As COVID-19 and a historically weak energy market wreaks havoc on maritime, Knut Ørbeck-Nilssen, CEO Maritime, DNV GL, tells Maritime Reporter & Engineering News in its May 2020 edition that this could be the beginning of a Renaissance period for the industry. "Everything will be looked at with new eyes, it’s going to be a renaissance for the maritime world and I think we’ll have a lot of innovation and new ideas," said Ørbeck-Nilssen. "Things that we’ve traditionally done for years simply will not hold up, it will be put to the test."
Ørbeck-Nilssen was part of Maritime Reporter's report on 'Class', with participation by the four largest classification societies. The full report from May 2020 will be available online shortly, but until then below is the full text from our interview with Ørbeck-Nilssen.
To start, please give an overview of COVID-19 as a business disruption event.
"I think this is above and beyond anything I’ve experienced during my 30 years in the maritime industry. It is truly global, hitting not only the maritime industry but the world economy, impacting world trade, job security and the health and well-being of families. This is quite different from any crisis I’ve experienced in the past. Its breadth is making it that much more challenging for everyone, the maritime industry included."
And its specific impact on Maritime?
"Almost every stakeholder in the maritime industry is impacted, whether you are a shipowner, a shipyard, an equipment manufacturer, or crew on a vessel. Each of us has to adapt - from the ways we work to dealing with very strict local regulations. It’s not just a financial impact, which is huge, but it is also impacting the daily lives of everyone in the maritime space. But it is not the same for everyone. Tanker owners, for example, have had extraordinary weeks and months with the massive amounts of oil storage taking so many vessels out of regular trade and increasing their rates. At the opposite end of the scale are cruise lines, which are banned from operating. Overall, this is a very tough hit for the maritime industries. Over the last four or five years I’ve talked about tectonic shifts in markets, regulation and technology, and it’s interesting to see now how true these tectonic shifts are affecting shipping. As 2019 drew to an end, we had no clue what was looming just a few weeks ahead; struggles that could potentially endure to 2021 and beyond."
Many business leaders we interview say that their focus is on 'the next 24 hours.' How has Long-term planning evolved at DNV GL?
"I think it’s true that all of us in the maritime industry, and DNV GL, have had to narrow our planning outlook to what’s happening tomorrow, to what’s happening next week. There are many moving parts to any global operation, and we have increased the frequency of our management meetings to a weekly basis, and I’m in touch with my direct reports on a daily basis. We are also increasing the frequency of our financial market and opportunity reporting. How we respond to the pandemic is sometimes almost happening in real time. But the winning recipe during these trying times is being able to maneuver through the daily terrain, but also to be able to look beyond the short-term horizon and keep an eye on what’s important in the medium and longer term. It’s like navigating a ship: You know where you’re going, but you’re in dire straits so you need an extra watchman to help you maneuver every nautical mile. At the same time you need to maintain a long-term outlook; to know your end destination and which course you’re charting; and the path finding star guiding your journey."
"I’m grateful for the strategy we have followed for the last five years to digitalize and modernize classification at DNV GL. It comes to bear fruit at times like these where the daily, physical face-to-face meetings and handing over of certificates is being made difficult. Our introduction of electronic certificates; our establishment of operational centers and the Direct Access to Technical Experts (DATE) service; and our ever-increasing remote survey capabilities make us continuously available to our customers. These new ways of delivering our class services have proved to be instrumental at times like this. On top of that, having a robust, modern IT infrastructure where our employees are fully capable of operating by digital means puts us in a situation where we are 100% globally operational. When we started our digitalization and class modernization journey, we didn’t foresee a pandemic, but our ability to respond to it has really validated our efforts and investment."
These last few months are the very definition of a 'Black Swan' event. How were you prepared?
"I am doubtful that anybody can truly say they were prepared for this specific event. Most professional organizations like DNV GL run a regular risk assessment of our operations; we did not identify a pandemic, of this scope, as a risk. We had preparedness in place for handling different risks and circumstances. We’ve also trained for emergency preparedness exercises. Once this pandemic hit, even though we weren’t sure exactly what hit us, we quickly engaged our emergency protocol in various locations. (That, on top of the previous comments on the advances of digitalization and modernization of class.) And then you have your staff: it’s impressive to see how employees are working out of their homes and traveling to vessels; our employees are extremely flexible, motivated and dedicated to their work. This is something money cannot buy; it has to come with a deep sense of purpose for the company to safeguard life, property and the environment. And to be there to serve not only the company, but the maritime industry, the seafarers, and the supply chain so that the delivery of critical food and resources can continue uninterrupted to where they’re most needed across the globe."
I know that it still may be a bit early, but what do you see when the COVID haze starts to clear?
"In general, looking at maritime, there will be an acceleration of digitalization. It will be like putting a turbo charger on its (digitalization’s) development so I would say that this crisis will probably put us 2 to 5 years ahead of what would have been the ‘normal’ progression of digitalization in maritime industries.
It’s almost like the Renaissance period between the 1400-1700s, with societies coming out of the middle ages, a time when everything was re-discovered and looked at with fresh eyes. All was geared toward making a better life across art, culture … everything … and I think this is very much going to be the impact on shipping and maritime. Everything will be looked at with new eyes, it’s going to be a renaissance for the maritime world and I think we’ll have a lot of innovation and new ideas; things that we’ve traditionally done for years simply will not hold up, it will be put to the test.
As for DNV GL, we will continue our digitalization journey, and I think we’ll see a lot of innovation in the years to come and naturally we will put a lot of effort – as we have always done – into innovation, research and development. This innovative and R&D approach, combined with our traditional pragmatism and experience serving the maritime industry, I think will be a powerful recipe for the future."
"Obviously, determining this is quite the challenge. When you’re in the middle of a pandemic, you think it will last forever. There are currently so many restrictions, and many say that until we have a vaccine, we will have restrictions. But if you take an optimistic view and look to China, and to some of the Asian countries that were hit in the first wave, it’s amazing the speed at which they are bouncing back to a more normal business life.
We should try to stay optimistic and look at it as a long and cold winter; when spring comes, it will be spectacular, and we have to do what we can to stay ready and agile for when things get moving. There is inspiration from China in that respect."
I know that you like to end your press conferences with a song that is appropriate to the theme. What is you song reference for what we are going through now?
Simon & Garfunkle’s Bridge Over Troubled Water. (a nod to Maritime Reporter's home town headquarters of New York City.)