Technology and efficiency - BIMCO Bulletin

Technology and efficiency

TECHNOLOGY AND EFFICIENCY How innovation in shipping is maturing: an expert’s view. By Craig Eason, Journalist and event host. As the shipping industry works to find new ways to decarbonise, a large number of innovative start-ups are emerging to help fuel the mission. Rainmaking Transport of Copenhagen links this wealth of dynamic ideas with the industry’s legacy companies. One growing trend is a rise in those innovators seeking to invest in the improvement of second-hand tonnage. There is little doubt that decarbonisation and digitalisation have been two key factors in the rapid development of shipping. In the past five years, numerous digitally focused solutions have emerged, as well as the acceptance that shipping needs to – and the belief it actually can – seriously cut its greenhouse gas emissions quickly. New start-up businesses have emerged, offering solutions that are quicker, cheaper, and that often cut out the middlemen. In tandem, technology firms and even shipping lines have had to evolve, knowing their former business models are no longer as profitable – or perhaps as suitable – for a society increasingly focused on sustainability, collaboration and connectivity. It led, a few years ago, to an upsurge of start-ups, accelerators, venture capital firms and development programmes with their young, trendy entrepreneurs speaking a new vocabulary that included “scrums”, “elevator pitches”, “scalability”, “runway” and “hacking”. Their motto is “fail fast, fail often”, reflecting the effort required to build up a business and the need to constantly reappraise what, in a start-up’s business, is successful or not. This is all in the face of major companies in an industry renowned for following tradition. One such firm heavily involved in linking the dynamic ideas and energy of the start-up community with the large corporates in shipping is Rainmaking Transport of Copenhagen, Denmark; it is a division of Rainmaking, a venture capital firm that invests in a wide range of businesses across many industries. It is headed up by Nicklas Viby Fursund who, ironically, after many years working in commercial operations at Maersk, left shipping because he found it too focused on the single per cent improvements being found in economies of scale, rather than the promises that were emerging with digitalisation. That was a few years ago. Having worked on various digital projects, and seeing how some parts of the maritime community were beginning to look enviously at the gains being made in fintech and insurance-tech digitalisation, Fursund teamed up with Rainmaking to launch Rainmaking Transport and take a fresh look at shipping. Some of Rainmaking’s early work has been helping larger corporates, including Cargill, Shell, Inmarsat, Wärtsilä and Cargotec, that have the resources and understanding of the industry but need engagement with start-ups that have the agility and ability to take on risk as they develop new business ideas and solutions. Fursund says Rainmaking is not a consultancy but an innovation company whose goals are to identify ventures it believes have value and then to invest time and money in them. “There are millions of start-ups and failure rates are high,” he says. “It’s about finding the right way to beat the statistics.” New funds reshaping shipping Fursund believes the start-up accelerator model has had its day and, as a result, Rainmaking Transport has now broadened out into longer-term funding. Rainmaking is a general partner in a series of funds where larger businesses have provided the venture capital as limited partners. He says the focus within shipping has changed. Large companies are no longer dabbling with disruption and transformation by running hackathons and accelerator programmes, instead they are investing larger amounts of cash in venture funds to back specific ideas. The company launched Ocean Venture Alliance in Asia last year, describing it as an advisory company, with a list of big names from shipping and innovation, able to offer support to chosen start-ups and investment. Another new name is Motion Ventures, a potential $30m fund launched in February this year, backed by Norwegian maritime industry group Wilhelmsen and German port and terminal operator Hamburger Hafen und Logistik. Motion Ventures is focused on early-stage start-ups looking to tackle maritime value chains. General partner Shaun Hoon, a director at Rainmaking, said at the time of its launch that giant corporations such as Wilhelmsen had the ability to shake up the relationship between start-ups and corporates: “They bring centuries of industry legacy, capital, resources and insight to ensure start-ups have the best possible chance to commercialise and find a strategic market fit.” As well as Motion Ventures, there is Christian Oldendorff’s Amplifier, and Innoport – a venture capital investment vehicle owned by Bernhard Schulte – both based in Hamburg. Even earlier, BW Group’s BW Ventures was in the business of investing in new technologies between 2011 and 2018. Fursund sees this approach increasing among the larger corporates in shipping, as they struggle with the increased commoditisation of the industry, where returns on investing in steel tonnage are so low. He finds it telling that there have been no dynamic agile start-ups launched seeking to invest in second-hand or new tonnage. He believes this trend will continue, as owners seek ways to spread their investment risks and expand into new areas, while still keeping their investments in the industry. Taking a stake in a smaller company, such as an innovative start-up, is a relatively low-risk way to realise business value without the million-dollar investment in building something new that may have an uncertain environmental future. Connect with BIMCO Facebook Linkedin YouTube