[180113.EN.SEA] Views Differ Whether Slow Steaming Benefits Shippers Or Only Carriers

SHIPPERS are the losers in deployment of slow steaming, because it increases inventory costs, according to analysis of four complete rotations in a paper from Rotterdam's Erasmus University.

Not so, say carriers, who insist slow-steaming benefits all, generating fuel savings. One can run a 10,000 TEU containership at its 20-25 knots cruising speed and burn 350 tonnes of fuel or burn 175 tonnes by steaming at 18-20 knots, according to London's Containerisation International.

But Martijn Streng's university study of roundtrip routes, says ocean carriers stand to gain - not shippers.

Benefits to carriers far outweigh those for shippers, said Mr Streng, though UK-based Walmart's Asda and Boots the Chemist chain has said the improvement in schedule reliability has been noted, and that affects supply chain costs and cash-flow.

Of the four routes studied, which included a Maersk route and two CMA CGM routes, two were still moving faster than 20-knots, but below the vessels' benchmark speed of 24.

Slowing below 20 knots leads to additional supply chain costs, but savings for carriers, said the university study. For example, carriers save 175 tonnes of bunker by sailing a 10,000-TEU ship between 18-20 knots rather than 20-25 knots. Super-slow steaming - 15-18 knots - saves 100 tonnes a day at $600 a tonne.

But speed is not the determining factor in supply chain costs, argues Erik Rabjerg Nielsen, Maersk's head of scheduling and deployment, but rather a stable and reliable service is what brings monetary benefits.

Ocean carriers have been using slow-steaming to improve profitability for six years and some are sceptical that the practice saves money at a time of rocketing bunker fuel prices.

For shippers, it has been particularly galling that the inventory costs rose through delays of its stock due to slow-steaming of up to a week, only to then be stung by a bunker surcharge. Additionally, carriers were able to offset any capacity squeeze caused by slow-steaming with newbuilding deliveries.

Source : HKSG.