Slow Steaming Logistics – A study of shippers’ ability to demand, and manage the consequences of, slow steaming maritime transportation services in their supply chains
Paper in proceeding, 2015
About 90 per cent of the total volumes of goods that are imported to, or exported from, Sweden have been carried using maritime transport at some part of the transport chain. Swedish industry and commerce are hence heavily dependent on access to effective and efficient maritime transport services. At the same time the IMO estimates that roughly 3 per cent of the global CO2 emissions stem from maritime transport. In addition, the shipping industry is the source of about 15% of the global SOX and NOX emissions. The challenge at hand is hence, to reduce the negative external effects of shipping while at the same time accommodating an increasing demand, without adversely affecting the shippers’ ability to fulfill their needs for maritime transport. One of the most potent measures for reducing fuel consumption and consequently, emission, is reduction of sailing speed; so called slow steaming. Due to the non-linear correlation between speed and fuel consumption (e.g. the admiralty formula which estimates a cube function; meaning a 10% speed reduction yields 27% fuel consumption reduction), even marginal speed reduction will result in substantial reduction in fuel consumption.
Historically, any time slow steaming has been broadly employed in the shipping industry; it has been so unilaterally by the ship owners. The rise in the application of slow steaming by linear shipping companies, is attributed to the flaccid demand, abundance of capacity, high fuel prices and low freight rates. Based on the existing knowledge, it is reasonable to anticipate that, despite the negative abatement costs and potency of slow steaming as a measure for reduction of emissions, its use will likely decline as soon as the market conditions rebound.
The purpose of this study is to explore and explain the shippers’ ability to demand, and manage the consequences of, slow steaming maritime transport services in their supply chains.
The Slow Steaming Logistics study has explored how the shippers are effected by interviewing six global companies originating in Sweden. The represent both import and export, the manufacturing industry as well as consumer goods and fashion – a wide selection of case companies. The case companies have been interviewed, and gathered for a workshop on the topic. The results from the study indicated that the shippers were firstly affected by slow steaming in 2008 or 2009, and the main indicator has been increased sailing times, that in turn affect their supply chains. The interviews also indicate that reliability can is regarded as more important than the sailing time itself. However, the shippers would like a diversity in the offering in the market for trans-ocean container freight, else other options as airfreight and railroad is considered for supply chains that today utilize trans-ocean containers shipping lines.