What next? … Paddle-wheelers?

TradeWinds brings us this spinnage from Singapore:

“Slow steaming is the best way forward in the challenging times facing the container industry, according to a senior executive at Maersk Line.”

Not only does slow steaming cut down on bunker costs, he stated, but it also reduces the carbon footprint of the liner industry as well as the “excess capacity” coming into the industry by the hundreds of new containerships being “unleashed” onto the world’s oceans by yards worldwide.

“Just a small reduction in speed has a huge impact on fuel consumption, which increases exponentially with speed,” the man explained. He went on to cite as an example a 56-day return service between Rotterdam and Shanghai using eight vessels traveling at 24 knots. To run this service normally, he pointed out, required an estimated 9,500 metric tons of bunker fuel but when the service speed was reduced to 22 knots using nine vessels with a total voyage time of 63 days, the total fuel consumption dropped to 8,000 metric tons. By slowing the service down by two knots, he explained, operators stand to save $ 1.1 million in bunker costs through one entire rotation.

The executive went on to point out that by needing more ships to operate the services, it would absorb a lot of the newbuildings (excess capacity?) coming (unleashed?) into the market which could further help operators maintain higher freight rates.

He also stated that ports, especially U.S. ports, needed to speed up their efficiency so that ships can get in and get out faster. “If ports were more efficient,” he said, “we could save a lot more fuel because there would be no need to race (by slow steaming?) across the ocean only to spend three days in port.” He complained further that environmental savings are lost when hundreds of trucks are lined up outside the gates for hours because of delays at check-point stations.

When told by TradeWinds that the shippers’ biggest concern was whether or not the savings from slow steaming were being passed on to them, the executive replied, “Of course it is. Freight rates do go up and down but in general they have been heading steadily south. This is a direct result of us passing on savings to the customer.”

Let’s see if we heard him correctly. By adding an extra vessel to the run, Maersk saves money. Right? In fact, according to Maersk’s calculations, $ 1.1 million in fuel costs are saved by adding seven more days to the run along with that extra vessel.

What Maersk officials have failed to consider, however, is what’s on the other side of the equation. What about the price of that ninth vessel, and the daily cost for operations? Are we supposed to believe that a paltry $ 1.1 million fuel savings every 63 days will offset those costs?

[Are we dealing here with bunker fuel or snake oil?]