seafarer supply lag could lead to cost spikes. Wage inflation will be exasperated if there are lengthy lags between growth in demand for particular technology-related skill sets and the available supply of such seafarers. Hence, ship managers will need to have training strategies in place to ensure that enough skilled labour is available in the future.
Training bottlenecks & rising backup manning ratios
Linked to this, training college bottlenecks could add to supply and cost pressures. Companies may therefore need to consider from where they will get sufficient numbers of IT literate seafarers if knowledge of digital systems becomes necessary ship wide, and not just limited to a few specialist roles. College courses will need to be designed and approved to provide the relevant training.
Upskilling could raise backup manning ratios. Given that it is likely that training time will need to be increased to keep skills up to date more regularly, this will have an effect on the man-berth ratio. In a relatively conservative analysis Drewry believes increased automation could lead to an increase in overall backup ratios of 2% (see chart). This would reflect both increased training ashore and more familiarisation time needed with vessel systems when crew changes take place.
Reduced need for human watch keepers would be the big game changer
A major benefit of automation would be to reduce the need for human watch keepers. If digital systems could reliably reduce the need for human watch keepers, hours of rest would be less significant. The remaining human element on-board could potentially operate the vessel with less support since the number of deck officers is determined to some extent by the amount of rest needed between periods of watch. This point is where the current economic benefits of automation are especially unclear since vessels will need to have duplication, at least, of all systems which would come at huge capital costs for most merchant fleet vessels.
Against the background of reports on the effects of digitisation, and assumed reduced demand for labour at sea, young people may become less likely to consider seafaring as a career. It seems prudent for shipowners and managers, therefore, to be careful to maintain the positive benefits of seafaring occupations to ensure that they continue to get labour for as long as they need it.
Source: Drewry Maritime Research