Slow steaming ?huge? for carriers

Slow steaming æhugeÆ for carriers    Slow steaming provides 'huge' benefits for liner carriers, according to a shipping analyst with Goldman Sachs.
   Simple math spells out the advantages, said Thomas Kim, executive director of Asia investment research for Goldman Sachs, speaking last week at the TPM Asia conference in Shenzhen, China.
   'If fuel represents 20 percent of revenue, and you save 20 percent of your fuel costs, that's a 4 percent margin, which is huge,' Kim said. 'The benefits of slow steaming are huge.'
   APL President Eng Aik Meng, another speaker at the Journal of Commerce conference, said the advantages of slow steaming are sometimes overstated.

Meng

   'Many of us operating in alliances aren't fully involved in slow steaming,' Eng said. 'Bunker savings (through slow steaming) are offset by the cost of an extra asset, either through chartering or depreciation. But you have to look at it loop-by-loop.'

Kim

   But Kim retorted: 'If you reduce your vessel speed, you reduce capacity. The ability to affect supply and rates, there's your return.'
   Kim also pointed out that slow steaming has not had the desired impact on schedule reliability — in fact, by some industry measures, on-time performance has worsened since slow steaming measures were widely introduced on the transpacific and Asia/Europe lanes.
   'Uncertainty has grown as slow steaming has widened transit times,' Kim said.
   APL, which has recently touted its on-time performance on the transpacific and has exacting standards for what it considers on time, said it uses slow steaming to maintain its schedules.
   'Our stand is, if there is a delay, we speed up,' Eng said. 'We have to be careful not to generalize the behavior of some to the whole industry.'
   Most speakers at the conference who touched on slow steaming had much the same message: slow steaming is here to stay.
   One shipper, Scott Larson, vice president of international logistics and custom compliance for retailer The Bon-Ton Stores, said that while slow steaming look like a long-term measure, the market is softening and freight rates are under pressure again.
   'It's like a chess game,' he said. 'Will carriers act together and take capacity out at the end of October? There are new entrants now (on the transpacific).'
   On the shipper side, 'no one wants to have excess inventory and unplanned markdowns,' Larson said.
   Luc Jacobs, senior vice president for ocean freight and head of global full-containerload for DHL Global Forwarding, said the industry 'should expect carrier will bring service predictability, reliability and consistency. We expect transit times to be adhered to. The perception outside the industry is that we're always late. Slow steaming can help this. But there must room there for speedier services.' ' Eric Johnson