Class for a complex future
In his role as CEO of DNV GL Maritime, and as the current chairman of IACS, Knut Ørbeck-Nilssen is at the vanguard of modernising class during a period of unprecedented change. He spoke to Gavin Lipsith.
Sometime success is a question of attitude. When Knut Ørbeck-Nilssen took on the role of CEO of class society DNV GL’s maritime division in 2015, it would have been easy to have felt sorry for himself. The global shipping market was entrenched in a long-running slump, the oil and gas sector had only recently collapsed and the regulatory outlook was trying, to say the least.
“You could think it was unfair on you to take the helm at such a time,” says the 27-year veteran of DNV GL. “Or you can decide that it is times like these when you can shape, change and improve the way you do business. For me that has been a key driver.”
The pace of that change has been dramatic. DNV GL has developed a digitalisation strategy that incorporates initiatives from drone surveying through to a big data and analytics platform, Veracity, which has now become a separate business unit in its own right. That’s on top of the more traditional role of class, ensuring that ships are safe and compliant – a task that has never been more challenging given the frequency and scope of regulatory change.
It’s not just DNV GL that is evolving. Ørbeck-Nilssen became the 2017-2018 chairman of the International Association of Classification Societies (IACS) at a time when IACS needed rejuvenation. This month the association introduces stringent new membership criteria. Meanwhile a working group on modern survey techniques has been formed and a drafting committee is defining terms that should enable it to tackle the potentially nebulous topic of autonomy with precision.
For both his company and the sector he represents, the former civil engineering student – who could so easily have found himself building bridges or tower blocks – is charged with forging a path into a future that is more complex and uncertain than ever. In the interview below Ørbeck-Nilssen outlines his approach to that daunting task.
How do you gauge the ‘health’ of DNV GL? What parameters do you look at and what does success mean to you?
At the time of the merger between DNV and GL, we became the biggest class society. But being the biggest in gross tonnage has never been our ambition. It’s about leading.
Customer focus is extremely important for us. So is quality – being among the top performers in port state detention ratios. Also on the innovation side, we try to introduce new and relevant technologies and methods of working. The drones that we use for surveys is one example, electronic certification is another.
These are the things we want to be measured on. Naturally we have ambitions on factors such as market share – but these are more strategic drivers than measures of success.
The state of the shipping market in recent years has been difficult for owners and indeed class societies. What’s your assessment of the industry’s current position?
I took the helm at a challenging time. We had just finished the hard part of the merger, then we found ourselves in quite a challenging environment for shipping – it had been tough for several years, but the downturn in oil and gas coincided with the time that both Remi Eriksen [group CEO of DNV GL] and I took over.
There are so many things we had to look at with fresh eyes. Things we had been doing in the same way for so long. But surely there must be another better way of doing them? That gives you a lot of energy and motivation.
Some of the methods and approaches we are putting in place today reflect that. Internally we talk about modernising class and I think this is the headline under which you could put a lot of the initiatives we are pushing through.
We had to do that out of necessity, because of the market, the regulatory climate and not least technological changes. Times are changing. It’s challenging but also inspiring because you have to turn every stone to look for new and better ways to serve your customers.
If you had to pinpoint one defining challenge for shipping over the next 10 years, what would it be?
Market fundamentals are still a challenge and the regulatory expectations from policy makers and other stakeholders mean that shipping will become a much more complex industry. There will be higher expectations on everyone in the industry to perform better. Naturally that will come at some cost.
But if you put aside the market conditions and regulation, then the challenge is to do with technology. There are so many developments taking place, in particular all the possibilities with connectivity and what we broadly term ‘digitalisation’.
For any shipping company to be successful in the future they will have to embrace digitalisation in some form. It’s easy to talk about autonomous vessels and unmanned ships, but that is quite a long way ahead. You have to think about the immediate steps you can take to improve your operations.
For example, we are introducing what we call ‘smart survey booking’, which will help owners take a much more proactive approach to booking surveys for their fleet. That’s just one example of many. I think all owners have to look at what the concrete steps are that they can take to start this journey. It’s the starting that is difficult.
That technology challenge also includes the fuels and propulsion systems of the future…
In 2001 DNV GL introduced the rules for LNG as fuel. We were lucky at that time to be working with the Norwegian cluster that was exploring this fuel on ferries and later on offshore supply vessels. That gave us a head start and a significant early share of the LNG-fuelled fleet.
Exploring this was important for us, to help the industry become more compliant on emissions. If you were trading in emission control areas, LNG made a lot of sense even at that time. The coming global sulphur cap is going to mean an even greater need to look at compliance options.
Are you optimistic about the ability of shipping to handle the 2020 global sulphur cap?
It will be important for the industry to be compliant. And being compliant by 2020 will be tough. The market is so fragmented in terms of the number of owners, vessel types and trading areas that it will be a challenge to have the right equipment and the right fuel at the right time.
But I think if you take a higher elevation perspective, it’s important for the industry to really move towards having a smaller environmental footprint. This is the expectation of society at large and also of the policy makers.
I think that’s clear when you see how quickly the pressure on shipping to reduce greenhouse gas emissions has escalated…
Exactly. Our role as a class society is not to set those policy goals, to say we should reduce emissions by this much by this year. Whatever the ambition level of the IMO and the industry, we should be there to help them find practical solutions. That’s why we have not stopped with being a leader in LNG, but also now in batteries and other fuel types such as methanol.
Battery technology is interesting because it is moving forward quite fast. Already it is being taken into use, even for deep sea shipping, if you have auxiliary systems such as cranes or other equipment that needs a lot of power for a limited amount of time, a battery can be a really good resource.
We talked about the measures that quantify our success. To have insight into what is coming and to be innovative with solutions – this is where we can make good contributions together with the industry.
Turning to your tenure as IACS chairman, why are the new membership criteria for IACS needed?
If you go eight or nine years back, IACS had to soften its criteria to allow more societies to become members. Looking at the situation now, it is important for IACS to be recognised as a high quality, very competent technical organisation. To maintain that and to continue to be a good advisor to the IMO, we need to be at a certain level.
There’s also the fact that, in these few years, the regulatory landscape has developed – with goal-based standards now mandatory for bulk carriers and tankers, for example. It makes sense for IACS membership criteria to reflect these changes. If you would like to be or become a member of IACS you should also have the competence and the capacity to work with these standards.
There is considerable interest from smaller class societies in becoming members of IACS. And when they do, they can leverage IACS’ quality standards. So we welcome new members, but it is important that they meet those standards.
You are also working on the issue of ship autonomy. Now IACS is drafting a terminology. Why is that necessary?
To develop proper regulations, you have to know what you are talking about, to share the same terms of reference. When you talk about autonomy you are not talking about unmanned ships, for example. You could be talking about the use of more sensors and more information to reduce the number of crew in the engine room.
Some of these terms need to be quite narrowly defined. What do we really mean by ‘sensor-based information’? What about the ‘quality’ of data? You need to define the language before you tackle the problem.
Your term as IACS president comes to an end in June. Are you happy with progress?
It has been extremely rewarding. It has been good to feel the support of the other class societies in the strategy we have developed and the initiatives we are carrying out. I am quite optimistic about what we can deliver during this year. I hope the last six months will be as fruitful and rewarding as the first six.
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