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Nautilus Labs aims to boost fleet efficiency as IMO 2020 fuel costs loom over ocean freight

( Photo: Nautilus Labs )

With new backing from Microsoft, start-up readies for technical and geographic expansion of optimization services for shipping assets.

Deck officers on ships are trained in a number of skills, such as firefighting, emergency medicine, survival at sea and celestial navigation. Include in that meter reading.

Every day, they help compile what’s called a “noon report,” the once-a-day report of a ship’s speed, position, fuel use and other data that is sent back to landside operations in order to monitor a voyage.

In many cases, the process of assembling the noon report requires a crew member “going around looking at a sensor gauge, writing down a value on a piece of paper, compiling all those values and emailing it back to shore,” said Matt Heider, chief executive officer of Nautilus Labs. “That’s really what performance monitoring is today for most shipping companies.”

His company seeks to bring the 200-year-old noon report to the modern age of continuous monitoring and data analytics. To do so, Nautilus received an $11 million investment round from Microsoft’s (Nasdaq: MSFT) venture capital arm, M12.

The new round adds to a $3.5 million seed round for the company from Quiet Capital, Trail Mix Ventures, and Amplifier.

With the new investment, Nautilus will add 30 or more employees, chiefly in engineering and data science, to join the current staff of 20, some of whom are alumni of Google (NASDAQ: GOOG), Amazon (Nasdaq: AMZN) and Palantir Technologies. It’s also looking to broaden its global reach beyond its New York base.

Since the commercial introduction of its platform in December 2017, Nautilus is managing over 120 ships. Among its clients are Teekay LNG Partners (NYSE: TGP), Dorian LPG (NYSE: LPG), Eagle Bulk Shipping (Nasdaq: EGLE) and TOTE Services.  

Nautilus’ software automates and unifies data collection across fleets and gets it back to shoreside much more quickly and frequently than currently occurs, Heider said. In addition, the software incorporates external data such as weather and port information, along with commercial data such as fuel costs and shipping rates in a given region.

Ships have numerous sensor gauges that offer different levels of automation. Heider said Nautilus can provide fleets with the “last mile” solution for getting that data back to shore, as well as provide analytic tools to existing sensor data from marine engine makers, such as Wartsila, Kongsberg Maritime and MAN.

Adding a layer of artificial intelligence to that data, ship managers can then make better decisions on how to optimize their fleet for all those variables, Heider said.

“One of the most basic decisions is just how fast should a ship travel,” Heider said. “It’s not necessarily obvious if you don’t understand the performance of the ship, or how much fuel it’s consuming at a given speed.”

Once that data is compiled and analyzed, ship managers can more easily determine “which port to bunker at, when to perform maintenance and what rate to charge for a given voyage.”

Fuel accounts for at least half or more of a ship’s operating expenses, so ship managers need to get it right. Liquid and dry bulk shipping typically charges an all-in rate, which includes fuel costs, for a voyage.

And fuel costs are going to be much more critical next year when the International Maritime Organization’s sulfur limits come into force.  Consultancy Wood Mackenzie said the shipping industry’s annual $100 billion fuel bill could rise by at least 25 percent by 2020 due to the switch.

Heider said Nautilus customers have so far found an uplift of “a couple of hundred dollars per day” in terms of reducing fuel costs from the platform. That can aggregate to thousands per year per vessel, and with more vessels joining the platform and adding more data, “we are just getting started.”    

“We think the value and the savings are going to be much higher long-term.”