Up to Speed
Some differing opinions were presented by Exim News Service on March 20th.
“Slow-steaming is here to stay,” says Mr. Rick Wen, one of Orient Overseas Container Line’s VPs. From his vantage point the advantage is apparent. With bunker costs up to $ 650 a ton in 2011 from$ 350 a ton in 2009, slow steaming can reduce costs three to five percent as fuel use drops when ships move more slowly. Nothing else could matter.
But not everyone sees it that way. According to Alphaliner, some carriers are admitting that slow steaming increases their operating costs because fuel savings are more than offset by the higher cost of operating longer strings. For example, the round trip cost of operating a string of seven 8,500-TEU ships steaming at 13 knots on the Far East-US West Coast trade, for example, is higher than operating a string of five ships in the same trade steaming at 19 knots.
As for shippers, the report states, a longer voyage could mean additional inventory carrying costs. Slow steaming also complicates a company’s ability to react to unexpected events, such as bad weather or a labor disruption, which could affect product flow. Slower speeds can trigger changes in ordering, production and scheduling as companies adjust to filling any holes in inventory if the goods are still on the water rather than in a distribution center or with their customer.
In earlier commentaries we pointed out the higher costs of operating extra vessels in slow steaming strategies as opposed to laying up those vessels and providing timely and faster service to customers, and back on June 6th, 2011 we also cited the greatest expense that would be incurred by carriers adopting slow steaming tactics. We stated in our Vol. XXVII, Art. 29 commentary (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 … Let’s call a spade a spade. ‘Slow-stealing’ is what it is.'”
[Can you understand all that, Mr. Wen?]