We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • ::COVID-19 COVERAGE::
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Change Me
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • Analytics & Big Data
      • Best Practices
      • Change Me
      • Empowering Your Performance Edge
      • Logistics Problem Solving
      • One-Off Sound Off
      • Public Sector Logistics
      • Two Sides of the Logistics Coin
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • MODEX 2020
    • Upload Your Video
Home » Liners unlikely to speed up their ships despite falling oil prices, analyst says
newsworthy

Liners unlikely to speed up their ships despite falling oil prices, analyst says

March 4, 2015
Ben Ames
No Comments

Liner shipping companies are unlikely to hike their steaming speeds despite a steep decline in fuel prices, experts say.

Oil prices have fallen dramatically in recent months, prompting some shipping analysts to wonder if cheaper bunker fuel could inspire containership operators to increase their vessels' speeds through the world's oceans. Not so fast, maritime shipping experts say. Though shipping firms may enjoy fuel savings during the current cycle, they are unlikely to abandon the practice of "slow steaming," under which vessel speeds are reduced to conserve fuel.

The reason, according to the Danish container shipping analyst SeaIntel Maritime Analysis, is that the global supply chain is so complex that changing just one variable will trigger costly adjustments elsewhere along the chain.

"It requires considerable time, effort and money to redesign and implement a new network, finding new berthing slots and communicating new transit and cutoff times to customers," said Alan Murphy, SeaIntel's COO, in a report issued today. "It is simply not worth it if the carrier does not expect a long-term gain from such a restructure."

That calculus means the industry will not adjust its shipping speeds until it can predict that fuel prices will stay stable and low in the long run—and few economists are willing to stake their reputations on that shaky assumption.

Carriers like the Belgian tanker company Euronav expect fuel prices to rebound soon to higher levels while ports continue to offload cargo at their current pace.

"Lower bunker costs make speed less of a cost issue, but ship owners will not waste fuel, so speeds in ballast will vary as to whether the ship is sailing to a cargo or not," Euronav said in its fourth-quarter 2014 earnings announcement. "No ship owner will want to speed up just to wait. Ships should continue in slow speed until they are fixed for a cargo and then adjust speed to arrive just in time."

Maritime freight firms began the practice of slow steaming in 2008, when a spike in global oil prices—and the bunker fuel that seagoing vessels burn—led to skyrocketing gas bills in an industry where logistics professionals strive to shave pennies off every shipment cost. At the time, operators implemented slow steaming in the belief that the world was heading into a long period of rising oil prices.

By taking their foot off the accelerator, ship captains saw a quick financial return as they burned less fuel and reduced carbon emissions. A containership saves money through efficiency by steaming at 13 or 15 knots instead of its typical top speed of 20 or 22 knots, just as a highway motorist can improve a car's mileage by cruising at 55 miles per hour.

Those savings add up fast when bunker-fuel costs account for an estimated 70 percent of the total voyage expenditure for a cargo vessel, according to the analyst firm Research and Markets.

But the strategy also came with a downside, delaying the delivery of precious containers to port locations by a day or two for every ocean crossing. That slow speed caused headaches for shipping customers, who operate in an age when manufacturing and retail industries rely on just-in-time deliveries to keep factories and shop floors humming.

Maritime & Ocean
KEYWORDS Euronav Research and Markets SeaIntel
  • Related Articles

    UPS hikes fuel surcharges despite dramatic declines in oil, fuel prices

    Analyst calls further diversion of import cargo to East Coast ports "unlikely"

    Cass shipment, expenditure indexes turn up in January; freight recession over, analyst says

Benames
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

Recent Articles by Ben Ames

Price tag in AutoStore deal shows hot estimates for AS/RS sector growth

Turnaround for reverse logistics: interview with Tony Sciarrotta

Suez Canal resumes daily traffic, but accident investigation just begins

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • A look into the future of robotics

  • Exotec Skypod System Adopted by Gap Inc. to Optimize Returns Process

  • A primer on warehouse robots

  • Roadrunner Freight bolsters LTL capabilities with $50 million in new backing

  • Truck driver availability tightens to three-year low, ACT says

Now Playing on DCV-TV

B56eecf1 4687 42a4 865e c3f3223925f7

How serious are you about controlling your freight costs?

DCV-TV 4: Viewer Contributed
If you’ve been feeling like your freight budget is under attack, you’re in good company! Whether you’re looking at the ocean, parcel, LTL, truckload, or air markets, capacity is tight and prices are soaring.RELATED RESOURCES:Rapid AssessmentVisit our websiteSubscribe to our YouTube Channel

FEATURED WHITE PAPERS

  • Special Report: Supply Chain Trends in Retail & Consumer Goods

  • Fortify Your Operational Resilience

  • Cold Storage Automation: Leveraging Advanced Technologies to Meet Increasing Demand

  • The modern warehouse: Maximizing productivity and capacity

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2021. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing