How startups and corporations can decarbonise the shipping industry
5 min read
02 Oct 2020
5 min read
02 Oct 2020
Innovation will be key to solving the problem of carbon emissions in the shipping industry. Partnerships between established firms and promising startups is one way to jump-start the process.
With some IMO regulations already in place and more to come, the shipping sector is focusing more than ever on finding ways to reduce greenhouse gas emissions. Many large maritime corporations are looking to startups for truly innovative solutions. According to many experts within the industry, cooperation between established companies and startups has significant potential to create viable solutions for decarbonising the maritime economy.
Mare Straetmans, Director of Digital Transformation at Van Oord, a maritime contracting firm, sees the digitalisation of the industry as the most promising path towards decarbonisation. He says that involving startups in the process can speed up development, bringing innovation into the sector to save time and operation costs, as well as facilitate logistics that will then help cut down emissions.
“Emissions reduction through emissions monitoring is one of the biggest opportunities,” Straetmans says, noting that he has been working with startups that are tackling the problem. “You have digital solutions that do smarter route planning or sails that actually bring wind energy to reduce fuel consumption. There are all kinds of innovative solutions that help optimise it. A single company cannot do that themselves, so partnering with startups is the way to go.”
Partnering for the future
Virginijus Sinkevičius, the European Commissioner for Environment, Oceans and Fisheries, says that cooperation between corporations and startups is a good way for newer companies to overcome the normally high barriers to entry to get into the sector.
“I believe that the role of startups and innovative entrepreneurs is to make these sectors more sustainable by using technology,” Sinkevičius says. “New concepts and technologies from the ‘general’ economy, such as artificial intelligence, blockchain or the Internet of Things, find their way into the emerging and traditional sectors of the blue economy. There are several startups that aim to use automation, AI and big data to make shipping more efficient, so there might also be some potential in this area.”
Wärtsilä is one legacy company that is actively engaging with startups to look for ways to increase innovation and decarbonisation in the shipping industry. About a year ago, Wärtsilä began a partnership with Rainmaking, a corporate innovation and venture development firm, to set up a unique impact startup programme for the maritime industry. This programme is focused on real engagement, designed to help startups get traction in collaboration with industry leaders.
In the last Rainmaking cycle, Wärtsilä’s impact programme partnered with the startup Signol, a system that turns feedback into results and incentivises employees to improve energy efficiency. Steffen Knodt, Director of Digital Ventures at Wärtsilä, believes that Signol’s approach, which was already successful in the aviation industry, could be applied to the maritime industry as well.
“It is quite an attractive case for us because it supports energy consumption during the voyage by supporting people in their decision-making. This is something that we do as a company already with our technical solutions from voyage management, but Signol would complement those on a more personal level, providing an outside industry look at how to incentivise people to make better decisions,” Knodt says.
Last November, Wärtsilä was part of an official side event at the SLUSH startup conference that connected startups and scale-ups with established companies.
Mikaela Terhi, Senior Manager for Transformation Communications at Wärtsilä says that participating in SLUSH was ultimately about creating business value by making Wärtsilä visible to new potential partners
“We want to build relationships with new growth startups and become a player in the startup ecosystem. We wanted to showcase Wärtsilä and promote our purpose and our strategy towards a smart technology company. For us, SLUSH is also about building our brand and attracting new talent.”
Investing in the blue economy
On an EU level, startups in the maritime sector are also getting a lot of attention, thanks to the BlueInvest initiative, which organises the annual BlueInvest Day to bring together innovators, entrepreneurs, investors, corporates and enablers in the Blue Economy. The initiative also sponsors smaller events throughout the year. At the Blue Invest Day 2020, Straetmans and Knodt were together appointed for the Blue Invest Award juries for the startup categories “Intelligent ocean” and “Clean energy from the ocean”.
“BlueInvest is an amazing project. It brings transparency into the blue economy. The fact that every event we organise is fully booked shows we are meeting a need here,” says Sinkevičius. “Investors use BlueInvest to find exciting new opportunities, and companies get visibility and easier access to capital. In addition, we help budding entrepreneurs turn their ideas into solid business. We do this via advisory services, but also through public funding such as our blue economy calls or the new BlueInvest fund, together with the European Investment Fund.”
At this year’s BlueInvest Day, Sinkevičius challenged the participating startups to become the first blue unicorn, getting to a valuation of EUR 1bln. He has a firm belief that some blue economy startups have that potential. Around 70 investors attended the event and, according to Sinkevičius, showed clear interest in the startups presented during the pitch competition.
Preventing a culture clash
However, it’s not always smooth sailing (no pun intended) when corporations and startups try to partner up. The bureaucracy within large corporations can often make the process painstakingly long and, ultimately, unappealing to both sides.
“Corporations are not always well-equipped to work with starts-ups because it’s a totally different way of working,” explains Straetmans. “Firstly, there are a lot of issues pertaining to certifications, compliance, structures, agreements and so on that are just too much for a new startups to handle. Secondly, decision makers in corporations are risk averse: with startups you can never be sure if you’ll succeed or the product might not be fully finished, and you can’t say to colleagues ‘we have this really cool project but it’s only half-completed’. People in corporations are not incentivised to take these kinds of risks; they’re incentivised to do what they’ve always done and not make any big mistakes.”
Startups also struggle because they don’t always know how corporations work. Straetmans says that some startups have lost the scalability of their products after making several adjustments for just one potential corporate client while others have waited almost 18 months to sign a contract.
But there are ways startups and corporates can try to address these challenges to innovate and decarbonise the industry.
“If I look at maritime startups, the guys are generally more engineers than entrepreneurs, so acquiring entrepreneurial skills is crucial. Startups can hire someone who knows how to close a deal, how to act with different actors within a corporate company, and how to design a pilot so that when it’s successful, it’s also going to be scalable. As for the corporates, they need to have people who can fulfil the function of, as we say in Dutch, ‘oil men’, i.e. men and women that put ‘oil’ into the process to help people in the corporate sector work more smoothly and efficiently with startups. If there are blocks, they get rid of them. If procurement is being difficult, then they will sit down with procurement and find a solution instead of stopping the process,” Straetmans explains.
Challenges notwithstanding, clearly the potential exists for corporations and startups to bring together their respective areas of expertise to disrupt the traditional maritime industry, says Terhi.
“A highlight for me at SLUSH 2019 was that by creating a joint event and campaign with other companies, we realised how much stronger we are together, and this is actually the message we also have for startups. Together, we can achieve so much more.”