There is no doubt that the COVID-19 pandemic has hit many industries hard. The crisis has had an interesting effect on the maritime sector, as the cruise industry ground to a halt, but the demand for high-end yachts soared. Also, given the need to get supplies all over the world, demands on commercial shipping have never been greater. In this feature, shipping end users Carnival Cruises, OmniAccess, Stena Line, and Tototheo Maritime share what’s next for their businesses, and how their connectivity strategies may change as a result.
Just over a year ago, John Padgett, chief experience and innovation officer of Carnival Corporation, was looking forward to a strong 2020. Demand for cruises was strong, as always. A partnership with SES meant Carnival's Princess Cruises brand could offer leading edge connectivity to passengers. And then COVID-19 hit, and the cruise industry ground to a halt. Padgett says the company will weather this particular storm, but he does not want to make predictions on when the market may come back.
Carnival has embraced satellite connectivity, and Princess Cruises is one of SES’s flagship customers. Now, Padgett believes connectivity is more important than ever. He talks of the concept of maritime offering land-based connectivity, and says this was the consumer expectation before, “regardless of what ship operators wanted to tell themselves.”
“It is the same as the aero market. Consumers expect ubiquitous, reliable, and affordable connectivity,” he says. “Now that almost everyone has become comfortable with virtual interactions, those elevated expectations will come with them on vacation. The impact of those rising expectations on the connectivity experience will be significant.”
While Princess is entrenched with SES and its O3b Medium-Earth Orbit (MEO) constellation, Telesat has targeted maritime and cruise as a market for its upcoming Lightspeed Low-Earth Orbit (LEO) constellation. Padgett says whether Carnival will adopt LEO constellations in the future will revolve around timeframe and scale. “Physics matters, which is why we value the MEO constellation over GEO [Geostationary Orbit]. Distance also matters,” he says. “There are two important elements to address before the cruise industry can embrace LEO. One will be the massive engineering feat that is required to pull off a truly global LEO constellation given the volume of satellites. And two, the overall integration of that ecosystem back to mobile maritime ecosystems.”
Padgett admits that if LEO solutions become ultra-reliable and very economical, then they could become interesting to Carnival, but he doesn’t seem to see LEO in the cruise line’s future any time soon. “One thing that can’t be emphasized enough is that the world’s surface is 71 percent covered by salt water, so LEO constellations must be scaled to cover our global operations. It may be different to someone that is running a niche vacation offering, or an operation tied to certain regions of the world. We operate on a global scale and need to cover every ocean. Beyond engineering, a global LEO constellation will need to become economically feasible, relative to MEO. When engineering, coverage, and economics all align, LEO will become very interesting to us. How many years is that? I think it's more than a few years out.”
Carnival hopes to reach a new normal later this year. Padgett says that guest access to connectivity is still more complicated than it needs to be, and Princess Cruises is using this downtime to make sure it will be better when the industry comes back.
“Now that connectivity performance is where we want it, our attention is focused on that specific moment when a guest first crosses a gangway on a ship. Our intention is to deliver instant and seamless connectivity — that notion remains an industry challenge. If we can make that last piece of friction disappear, then our guests will enjoy uninterrupted connectivity transitioning from land to sea, and they’ll be stunned and appreciative,” he says.
One thing is for sure, things are changing, and Padgett believes they are changing for good. He adds, “I actually don’t see it as going back. My perspective is that the future trajectory is just modified. Many of the reactive style tactics to unknown and perceived risks will go away. Some will not. Operating models will continue to adapt to maximize value to guests as well as minimize known health and safety risks that exist.”
Even in a pandemic, there are certain sectors that buck trends and do well. It may come as little surprise that high-end yachting has seen huge levels of demand, as the super rich look to shield themselves from COVID-19. This trend drove a strong need for connectivity, and OmniAccess, which provides connectivity solutions in this area, has been having a strong year.
Bertrand Hartman, CEO of OmniAccess, said last year the company saw a delayed start to the season, but once people had the opportunity to use boats, there was a catch-up effect where people were desperate to get out. The second part of the season was better than normal for OmniAccess, and this led to some mixed feelings. Hartman says last year was OmniAccess’s best year ever, despite the very challenging conditions.
He says that the high levels of uncertainty and the COVID restrictions negatively impacted certain clients, but it caused others to use their yachts more. Many people decided in COVID times that a boat was one of the best places to be, and as people spent more time on their boats, it increased the need for connectivity. Some stayed on their boats for five to six months, needing more bandwidth than normal.
“On top of that, the competitive landscape with various of our colleagues running into trouble, also brought in new clients. On balance, the impact of all of these things together was actually positive. Operationally things were challenging, but by reacting quickly we managed to work around this and COVID has not impacted our operations at all,” says Hartman.
While Carnival seems somewhat reticent about using LEO solutions, OmniAccess is taking the opposite view, and the company is going to be one of Telesat’s earliest customers for bandwidth on its LEO constellation. Hartman explains that Telesat LEO can offer compelling features to the company’s high-end clients. “It addresses some of the structural problems of VSAT [Very Small Aperture Terminal] like patchy coverage, limited amount of satellites, limited throughput, and above all, latency. Latency is a major issue: some people will tell you that latency is a red herring, probably because they don’t have an alternative. It is not a red herring. Anybody who has used VSAT for normal applications can confirm that,” he says.
Hartman stresses the importance of latency for OmniAccess, and believes LEO will quickly become the norm for top-notch capacity at the high-end application level, while GEO will play a big role in more price-sensitive, or less latency-sensitive markets.
“[LEO] is what I would want on my boat if I was to have one,” he says. “LEO particularly shines in maritime. VSAT links are not easy. You have a limited number of satellites, line of sight instruction. We are all struggling to mitigate that. Now, you have hundreds and thousands of satellites. So, that gives you coverage and you have significantly more bandwidth. And you have the latency element. It ticks a lot of boxes.”
Hartman believes the business model of LEO will fundamentally change how verticals are shaped, and who has a place in each part of it. He thinks everyone will have to think about consumer demands and the best technology platform to keep businesses relevant.
“Anybody who does not think that way, and has their GEO service with limited bandwidth, high latency, flickering modems and teleports is in denial. We live in very exciting times with lots of changes ahead of us. How we handle this could present huge upsides or risks. Personally, I think it is great to see the likes of Elon Musk and Jeff Bezos making their way into satellite – they have different mindsets by orders of magnitude. We have been building the same satellites for decades. This will now fundamentally change,” he says.
Stena Line is one of Europe's leading ferry companies, with 36 vessels and 18 routes in Northern Europe operating 28,000 sailings each year. The company is an important part of the European logistics network and develops new intermodal freight solutions by combining transport by rail, road, and sea. The company is looking into radio communication and does not use much satellite capacity, says Raimo Warkki, IT Demand Manager at Stena Line. While the demand for communications is only increasing, the ferry operator says satellite is not necessarily the best solution because of the routes it takes. It is clear the company sees satellite as a secondary solution.
Warkki says, “The goal for the radio communications project is actually to reduce the needs for satellite communications, as well as improve the guest’s experience with [a] good internet connection on board. We want to improve the communications and possibilities on board vessels. One radio link gives us more performance than the whole satellite. So, more and more applications today are based on thin clients, web-based.”
Stena sees satellite as more of a backup solution in the future. “We can’t get radio communication on all of our routes without huge investments. We are going to have a need for satellite in the future. But, whether it will be LEO or VSAT, I don’t know,” Warkki says. “It will have a crucial function in the future, even if we have the main traffic on radio communications on our routes. If we look at how our fleet moves around, we need to have VSAT as a backup solution. It will be there in some way.”
Stena, like a lot of companies, had a tough 2020. Its whole peak season disappeared due to the pandemic. Warkki says that the company hasn’t spent much money during this time to change its connectivity set up, and while it will always look for new solutions, it is clear that Stena will need a lot more convincing before it decides to go down the satellite route further in the future.
In one of the early deals of the year, Tototheo Maritime hooked up with SES to provide connectivity to its maritime customers. Despina Panayiotou Theodosiou, CEO of Tototheo Maritime told Via Satellite she believes the pandemic has made the benefits of connectivity onboard ships for operational and crew welfare reasons more evident.
“Regarding the pandemic's impact, there are issues with getting experienced installation engineers on board ships, however there is equipment that can be couriered on to vessels and some work can be done by crews. We see this happening, but certainly in the beginning of the pandemic, a lot of contracts were paused. However, with some ports opening up we see a resumption of orders,” she says.
She says the biggest maritime connectivity challenge over the past few months has been the uncertainty. It is hard to know, for example, when the cruise industry will start up again. Although there are some announcements of cruise ships being scheduled to go back into service, it will rely on the progression of vaccinations worldwide.
Crew welfare, always a concern, has also come into focus again. Connectivity has always been so important here, and will only get more important going forward. These industries need to work hard to persuade people that they can offer safe, healthy and strong experiences while working at sea.
“We have people who have been left stranded on ships for months, even up to a year. This is leading to a deteriorating image of the shipping industry in the press and a likelihood that youngsters will not choose to take a career at sea due to their belief of how badly they may be treated,” Theodosiou says. “The fact that shipping is an essential industry for global trade, and that this essential industry is becoming increasingly digital, and needs its dedicated workforce, leads to a growing set of declarations and statement of support for crews, and we need to ensure that they are not only words.”
Theodosiou calls digital and satellite connectivity “a business lifesaver.” She says, “For crews feeling stranded and locked on ships, it became a crucial lifeline, and for digitally enabled companies, it helped in many different ways. In short, digital technologies were a tremendous help in keeping our business underway. The greatest trend we see among our customers is using these technologies to enable fleet optimization and efficiency applications.”
She expects Artificial Intelligence (AI) and Machine Learning (ML) will also play a key role on the connected ship going forward. “The benefits of AI and ML are coming as we embed these processes into routine business processes. It is the same with blockchain technology, these are tools that need to find their place in the industry, and indeed are beginning to do so. Many start-ups and entrepreneurial technology companies are rolling out AI-enhanced solutions that will start to influence our industry in profound but specific ways,” she says. “AI is not a panacea or magic dust solution, far from it. AI is a data-driven, precise tool that can utilise connectivity to analyse specific data inputs and articulate improvements.” VS
Editor's note: This piece has been updated to clarify Princess Cruises' partnership with SES.