This episode highlights the new benefits, risks and impacts on operations that artificial intelligence is bringing to the transportation industry. Reed Smith transportation industry lawyers <a href='https://www.reedsmith.com/en/professionals/d/deng-han'>Han Deng</a> and <a href='https://www.reedsmith.com/en/professionals/b/beiersdorf-oliver'>Oliver Beiersdorf</a> explain how AI can improve sustainability in shipping and aviation by optimizing routes and reducing fuel consumption. They emphasize AI’s potential contributions from a safety standpoint as well, but they remain wary of risks from cyberattacks, inaccurate data outputs and other threats.
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Transcript:
Intro: Hello and welcome to Tech Law Talks, a podcast brought to you by Reed Smith's Emerging Technologies Group. In each episode of this podcast, we will discuss cutting-edge issues on technology, data, and the law. We will provide practical observations on a wide variety of technology and data topics to give you quick and actionable tips to address the issues you are dealing with every day. 
Han: Hello, everyone. Welcome to our new series on AI. Over the coming months, we will explore the key challenges and opportunities within the rapidly evolving AI landscape. Today, my colleague Oliver and I will focus on AI in shipping and aviation. My name is Han Deng, a partner in the transportation industry group in New York, focusing on the shipping industry. So AI and machine learning have the potential to transform the transportation industry. What do you think about that, Oliver? 
Oliver: Thanks, Han, and it's great to join you. My name is Oliver Beiersdorf. I'm a partner in our transportation industry group here at Reed Smith, and it's a pleasure to be here. I'm going to focus a little bit on the aviation sector. And in aviation, AI is really contributing to a wide spectrum of value opportunities, including enhancing efficiency, as well as safety-critical applications. But we're still in the early stages. The full potential of AI within the aviation sector is far from being harnessed. For instance, there's huge potential for use in areas which will reduce human workload or increase human capabilities in very complex scenarios in aviation. 
Han: Yeah, and there's similar potential within the shipping industry with platforms designed to enhance collision avoidance, route optimization, and sustainability efforts. In fact, AI is predicted to contribute $2.5 trillion to the global economy by 2030. 
Oliver: Yeah, that is a lot of money, and it may even be more than that. But with that economic potential, of course, also comes substantial risks. And AI users and operators and industries now getting into using AI have to take preventative steps to avoid cyber security attacks. Inaccurate data outputs, and other threats. 
Han: Yeah, and at Reed Smith, we help our clients to understand how AI may affect their operations, as well as how AI may be utilized to maximize potential while avoiding its pitfalls and legal risks. During this seminar, we will highlight elements within the transportation industry that stand to benefit significantly from AI. 
Oliver: Yeah, so a couple of topics that we want to discuss here in the next section, and there's really three of them which overlap between shipping and aviation in terms of the use of AI. And those topics are sustainability, safety, and business efficiency with the use of AI. In terms of sustainability, across both sectors, AI can help with route optimization, which saves on fuel and thus enhances sustainability. 
Han: AI can make a significant difference in sustainability across the whole of the transportation industry by decreasing emissions. For example, within the shipping sector, emerging tech companies are developing systems that can directly link the information generated about direction and speed to a ship's propulsion system for autonomous regulation. AI also has the potential to create optimized routes using sensors that track and analyze real-time and variable factors such as wind speed and current. AI can determine both the ideal route and speed for a specific ship at any point in the ocean to maximize efficiency efficiency and minimize fuel usage. 
Oliver: So you can see the same kind of potential in the aviation sector. For example, AI has the potential to assist with optimizing flight trajectories, including creating so-called green routes and increasing prediction accuracy. AI can also provide key decision makers and experts with new features that could transform air traffic management in terms of new technologies and operating procedures and creating greater efficiencies. Aside from reducing emissions, these advances have the potential to offer big savings in energy costs, which, of course, is a major factor for airlines and other players in the industry, with the cost of gas being a major factor in their budgets, and in particular, jet fuel for airlines. So advances here really have the potential to offer big savings that will enable both sectors to enhance profitability while decreasing reliance on fossil fuels. 
Han: I totally agree. And further, you know, in terms of safety. AI can be used with the transportation industry to assist with safety assessment and management by identifying, managing, and predicting various safety risks. 
Oliver: Right. So, in the aviation sector, AI has the potential to increase safety by driving the development of new air traffic management systems to maintain distances from aircraft. Planning safer routes, assisting in approaches to busy airports, And the development of new conflict detection, traffic advisories, and resolution tools, along with cyber resilience. What we're seeing, of course, in aviation, and there's a lot of discussion about, is the use of drones and EV tools, so electronic, vertical, takeoff, and landing aircraft. All of which add more complexity to the existing use of airspace. And you're seeing many players in the industry, including retailers who deliver products, using eVTOLs and drones to deliver product. And AI can be a useful assistant, that is, to ATM actors from planning, to operations, and really across all airspace users. It can benefit airline operators as well, who depend on predictable routine routes and services by using aviation data to predict air traffic management more accurately. 
Han: That's fascinating, Oliver. Same within the shipping sector, for example, AI has the capacity to create 3D models for areas and use those models to simulate the impact of disruptions that may arise. AI can also enhance safety features through the use of vision sensors that can respond to ship traffic and prevent accidents. As AI begins to be able to deliver innovative responses that enhance predictability and resilience of the traffic management system, efficiency will increase productivity and enhance use of scarce resources like airspace, runways, and stuff. 
Oliver: Yeah. So it'll be really interesting to follow, you know, how this develops. It's all still very new. Another area where you're going to see the use of AI, and we already are, is in terms of business efficiency, again, in both the shipping and aviation sectors. There's really a lot of potential for AI, including in generating data and cumulative reports based on real-time information. And by increasing the speed by which the information is processed, companies can identify issues early on and perform predictive maintenance to minimize disruptions. The ability to generate reports is also going to be useful in ensuring compliance with regulations and also coordinating work with contractors, vendors, partners, such as code share partners in commercial aviation and other stakeholders in the industry. 
Han: Yeah, and AI can be used to perform comprehensive audits to ensure that all cargo is present and that it complies with contracts, local and national regulation, which can help identify any discrepancies quickly and lead to swift resolution. AI can also be used to generate reports based on this information to provide autonomous communication within contractors about cargo location and the estimated time of arrival. Increasing communication and visibility in order to inspire trust and confidence. Aside from compliance, these reports will also be useful in ensuring efficiencies in management and business development and strategy by performing predictive analytics in various areas, such as demand forecasting. 
Oliver: And despite all these benefits, of course, as with any new technology, you need to weigh that against the potential risk and various things that can happen by using AI. So let's talk a little bit about cybersecurity and regulation being unable to keep pace with technology development, inaccurate data, and industry fragmentation. Things are just happening so fast that there's a huge risk. Associated with the use of artificial intelligence in many areas, but also in the transportation industry, including as a result of cybersecurity attacks. Data security breaches can affect airline operators or can also occur on vessels, in port operations, and in undersea infrastructure. Cyber criminals who are becoming more and more sophisticated can even manipulate data inputs, causing AI platforms on vessels to misidentify malicious maritime activity as legitimate trade or safe. Actors using AI are going to need to ensure the cyber safety of AI-enabled systems. I mean, that's a focus in both shipping and aviation and in other industries. Businesses and air traffic providers need to ensure that AI-enabled applications have robust cybersecurity elements built into their operational and maintenance schedules. Shipping companies will need to update their current cybersecurity systems and risk assessment plans to develop these threats and comply with relevant data and privacy laws. A real recent example is the CrowdStrike software outage on July 19th, which really affected almost every industry. But we saw it being particularly acute in the aviation industry and commercial aviation with literally thousands of flights being canceled with massive disruption to the industry. And interestingly, the CrowdStrike software outage, what we're talking about there is really software that's intended to avoid cyber criminal risk. And a, you know, a programming issue can result in, you know, systems being down and these types of massive disruptions, because of course, in both aviation and in shipping, we're so reliant on technologies and the issue of regulation and really the inability of regulators to keep up up with this incredible fast pace is another concern. And regulations are always reactive. In this instance, AI continues to rapidly develop and regulations do not necessarily effectively address AI. In its most current form. The unchecked use of AI could create and increase the risk of cybersecurity attacks and data privacy law violations, and frankly, create other risks that we haven't even been able to predict. 
Han: Wow, we really need to buckle up in the times of cybersecurity. And talking about inaccurate data, quality of AI depends upon the quality of its data inputs. Therefore, misleading and inaccurate data sets could lead to imprecise predictions for navigation. Alternatively, there is a risk that users may rely too heavily on AI platforms to make important decisions about collision avoidance and route optimization. And so the shipping companies must be sure to properly train their employees on the proper uses of AI. And speaking of industry fragmentation, AI is an expensive tool. Poor economies will be unable to integrate AI platforms in their maritime or aviation operations, which could fragment global trade. For example, without harmony in the AI use and proficiency, the shipping industry may see a decrease in revenue, a lack of global governance, and the rise of the black market dark fleets. 
Oliver: There's just so much to talk about in this area. It's really almost mind-blowing. But in conclusion, I think a couple points that have come out of our discussion is that if the industry takes action and fully captures AI-enabled value opportunities in both the short and the long terms, the potential for AI is just huge. But we have to be very mindful of the associated risks and empower private industry and governments to provide resolutions through technology, but also regulations. So thank you very much for joining us. That's it for today. And we really appreciate you listening in to our Tech Law Talks. 
Han: Thank you. 
Oliver: Thank you. 
Outro: Tech Law Talks is a Reed Smith production. Our producers are Ali McCardell and Shannon Ryan. For more information about Reed Smith's emerging technologies practice, please email techlawtalks@reedsmith.com. You can find our podcasts on Spotify, Apple Podcasts, Google Podcasts, reedsmith.com, and our social media accounts. 
Disclaimer: This podcast is provided for educational purposes. It does not constitute legal advice and is not is not intended to establish an attorney-client relationship, nor is it intended to suggest or establish standards of care applicable to particular lawyers in any given situation. Prior results do not guarantee a similar outcome. Any views, opinions, or comments made by any external guest speaker are not to be attributed to Reed Smith LLP or its individual lawyers. 
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