Analyst says there is no clear link between slow-steaming and schedule reliability

Date Added: 5 June 2023

Davies Turner offers a comprehensive network of international container shipping services, including LCL and FCL import and export operations, and we note that Lars Jensen, CEO & Partner, Vespucci Maritime, writing in the Journal of Commerce, states there is no clear link between slower sailing of container shipping services and any improvement in schedule reliability.

Jensen writes that the operating speeds of container vessels are being reduced, adding that this is hardly surprising and follows a true-and-tested approach by ocean carriers when faced with overcapacity and/or higher fuel costs.

Economically, this is completely rational, says Jensen, as it absorbs part of the impending overcapacity from many of the new vessels being delivered, and also reduces the relative importance of the fuel cost.

And he adds that it is not new behaviour by the container shipping lines, pointing out that for decades, vessels have been slowed down repeatedly, with shipping lines stating the slower vessels will enable an improvement in reliability.  

Asking whether it is a problem for the shippers, Jensen writes that theoretically it can be argued that extended transit times are an added cost to shippers. "But if this element was sufficiently important to the shippers, it should also be kept in mind that not all services from all carriers are slowed down at the same time. If shippers were willing to pay the cost difference between the normal speed and the slow-steaming savings, some carriers would have a competitive advantage by not slowing down. Every time slowdowns have happened, it was clear that an insufficient number of shippers have been willing to pay this premium for a sufficient amount of cargo — at least not to the degree where any major carrier could have a competitive advantage in offering such a service."

Pointing out another side to the discussion, Jensen says that slowing down will lead to more buffers in the sailing schedule and that should lead to improved reliability and reduced risk of void sailings.

Theoretically, that is quite logical. If you are going slower, it is easier, and less costly, to catch up if you get behind schedule. But Jensen points out that evidence indicates that in practice, that is not what happens.

Jensen concludes by referring to the reliability data compiled by Sea-Intelligence Maritime Analysis. It shows that the average global schedule reliability has followed a clear negative trend from the start of the data in 2011 to the end of 2019 before the pandemic disruptions, from about 80% 12 years ago to about 75% immediately prior to the pandemic.

This leads him to conclude that despite the slower sailing, there is no clear link between this and any improvement in schedule reliability.

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