Box Carriers Say Slow Steaming Is Here To Stay
Slow steaming is delivering cost savings for container lines beyond the obvious one of cheaper fuel bills.
That is convincing liner shipping bosses that reduced ship speeds are here to stay for the foreseeable future, despite a rally in freight rates that has accompanied the recent rebound in cargo volumes on some trades.
But super-slow steaming, when ship speeds are cut right back to around 12 knots-14 knots, may not be maintained if conditions continue to improve. However, running deepsea containerships on the longhaul legs from Asia to Europe or the US at reduced power makes sound economic sense, say industry leaders.
“There are compelling reasons for slow steaming for as long as I can see,” Neptune Orient Lines president and chief executive Ron Widdows said in an interview.
That is because costs can be taken out across the system if ships are being operated more slowly, while schedule enhancements are also possible.
“It is not just fuel savings,” said Mr Widdows.
“When you add ships to a rotation, that provides opportunities to call at some other ports, so feeder costs are reduced.”
With more flexibility in the schedule, ships may be able to berth during different windows, which could also save money. Docking on a weekday rather than at the weekend, or during daylight hours rather than at night, would cut overtime payments.
“So you can save money in terms of terminal handling, feeder costs and some cargo rehandling, as well as fuel costs — it is a compelling set of economics,” said Mr Widdows.
If slow speeds makes sense at $400- $450 per tonne, “then carriers are moving towards the conviction that this is the way things are going to be”.
Even if freight rates recover by, say, $500 per box, “why would lines then speed up and spend hundreds of millions of dollars more on fuel?” Mr Widdows asked.
Maersk Line chief executive Eivind Kolding also thinks the majority of lines will continue to throttle back. “I believe slow steaming is here to stay,” he said last week.
Some might speed up, but most probably would keep speeds down, he predicted. That is because the cost savings are big, while freight rates are not yet back to breakeven.
Furthermore, it takes a great deal of time and effort to adjust service networks every time speeds are adjusted.
In the Asia-Europe trades, Maersk is running its ships at about 20 knots on the headhaul leg, but at much slower speeds of 12 knots-14 knots on the return leg that is less time-sensitive.
There was more of a question over whether super-slow steaming would continue, Mr Kolding said, since very low speeds posed a greater operational challenge.
Slow and super-slow ship speeds were first introduced when fuel prices soared, but have remained in place as freight rates plunged and lines saw an opportunity to absorb some of the large amount of idle tonnage by slotting extra ships into standard loops so that weekly schedules could be maintained. With charter rates still low, the economics continue to make sense.