All steamed up

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Slow steaming is here to stay, according to liner shipping giant Maersk. Eivind Kolding, Maersk Line chief executive, said last week: “For Maersk Line slow steaming is here to stay because it remains a win-win-win situation. It is better for our customers, better for the environment, and better for our business.”

Controversial words – it is only a few months ago that the chairman of the European Shipper’s Council’s Maritime Transport Council, said: “Those carriers introducing slow-steaming to reduce their own costs must understand the possible impacts this has on their customers’ supply chains: lengthening lead-times, increasing inventory cost, disorganising transhipment patterns, and making changes to schedules and port rotations with little or no warning.

He should know – Jean Louis Cambon, is also head of Michelin’s Ocean Management Committee.

The original argument for slow steaming was that it was a response to the recession. Slow steaming saved energy and cut CO2 emissions, it also took boxes out of circulation, thereby stopping rates from tail-spinning. Maersk points to figures from Alphaliner that suggest that slow steaming absorbed 4.1 per cent of the global fleet at one point, which in turn helped balance supply and demand.

However, Maersk last month reported a 31 per cent rise in container shipping rates in the first half of 2010 – and, just for good measure, an 11 per cent rise in freight volumes.

So the argument has become subtly different – Maersk recognises the issue of longer inventory times but argues that that slow steaming helps prevent bottlenecks on terminals.

It is clear now that this issue will not go away – so it will be all the more important to look at the long term impacts on supply chains. For some, it might even mean reconsidering where products are sourced.

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