Slow Burn

Today’s Singapore Business Times had something else to say about the slow-steaming spinnage we’re being fed. Here’s how the comments were reported.

“In the cheering for slow steaming, what with savings on fuel for liners and the lower emissions for the planet, it appears that the shippers’ howls of protest might have been drowned out.

“Nine out of 10 businesses polled in a survey of 200 senior executives said that slow steaming has had an impact on their supply chains, a study commissioned by logistics firm BDP International has found.

“In Asia-Pacific, where the bulk of the world’s sourcing is done, 58 per cent of businesses are wringing their hands over how slow steaming has affected the quality of customer service – compared with 52 per cent in Europe and the Middle East and 38 per cent in the Americas.

“While slow steaming typically adds about a third of a trip’s duration at normal speed to the overall time at sea, the issue is as much about the accompanying uncertainty as it is about the longer transit time.

“‘The uncertainty has increased because communication from carriers about transit times and arrival date is inconsistent at best. During the previous regime, importers and exporters had a good understanding of what transit time to expect and could plan accordingly,’ said David Poh, the general manager of BDP International in Singapore.

“‘Now, the transit times vary, and precise details of arrival dates and transit times are not always communicated by the carriers.’

“Fifty-one per cent of the Asia-Pacific businesses surveyed also said that their inventory levels had been affected by slow steaming.

“‘If transit times are taking longer, companies are changing the way they manage their inventory – and they’re pushing more inventory into markets as a hedge against the transit time delays that they’re experiencing,’ said Arnie Bornstein, an executive director at BDP International.

“This comes at a greater expense as well, as companies fork out more for storage space. ‘When you have a fragile, uneven economic recovery, shippers and buyers are being very careful not to push too much inventory into a market,’ Mr. Bornstein added.

“The push for slow steaming has caused reverberations upstream, all the way into the assembly line, for some businesses. In Asia-Pacific, putting in place advance planning to synchronize delivery and production schedules was the most common reaction to slow steaming, with 48 per cent of respondents having done it.

“‘This is way beyond getting a container to a dock to be loaded on a ship. Companies are actually taking steps to change the timing and schedules for production ,’ said Mr. Bornstein.

“Not surprisingly, a resounding 73 per cent of respondents in Asia-Pacific would like to see the savings from lower fuel usage translated to lower freight rates.

“While the survey might be the first of its kind to be carried out by BDP, the underlying sentiment typifies an age-old dynamic between shippers and liners.

“‘Shippers would like to see a more collegial environment for negotiating mutually fair rates. Right now, shippers don’t feel like they’re being treated like customers,’ said Mr. Bornstein.” –

In an earlier report, Peter Gatti, the executive vice president of the National Industrial Transportation League (NITL) stated that shippers were also counting on a price break from the carriers comprising the Transpacific Stabilization Agreement (TSA), but that didn’t happen. Indeed, added Gatti, one non-conference carrier operating a dedicated shuttle from Shanghai to Long Beach has been operating at normal knot-speed and delivering goods at a competitive price point.

According to Gatti, supply chains have suffered negative impacts as a result of slow steaming. Shippers said that transit times have risen, effective vessel capacity has dropped, shortages in containers have been exacerbated, and meeting customer expectations is more difficult.

It isn’t really slow steaming – it’s slow stealing. And stealing is what it is because carriers are ripping off shippers and consumers – big time. Here’s what we wrote about ‘slow steaming’ in our Vol. XXVII, Art. 29 commentary, which we appropriately titled “Slow Stealing”:

“If you’re not convinced by this time that ‘slow steaming’ is just another hoax – just another sure-fire way to bleed the taxpayer/consumer – read what Lloyd’s Register says about the stratagem. In dismissing the ‘slow steaming’ concept as costly and harmful to the environment, the marine classification society told Marine Biz TV:

“‘Containerships are built to operate at higher outputs and will need to be more closely monitored when slow steaming to avoid loss of engine performance, fuel quality, and lubrication oil consumption when moving below 20 knots. The large containership is designed for 25 knots at 70,000kw main engine power and will require just 50 percent power when reduced to 20 knots. As voyage times increase, fuel savings will be less, and at slower speeds, NOx emissions also increase, resulting in waste engine capacity, higher capital costs from unused power potential, losses in heat recovery systems, turbocharger and propeller efficiency as well as increased fouling of hulls and propellers. Lloyd’s Register also warned of increased compensatory fuel consumption and possible increased vibration levels risking safe, reliable ship operations.’ – ”

“Carriers should quit lying to us. There are no ‘benefits’ or profits to pass on. The only things being passed on are the extra costs incurred by the arrogant ‘slow steaming’ stratagem. The real reason for ‘slow steaming’ is to avoid scrapping the overcapacity which resulted from mismanagement and the corporate fanning of feathers’. Let’s call a spade a spade. ‘Slow stealing’ is what it is.”