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Container giants MSC, Maersk eye slow steaming to cut costs amid rising fuel prices

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Container giants MSC, Maersk eye slow steaming to cut costs amid rising fuel prices

London — Slow steaming is to become a more prominent feature on some routes forcontainer shippers as industry leaders Mediterranean Shipping Company (MSC)and Maersk look to cut costs and improve reliability, the companies confirmedWednesday.

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"The cost of fuel and the advantages of reducing related air emissionsinto the environment are among the factors behind this," a spokesman for MSCsaid.

"The initiative is driven by a need to become more reliable andpunctual, which is an issue facing the whole industry," the spokesman added.

Bunker costs for June are higher than they were at the start of the yearand have been rising strongly since March, the S&P Global Platts' North Asiato North continent IFO380 average cost assessment, which includes bunker fuelcosts at Colombo, Gibraltar, Rotterdam and Singapore, showed.


Jan 394.00

Feb 380.50

Mar 378.00

Apr 399.50

May 442.00

Jun* 450.50

* month to date

Source: Platts

By going slower vessels can better adhere to more realistic schedules andavoid congestion at ports when they stop to bunker. "The schedule is oftenimpacted by port congestion and once they are out of sync they have to moveships much faster, using more fuel to catch up," he said.

The same thoughts have occurred to Maersk, which is part of the 2MAlliance with MSC.

"The reliability in the industry and for Maersk Line is lower than wewould want it to be and there are many levers a shipping company can pull toincrease punctuality and efficiency," the company said in a statement.

"These include the removal of port calls, the reduction of speed as wellas adding ships to a service. We are constantly looking for ways to improveour network, making it more efficient and customer-oriented," Maersk said.

By slow steaming, bunker buyers have said they can push vessels furtherto reach even cheaper and more strategic bunkering locations, rather thanhaving to stop at the most convenient location in terms of logistics. Bargefees, calling costs and port charges can contribute to hikes in prices andmake owners selective about the economics of bunkering.

Slow steaming is likely to be adopted by those who do not upgrade theirfleet or invest in scrubber technology, industry participants have said. Thiswill add time to voyages and alter the timeliness of delivery schedules.

However, owners who have upgraded their fleet to incorporate new and moreefficient vessels are likely to lead the competition in terms of fueleconomics and savings.

Cargo volume allocations are increasing to the mid 90%s and beyond fromaround levels of about 85% for some, for June and July, according to sources.However, a few carriers are not as full as hoped and this has dampened boxrates in the second half June. The new alliance structures, such as the 2MAlliance, are proving to be unpredictable in their cargo loadings with somebeing delayed at source or at the arrival port.

This is causing some difficulties for shippers and freight forwarders asthey seek to manage the overall supply chain.

Increasing capacity is leading to difficulties in ships reaching theirfull loading capacities. Some carriers are introducing their newbuildsinto their schedules which could lead to lower than anticipated cargoallocation percentages.

Slow steaming may help reduce the impact of this capacity increase aswell as alleviate the port issues but could further frustrate shippers, whenadded to the Emergency Bunker Surcharges that some carriers are implementing,sources said.

--Tom Washington,

--Eleni Pittalis,

--Andrew Scorer,

--Edited by Alisdair Bowles,