Slow-steaming to escalate | Saigon Newport Corp.(SNP)
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Slow-steaming to escalate


Although slow-steaming continues to be a contentious issue with shippers, more is on the way as fuel prices remain stubbornly high and ocean carriers can no longer absorb the bill, due to the parlous nature of their finances, according to the latest Container Insight report from analyst Drewry.

Drewry believes ocean carriers are losing money due to the freight rate war taking place in the east-west trades, and are still confronted with surplus capacity.
It said: “At the end of April, there were still 31 ships of over 10,000teu due for delivery this year, and carriers are running out of places to hide unwanted 8,000teu vessels cascaded out of the Asia-Europe tradelane.”
The reports says cargo growth between Asia and the US and Asia and east coast South America is insufficient, which means that either more vessels will have to be laid-up, or further slow-steaming introduced.
“With east-west freight rates plummeting to sub-economic levels again, ocean carriers can return to the view that ‘shippers get the service they pay for’ by further releasing pressure on their vessels’ accelerators.”
According to the analyst, estimated overall vessel speeds remained more-or-less constant between September and March, although Drewry’s research shows that there were wide variances at individual schedule level, depending on the extent of port optimisation required.
For an average voyage between Asia and North Europe deploying 11 vessels running at 19k westbound and 15k eastbound, an extra vessel could be added by increasing westbound transit time by two days through a speed reduction of 1.5k, which would mean having to add five days on the way back through a speed reduction of 2k.
It would make it difficult for Maersk Line to maintain ‘Daily Maersk’ with the same transit time guarantees, however, says the report.
The calculation is more difficult in the transpacific, says Drewery, due to the much more variable transit times of existing services between north, central and southern Asia to north, central and southern WCNA ports, but, due to the much shorter distances involved, the time lost would be far less.
The analyst said: “Further vessel reductions between Asia and Europe and between Asia and the US, should be expected soon. It will result in longer transit times, but schedule reliability should improve due to the greater opportunity for making up lost time.”

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