Slow steaming in the liner shipping industry

Since the extraordinary rise of bunker prices in 2008, the liner shipping industry decreases the commercial speed of their vessels to save bunker costs. With the implementation of slow steaming, they create also a method to decrease their CO2 emissions, in line with stricter emission standards and legislation in certain regions. According to the liner shipping companies, the implementation of slow steaming helps them to sustain in times of high bunker costs. Instead, shippers complain about slow steaming. They face higher costs, and longer transit times. In recent articles, the effects for shippers were not taken into consideration. This thesis will therefore create an integrated analysis of all economic consequences of slow steaming for shipping companies and shippers in terms of efficiency, effectiveness, equity and sustainability. To calculate the efficiency of slow steaming, the consequences in bunker savings, emission savings, additional vessel costs and time costs for a certain liner service were analysed. The most efficient speed was 17 knots, which saved almost 9 % of the total economic costs of operating the loop with sailing at 25 knots. At speeds under the 17 knots, much costs were still saved but the additional costs of extra vessels and time costs for shippers increased much more, resulting in even higher total costs than a fast speed of 25 knots. When the effects of slow steaming for shippers and shipping companies are compared, equity effects become present. At every decrease in speed, shippers face extra costs while shipping companies save millions of dollars. Moreover, supply chain costs and bunker surcharges are not considered, what would make the situation even more unfair. Shippers are not compensated by a more efficient sailing process of the shipping companies. An explanation for this situation is found in the remains of the conference-systems. This shipping company protection system could make them deal with high risks and investments. However, more transparency and service in operating a liner service would not be too risky at all. It can be concluded from the calculations in this thesis hat slow steaming is effective in reducing bunker costs for a shipping company. $3.7 million to $12.6 million can be saved with a single speed reduction of 2 knots. This implies a 50% cost reduction (more than $30 million) when every vessel makes one roundtrip with a speed of 17 knots instead of 25 knots. This scale of cost savings in short term cannot be reached by using cheaper kinds of fuel. It can be reached by innovations in the design of the vessel, but this is a long term investment and its effectiveness should therefore not be compared with slow steaming.