containership at sea

Demand for Faster Transit Times Could Signal an End to Era of Slow-Steaming

The Loadstar
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October 9, 2015


By Mike Wackett, The Loadstar

The era of global slow-steaming by container lines could be about to end with the recent announcement of improved transit times on select services.

APL today announced the launch of its Eagle Express weekly transpacific service, which will offer a 13-day transit from Shanghai to Los Angeles, which the Singapore-based carrier said would be pitched to shippers with time-sensitive cargo, and follows the success of Matson’s China-Long Beach Express service.

APL president Kenneth Glenn said today: We are committed to adding robustness to the supply chains of our customers. Whether it is shipment to the US west coast or its inland destinations, time-sensitive shippers can now take advantage of superior transit times and on-time assurance.”

The service calls at APL’s Los Angeles terminal and links with its 11 weekly dedicated LinerTrain intermodal services, which depart from an on-dock facility to inland destinations such as Chicago, Memphis, Dallas, Houston and New York.

Elsewhere, Israeli container line Zim said it was “offering improved transit times” on its East Med-North Europe service, which it operates in a vessel sharing agreement with MSC, cutting around two days from the schedule between Ashdod and North Europe, for a “best-in-market” transit for the fruit export season.

Despite the cost of bunker fuel more than halving over the past year, ocean carriers have continually dismissed ending the widely-used practice of slow-steaming.

Slow-steaming, which reduces service speed to around 15 knots, was adopted by carriers over her last few years to mitigate the effect of the spiralling cost of fuel, which at its peak represented some 50% of vessel operating costs.

After years of competing on transit times, container shipping lines found that reducing the speed of ships by 10% resulted in a cut of engine power by about 25% and saving around 20% in fuel.

But having successfully “sold” increased transit times to shippers – despite the resulting increase in inventory costs – on the benefits to the environment from reduced carbon emissions and an improvement in schedule reliability, carriers have generally failed to deliver on the latter.

The theory was that slow-steaming containerships could increase speed if they found themselves behind schedule, but the reality was that masters were mostly overruled by operation centres and refused permission to go from ‘slow and steady’ to ‘full-steam ahead’ on the grounds of extra costs.

An additional reason for continued slow-steaming is that it went some way to mitigating the chronic overcapacity on many tradelanes, which would be considerably worse if ships were steaming at faster speeds.

Carriers also harbour fears that oil prices could rebound and are concerned about a potential backlash from investors worried that faster sailing speeds represent a reversal of emissions-reduction policies.

However, some other shipping sectors, where time is money on the delivery of cargo and ad hoc container services which reduce charter hire by faster steaming, have already embraced the reduction in fuel costs to improve profitability.

APL and Zim may be followed by other lines offering faster transit options, partly because it is an extra selling point to distance themselves from the pack in an increasingly commoditised industry.

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