Posted by Sheilla Chiang on 5 July 2022 on the-ken.com
Singapore wants its shipping industry to be a highly-digitised, global maritime technology startup hub. But between startups looking for support, large corporations reluctant to change, and an ambitious government, the directions are still a bit unclear on the roadmap.
Singapore’s shipping industry is a core sector for its economy—its port is world’s business transshipment port, handling 37.5 million TEU in 2021.
But, the maritime industry is also old-school, relying on manual, legacy solutions to manage critical marine services.
Things are evolving, but not fast enough. The government has given out a few millions in grants and set up accelerator programmes to incubate startups in the sector.
But without outside support and a cross-functional partnership between the startups, corporations, and the government, it’ll be difficult to buck tradition.
The Port of Singapore has held the crown of world’s busiest transshipment port by TEUs since 2020. In 2021, according to figures by the Maritime and Port Authority of Singapore (MPA), it handled 37.5 million TEUs, up 1.6% from 2020. Singapore’s ambitions go beyond just wearing that coveted crown, however. It wants its shipping industry, a core sector for the city-state’s economy, to be a highly-digitised, global maritime technology startup hub.
And to that effect, it has sunk in effort and money in the last few years—an S$80 million (US$57 million) Singapore Maritime Institute Fund that supports research and development; several grants awarded to startups in ship management or ship-related services; an accelerator programme called PIER71 (Port Innovation Ecosystem Reimagined @ BLOCK71). All to address key challenges such as decarbonisation, digitisation, supply-chain resistance that have dogged the industry. Singapore is also in the process of building a S$20 billion (US$14 billion)-worth automated port, touted to be the world’s largest.
But getting a business that has been around even before globalisation was a thing to up its tech chops is proving to be a seemingly insurmountable task, as Singapore is beginning to learn.
Over 80% of the world’s container ports, including Singapore, continue to rely on manual, legacy solutions to manage critical marine services such as towage, pilotage, and berthing. Forget spreadsheets—even whiteboards are involved.
“It’s essentially a bit of an old boys’ club. People have been in this for 50 years,” said an investor in the sector. The investor and others in the story The Ken spoke to requested anonymity as they did not want to be seen commenting on the industry.
Singapore’s efforts at incubating startups in a rusty old sector has borne some fruit. There are startups such as decarbonisation solutions company Everimpact and crew management platform Greywing up and running in the segment. Everimpact also recently raised US$1.6 million in seed funding. The round was led by Motion Ventures and also included participation from Asian Development Bank’s venture arm (ADB Ventures), MOL Plus, and IMC Ventures, among others.
But change has been slow to come. According to startups The Ken spoke to, convincing large maritime corporations to adopt these digital solutions has been an uphill task. And the gap between domain expertise and technology hasn’t helped.
“For people that want to get into [the maritime sector] and want to build solutions for it, it’s a very closed industry.”
AN INVESTOR IN SINGAPORE’S MARITIME INDUSTRY
“Bringing a tech solution to a vessel is complex. Weather conditions, security issues, and data communication can make your work much more difficult. Creating a new product requires that you have someone that bridges the gap between the startup and the large maritime corporation,” Mathieu Carlier, founder and chief executive of Everimpact.
And with more and more startups in the segment beginning to pop up, the industry has no idea what to do with many of them. Besides Everimpact and Greywing, there are also KaHa, SOL-X, SparesCNX, BeeX Autonomous Systems, QuantShip, Shipskart, Riverr, and more—all working on one project or the other in the maritime industry. “So many startups are knocking on the doors of these big guys and they are not going to be able to give attention to every startup,” said an industry observer.
For now, there are a bunch of godfathers helping these startups get their ships sailing. PIER71, for instance, connects demand drivers and startups. Tier-1 investors such as Softbank Ventures Asia are also beginning to speed up their involvement. The VC recently led a US$5.8 million funding round in maritime technology startup Seadronix. Marine venture builder ShipsFocus and Singapore-based Quest Ventures also collaborated to launch a S$10 million (US$7.5 million) maritime fund last year. Meanwhile, large shipping conglomerates CMA CGM and Eastern Pacific Shipping have thrown these startups a lifejacket, either by investing in and nurturing startups or launching their own innovation teams.
“The maritime industry is on an accelerated digitalisation path and we need all stakeholders to be on board, for more corporates to trial new technologies and adopt new ways of doing things,” said Professor Freddy Boey, deputy president (Innovation and Enterprise) at National University of Singapore (NUS), who oversees PIER71, a joint collaboration between the MPA and NUS.
TECH IT UP A NOTCH
If the pandemic and the subsequent lockdowns were a rude wake-up call to multiple industries across the world, they were nothing short of alarm bells for the shipping industry. Port closures, shipping delays, and a global container shortage all saw containers piled up high at ports all over the world.
Some, like the Port of Busan, already had digitisation practices to fall back on. The Korean port had embraced digitalisation even before the pandemic, and tech such as those that monitor container stacking and alignment status in real-time or a blockchain-based logistics portal system were already well established.
Singapore sailed through, but it wasn’t easy. Container throughput for the Port of Singapore fell by 0.9% for the whole of 2020. However, the port saw a 4.6% year-on-year (YoY) growth in container throughput from January to May 2021. That’s more than the YoY growth in 2019 for the same time frame—3.9%—prior to the pandemic.
For now, the MPA is working with the Singapore government to roll out the necessary measures to ensure minimal disruption to the shipping industry. The MPA did not respond to The Ken’s questions at the time of publishing.
During the pandemic, the port had implemented several short-term measures such as conducting contactless cargo and bunkering operations and providing telemedicine services for seafarers. Now, it’s focussing on building out its automated port, which is expected to double the existing space as well as feature drones and driverless vehicles.
The port is also on track to achieve some of its goals such as the targets around “maritime decarbonisation while also promoting digitalisation and enhancing inter-modal connectivity,” said Chee Hong Tat, Senior Minister of State, Ministry of Transport and Ministry of Foreign Affairs, earlier this year.
Decarbonisation is one of MPA’s priorities in 2022. According to a 2020 report by the International Maritime Organization (IMO)—a United Nations body responsible for regulating shipping—shipping accounts for nearly 3% of the worldwide carbon di-oxide (CO2) emissions. Scientists project that it could account for as much as 17% of total annual CO2 emissions by 2050.
In 2021, the MPA even set up the S$120 million (US$86 million) Global Centre for Maritime Decarbonisation (GCMD) to spearhead Singapore’s maritime industry’s energy transition. “The whole maritime ecosystem is working on decarbonisation and we are preparing some pilots there as well,” said Carlier, who worked for the United Nations before founding Everimpact.
The startup is currently collaborating with the Norway-based Wilhelmsen Group and Japan’s Mitsubishi Corporation to trial Everimpact’s Internet of Things sensors. These sensors measure physical carbon emissions and the trial involves their use on a select number of Mitsubishi ships to validate the tech before commercialisation at scale.
Over 100 Everimpact sensors, paired with software, have been used to measure the carbon footprint of eight cities across Europe and the UK so far. Petroleum giant Shell also chose Everimpact as the winner of its New Energy Challenge 2021 to track Shell’s and its customers’ carbon footprint from operations. Everimpact also received €320,000 (US$334,000) from an organisation supported by the European Union called EIT Climate-KIC.
But to get to its scale today has not been easy. When they tried to go to market early five years ago, it was difficult to get initial traction. “Investors knew little about climate change and measuring carbon emissions,” said Carlier. “Things have changed a lot in the last two years. Businesses are beginning to make commitments to be carbon neutral. Investors are now quite sophisticated about climate change and in carbon emissions,” he added.
Tie-ups such as Everimpact’s with Wilhelmsen and Mitsubshi are crucial for Singapore’s ambitions. “This is a very complicated industry to navigate. You need to connect with domain expertise to understand what the opportunities and obligations are,” said Nakul Malhotra, vice president of innovation at Wilhelmsen.
For one, these startups need guidance from those who’ve been in the industry. It’s not just a matter of investing in the startups—companies have to be willing to work on innovation with them.
“The organisation needs to offer their resources to collaborate with and participate in startups to help them get their products to market, to help them test their products in a real business environment,” said Nick Clarke, co-founder and CEO of intelligence platform Greywing. The intelligence platform, founded in 2019, helps companies track and facilitate crew changes. Greywing recently entered into a strategic partnership with voyage management platform Dataloy Systems to facilitate accurate crew planning.
Not everyone is rushing in to offer that sort of help, though. Even larger corporations that have seemingly recognised the opportunity need some time and convincing. Take Singapore-based shipping conglomerate IMC Industrial Group, for instance. When James Ong was first roped into setting up IMC’s corporate venture arm in 2021, IMC Ventures, he faced some resistance. He was trying to bring the venture arm and operating team together.
“It was hard for them to understand what I was trying to do. I was stonewalled at times for the first three to six months. To them, it was someone who was new to shipping trying to tell them what to do, when they have been in the industry for 20 years,” Ong, partner at IMC Ventures, told The Ken.
Once it clicked, however, things began to move. In the last six months, Ong and IMC Venture’s innovation team led the completion of two proof-of-concepts (POCs). One of them is Chord X, which measures a fleet’s carbon emissions and fuel consumption.
The innovation team now consists of the different heads of departments and they meet every two weeks to discuss new tech and new startups. So far, IMC Ventures has evaluated over 150 startups in 2021.
For older companies, collaborations such as these are an argument in favour of embracing something new. “And for an industry that has worked and functioned well for centuries, there’s actually a very poor argument to use something new. Like, why reinvent the wheel?” said Shaun Hon, general partner of Motion Ventures. Motion Ventures’ investors include Wilhelmsen, IMC Ventures, MOL PLUS, the corporate arm of Japanese shipping heavyweight Mitsui O.S.K. Lines, Ltd., among others.
Jazzy startups also help bulk up the conglomerates’ own resumes. Maritime is not a “sexy” industry and hiring in the sector remains a challenge. For instance, roles such as technical superintendents—who usually oversee the safe and efficient operation of ships—require years of experience on the seas. Restructuring them and using technology to accelerate training could allow more locals to be employed in such a capacity. “If you have an option of working with Google or Amazon or Grab, versus working in some dark, dingy, old fashioned industry, what would you choose?” said Malhotra.
“I think the real tipping point is when you start to see external investors outside the maritime sector starting to come in.”
JAMES ONG, PARTNER, IMC VENTURES
For now, the Singapore government is implementing trials to redesign maritime jobs—the current pool of qualified local talent with extensive seafaring experience is small. In the long term, however, the hope is that programmes such as PIER71 will amp up the momentum.
PIER71™ was launched in June 2018 by the MPA and entrepreneurial arm of the National University of Singapore NUS Enterprise to boost innovation within the maritime industry.
The idea is to support maritime startups from right from the ideation stage to help address the segment’s challenges. Through the accelerator programme, startups collaborate with PIER71’s network of maritime corporate partners on pilot projects across areas for innovation identified by maritime companies.
“By identifying the business challenges and key priorities of the maritime corporates, we are then able to attract and identify start-ups with innovative solutions that can be reimagined for the industry,” Professor Freddy Boey, NUS’ Deputy President (Innovation and Enterprise), told The Ken. Corporates such as IMC Ventures and Motion Ventures also collaborate with PIER71 to bring startups and companies together.
To date, over 400 tech startups from around the world have participated in PIER71’s Smart Port Challenge. Some of the winners include autonomous underwater robot startup BeeX, advanced combustion solution FUELSAVE, and wearable AI startup Vulcan AI. Vulcan, which uses artificial intelligence and wearable tech to improve safety and productivity on ships, were originally looking at other applications of their tech in other sectors.
“PIER71 helped us take a solution that already existed, shaped our proposition, and customised it for the maritime sector,” Manik Bhandari, Vulcan AI’s founder and CEO told The Ken. “The programme connected us to different corporates, got [us] their feedback, ” he said. The company, which pitched its concept at the 2020 edition of the challenge, emerged as the second runner-up that year.
The MPA also awarded 11 startups a Maritime Innovation and Technology (MINT)-STARTUP grant for prototype development and test-bedding. This brings the total number of grant recipients to 50, and the total funding disbursed since 2017 to over S$2.45 million (US$1.75 million).
All these collaborations make up only a small segment of those trying to update an industry that is fast approaching outdatedness. Singapore’s maritime industry still remains quite fragmented—the government with its funds and accelerator programmes, large corporations reluctant to adopt digital solutions, and startups with little experience working in a sprawling, ancient industry.
“Everybody’s waiting and watching. The challenge is, it requires the whole industry to adopt certain changes. That will be the thing that’s probably more difficult to do,” said the industry observer quoted earlier. For now, all three sides are playing catch up—with each other and with the rest of the world.