Self-navigating ships could change the shipping industry. Here are the companies poised to benefit
The shipping industry is eyeing the artificial intelligence wave, and self-navigating vessels could be on the horizon. With issues of high fuel rates and a shortage of crew workers willing to spend weeks across transoceanic voyages, many shipbuilding companies are using AI to help develop autonomous navigation ships, or self-driving boats. Worldwide, the autonomous ships market reached $4.13 billion in 2022, and is forecasted to grow to $10.1 billion in 2032, according to Emergen Research . "There's a lot of interest from shipyards and promoting this not only from a safety perspective, but training, cost reduction and other commercial reasons," said Patrick Ryan, global engineering and chief technology officer at the American Bureau of Shipping (ABS). "Covid had a big impact on the pace of adoption and excitement around autonomy, because it put a lot of stress on seafarers globally as they couldn't get off the vessels in certain ports because of restrictions around Covid," he added. Recent self-driving boat technology In June 2022 , Avikus, a HD Hyundai subsidiary, announced that its autonomous navigation system, HiNAS 2.0 (Hyundai Intelligent Navigation Assistant System), successfully enabled a 180,000 square-meter-class ultra-large LNG carrier in completing a transoceanic journey. The ship, known as Prism Courage, started its journey from Freeport located on the Gulf of Mexico, passed through the Panama Canal and arrived at the Boryeong LNG Terminal in Korea. Avikus said this journey marked the first time autonomous navigation successfully enabled a large vessel to complete a trip over 10,000 kilometers. HiNAS 2.0 deployed a level-three autonomous navigation system, meaning that human intervention is only deployed in an emergency situation. The success of the HiNAS 2.0 and Prism Courage journey marked a foray into greater commercialization and implementation of autonomous ship navigation technology. HiNAS 2.0 can be retrofitted onto existing ships, providing a potentially easier point of entry to implement self-navigation technologies. Previously, the Yara Birkeland, the first fully electric and autonomous container ship produced by Yara International ASA, cost $25 million, roughly three times the cost to build an average carrier vessel. It went into commercial operation in the spring of 2022. Yara International said that the autonomous ship provides cost savings of up to 90% by slashing fuel and crew expenses. Although developing self-navigation systems and AI technology for boats presents significant expenses in the short term, such advancements help shipping companies save margins in the long run, according to Carol Schleif, chief investment officer at BMO Family Office. Rudy Negenborn, a professor at Delft University of Technology, noted that the demand of autonomous navigation ships extends beyond oceans to include port areas, waterways and cities. "Autonomous systems can make better use of the capacity on waterways," said Negenborn. "The total volume which we want to transport is not likely to decrease – autonomous systems can help alleviate congestion and make transport more energy-efficient," he added. Preventing attacks and errors While autonomous shipping technology can reduce the number of accidents stemming from human mistakes — Ryan of the ABS estimates incidents at sea driven by human decision-making errors could be as high as 80% — it's unclear whether it can alleviate the chaos caused by shipping attacks , most notably the strikes in the Red Sea. Whether autonomous navigation could've prevented the blockage of the Suez Canal by the Ever Given container ship isn't certain, Ryan added. However, he said the technology aids with safety and better decision-making. "In a general sense that it can help with safety and even things like reduced carbon emissions," Ryan said. "We can do improved weather routing, we improve navigation. We see some of the commercial reasons that companies are going down the autonomous navigation pathway from is [also] to reduce their carbon footprint." "A computer can make more timely, more sophisticated, more accurate decisions," he added. The big players The shipping companies at the forefront of autonomous navigation systems and AI are the incumbent large market players, said BMO's Schleif. "The big recognizable shipping names are the ones that are at the top because they have the cash to be able to invest in [AI]," said Schleif. These companies also have the data and processing power needed to create models for the technology and sensors, she added. The shipping industry has high barriers to entry because of the large-scale investments needed, as well as aggressive competition from existing companies and brand power associated with reliability. Within the market, numerous Asian and European companies have established themselves at the forefront of the AI movement in shipping. Schleif highlighted AP Moeller-Maersk , which began trialing AI-powered perception software on its container ships to improve situational awareness during journeys. U.S.-based investors can buy shares of the Danish company through American depositary receipts. U.S.-based traders can also gain exposure to Yara International through ADRs. Japan-based Mitsui O.S.K. Lines is also accessible through ADRs. Mitsui O.S.K. had a successful trial of the first fully autonomous ship technology from port to port. The company is aiming for its fully autonomous ship technology to reach full-scale commercialization by 2025. Ryan highlighted Rolls-Royce as another preeminent name in developing autonomous solutions for commercial and government vessels. Shipbuilders aren't the only companies expected to benefit from the AI implementation in ships. Freight companies could get a boost as well, according to Morgan Stanley. "We have long believed the Freight Transportation space is on the cusp of and ripe for a generational shift driven by disruptive technologies, including autonomous [technologies]," analyst Ravi Shanker wrote in a note last May. Shanker highlighted J.B. Hunt , C.H. Robinson and Expeditors International as companies engaged in ocean-shipping that will benefit from autonomous operations. "This is a starting point for industry," Negenborn said. "This is not something that will fade away."