Slow steaming impacts on ocean carriers and shippers

Abstract

A b s t r a c t Ocean container carriers have implemented slow steaming (reduced vesselspeeds) in recent years to improve fuel efficiency and lower greenhouse gas emissions. However, many shippers oppose the practice due to increased pipeline inventory associated with longer transit times. Given this conflict, this article seeks to quantify the costs and benefits of slow steaming relative to carriers and shippers. We simulate a high volume AsiaNorth America container trade lane to estimate slow steaming impacts under different vessel speeds, volumes and fuel prices. Under current conditions, the results justify slow steaming practices, revealing extra slow steaming as the most beneficial vessel speed with a 20 per cent reduction in total costs and a 43 per cent reduction in carbon dioxide emissions. Extra slow steaming is also optimal for future volumes and a wide range of fuel prices. Furthermore, the results detail carrier and shipper cost trade-offs, thus offering practical evidence and transparency to the industry on how to create financial equity in facilitating contractual-based agreements for vessel speed standards.

Swedish shippers’ strategies for coping with slow-steaming in deep sea container shipping

“…Notwithstanding the positive environmental and economic effects of slow-steaming, the practice also entails significant and potentially negative operational and economic consequences for the shippers, i.e., the customers of the service that the shipping companies produce-most notably, the increased lead time resulting from longer transport times (Fredriksson & Jonsson, 2009;Maloni et al, 2013;McKinnon, 2012). Unilateral changes in sailing speed contribute positively to the reduction of CO 2 emissions, but only temporarily if the supply chains using the service cannot cope with the lead times and opt for more carbon intensive alternatives.…”

Selection of ocean container carriers: One countrys perspective

“…Early studies from North Americ a considered cost as the most important because shippers were int erested in reducing logistic operational costs (Brooks, 1985;Gibson et al, 2002;Murphy and Daley, 1995). However, recent studies from North America have discovered that service relat ed factors (that is, transit time, quality service, on -time delivery performance) have become more important (BenAkiva et al, 2013;Maloni et al, 2013;Zsidisin et al, 2007).…”

“…Voss et al (2006) analysed the significant factors that drove transport service buyers when selecting ocean carrier and found that delivery reliability, rates charged, and carrier reputation were the three most important factors taken into consideration by shippers. Additionally, Saldanha et al (2009) Gibson et al (2002) Cost, effectiveness, trust, flexibility US Zsidisin et al (2007) On-time delivery performance US Premeaux (2010) Flexible rates, response to emergency, IT US Ben-Akiva et al (2013) Quality service and total logistics costs US Maloni et al (2013) Transit time, Co2 reduction operations US/Asia Gailus and Jahn (2013) Reliability, transit time Germany Kannan et al (2011) Low rate, pricing flexibility and flexibility India Van den Berg and de Langwn (2014) Cost driven Netherlands Lam and Zhang (2014) Cost control, reliability and responsiveness Singapore Harrision and Fichtinger (2013) Time, schedule, transit time and frequency UK transit time and transit time reliability as the most critical factors which influenced the decision making of freight service buyers when selecting ocean container carrier.…”

Efficient Hinterland Transport Infrastructure and Services for Large Container Ports

“…e) The adoption of 'slow steaming' by container shipping lines, primarily to cut bunker fuel costs. To compensate for the lengthening of transit-times on the maritime leg, shippers are keen to accelerate hinterland transport and improve its reliability to minimise adverse effects on production and distribution schedules (Maloni et al, 2013). f) The shift in the balance of costs between deep-sea and hinterland transport.…”