Slow steaming impacts on ocean carriers and shippers

Michael Maloni, Jomon Aliyas Paul and David M Gligor
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Michael Maloni: Department of Management and Entrepreneurship (BB337), Coles College of Business, Kennesaw State University, 1000 Chastain Road, #0404, Kennesaw, Georgia 30144-5591, USA
Jomon Aliyas Paul: Department of Economics, Finance, & Quantitative Analysis, Coles College of Business, Kennesaw State University, 1000 Chastain Road, Kennesaw, Georgia 30144, USA
David M Gligor: Department of Marketing and Supply Chain Management, Henry W. Bloch School of Management, University of Missouri-Kansas City, 5110 Cherry Street, Kansas City, MO 64110, USA

Maritime Economics & Logistics, 2013, vol. 15, issue 2, 171 pages

Abstract: Ocean container carriers have implemented slow steaming (reduced vessel speeds) in recent years to improve fuel efficiency and lower greenhouse gas emissions. However, many shippers oppose the practice due to increased pipeline inventory associated with longer transit times. Given this conflict, this article seeks to quantify the costs and benefits of slow steaming relative to carriers and shippers. We simulate a high volume Asia-North America container trade lane to estimate slow steaming impacts under different vessel speeds, volumes and fuel prices. Under current conditions, the results justify slow steaming practices, revealing extra slow steaming as the most beneficial vessel speed with a 20 per cent reduction in total costs and a 43 per cent reduction in carbon dioxide emissions. Extra slow steaming is also optimal for future volumes and a wide range of fuel prices. Furthermore, the results detail carrier and shipper cost trade-offs, thus offering practical evidence and transparency to the industry on how to create financial equity in facilitating contractual-based agreements for vessel speed standards.

Date: 2013
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