According to a recent report from Drewry Maritime Research; “The freight rate war currently taking place between Asia and Europe, and between Asia and the US, and the further addition of new ships, will force carriers to resort to more slow steaming. Although slow steaming continues to be a contentious issue with shippers, more is on the way as fuel prices remain stubbornly high and ocean carriers can no longer absorb the bill due to the perilous nature of their finances. Drewry believes that ocean carriers are losing money at present due to the freight rate war that is taking place in the east-west trades, and they are still confronted with excess capacity. At the end of April, there were still another 31 ships over 10,000 TEU due for delivery this year, and carriers were running out of places to hide unwanted 8,000 TEU vessels cascaded out of the Asia-Europe tradelane.

“Cargo growth between Asia and the US is insufficient, as it is between Asia and the East Coast of South America, which means that either more vessels will have to be laid up, or further slow steaming introduced. The latter is the most logical, particularly as it was difficult to justify throughout most of last year due to freight rates being so high. But with east-west freight rates now plummeting to sub-economic levels again, ocean carriers can return to the view that ‘shippers get the service they pay for’ by further releasing pressure on their vessels’ accelerators. They have a wide margin to play with, as shown in tabulations of the three fastest and slowest services from Asia to Northern Europe, and from Asia to the West Coast of North America.

“The wide variance in speeds is difficult to explain, as ocean carriers do not appear to get much of a freight rate premium for faster service, although market feedback is mixed on this. Schedule optimisation seems to be more important, taking into account the range of ports that need to be served at both ends. And, once a schedule has been decided, vessels cannot easily be added due to berthing window restrictions in most ports, which explains why there has been so little change over the past nine months …

“Estimated overall vessel speeds remained more-or-less constant between September and March, although Drewry’s research shows that there were wide variances at individual schedule level, depending on the extent of port optimisation required …

“For an average voyage between Asia and North Europe deploying 11 vessels running at 19k westbound and 15k eastbound, an extra vessel could be added by increasing westbound transit time by two days through a speed reduction of 1.5k, which would mean having to add 5 days on the way back through a speed reduction of 2k. It would make it difficult for Maersk Line to maintain ‘Daily Maersk’ with the same transit times, however …

“Further vessel reductions between Asia and Europe and between Asia and the US, should be expected soon. It will result in longer transit times”. – (… As well as unhappy shippers and consumers! … Drewry should have reported.)

[Does this “shop-til-you-drop” behavior by ocean carrier bigwigs make any sense at all?]