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China: Shipping companies make efforts to gain profit

Profits and share prices of shipping companies are sinking, due to the collapse in demand for shipping goods worldwide.

Some major sea freight companies are betting on larger scale operations to solve their problems, by investing in larger vessels and taking on mergers. Some Chinese firms, however, are thinking smaller, greener and longer-term.

Shares in COSCO Shipping have fallen more than 20 percent since August when local media reported that China’s largest shipping companies, China Ocean Shipping Group and China Shipping Group planned to merge on government orders.
The move highlights necessary consolidation worldwide in the deteriorating shipping industry, as global trade shipments remain weak. It also implies that the ship BUILDING industry is running into heavy seas.

“After the ships were built they found that the shipping sector has entered a downward spiral. Although high bunker oil prices have eased recently, the overall cost reduction has been outpaced by the slump in shipping lines’ income. So they are not ordering new ships,” said Zhang Qi, senior analyst, Haitong Securities.

The Baltic Exchange Dry Index, a closely watched barometer for global shipping activity, has slumped from its peak of over 11 thousand since the financial crisis of 2008 to less than one thousand today. Market watchers even joke that only a super hurricane that destroys a third of all existing vessels could save the industry from overcapacity.
Well, the chances of that kind of catastrophe are only known to insurance companies, or maybe to no one. To find respite from the current tough conditions, however, the China State Shipbuilding Corp has come up with a long-term plan. They are going to build a smart ship called iDohpin.
What’s so smart about the ship is that it will carry an integrated data collection platform designed by the Shanghai Merchant Ship Design and Research Institute. Chief engineer Wang Gangyi of the institute says the platform will transform ship builders from manufacturers to service providers.

“The idea behind this design is the Internet of things, and big data. We want to apply these technologies on the ships and vessels we design,” he said.
“We used to focus on mechanics entirely. We didn’t put much thought on services that could be provided after delivery. So the idea is to set up a data center that does all the analysis to improve safety levels for the ship’s equipment and navigation. It will also bring down operational costs and provide assistance in fleet management.

The data center will need enormous amounts of data collected from smart ships like iDolphin, which is still in the design stage.
According to Wang, by 2020, there will be hundreds more ships like iDophin using his company’s integrated smart system. All of them will communicate with the data center, which will be used to develop an autonomous navigation system, hopefully in 20 to 30 years.

“iDolphin is the first example how to collect data from the entire ship, which includes all the devices on the ship, the operational status, its navigation system, even the weather system, all consolidated on one platform for us to analyze for applications development,” he said.

Just like your car on cruise control, the ships will consume less oil and produce fewer omissions. The system will also lower costs for shipping lines by optimizing routes, allowing staff reductions, and saving port maintenance time.