Steaming ahead, but slowly

The US Federal Maritime Commission’s move to allow transpacific carrier groups to discuss and co-ordinate environmental strategies seems like a sensible decision.

The Transpacific Stabilisation Agreement was quick to point out that the decision meant its members would be able to better organise their slow-steaming efforts.

But this may cause some concern for shippers and forwarders, as it is questionable whether carriers slow ships purely for the benefit of the environment, or whether they do it primarily to reduce costs and capacity.

To criticise the decision because it allows carriers to reduce costs is unfair, because one quick and easy way to reduce carbon emissions is by reducing fuel consumption – and that is exactly what slow-steaming seeks to do.

However, another upshot of slow steaming is that it also gives carriers tighter control over vessel supply, because to slow vessels while maintaining frequency and capacity, more ships are needed.

Slow-steaming therefore eats through excess tonnage that would otherwise cause market oversupply and rates to slip. And when there is no oversupply, slow-steaming can be stopped and the extra vessels used to start new services.

So, allowing carriers to meet to plan a technique that will allow them to manipulate market capacity is bound to cause upset, since anything that increases control over supply also increases control over price. (source: ifw)

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