Tuesday, January 19, 2010

A Slow Boat From China

Ocean carriers throttle back to save fuel costs; impose container surcharge

Your containers may take longer to arrive from their ocean voyage, as shipping lines deliberately cut the steaming speed of their freighters to save fuel, according to Alphaliner Weekly Newsletter.

The move also helps the carriers deal with overcapacity in ocean transit without idling ships, by using more, not fewer, ships to deliver the same amount of cargo.

The extra-slow steaming can save the ships five to seven percent of total operating costs on long-haul loops, including the costs of extra ships and containers required for longer transit times. With bunker fuel prices near $500 a ton, annual savings could total $15 million to $20 million for a typical Asia-Europe route, reported the Journal of Commerce.

Cutting the ships’ speed can add a week on an Asia-West Coast voyage, although some lines have kept the length of the loop unchanged by reducing the number of port calls. The ships travel at a speed of 17 to 19 knots, rather than their normal full speed of 23 to 25 knots. Some carriers are adopting “super slow steaming” as slow as 14 to 16 knots on some long backhaul routes.

At the same time, ocean carriers have imposed an Emergency Revenue Charge, or ERC, on every container shipped, to help offset rising fuel prices in the face of slack demand. For example, the ERC on a standard 40-ft. container is typically billed at $400.

One thing that is moving fast is the pace of change in the industry, requiring shippers to stay alert and closely monitor their costs and delivery schedules.

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