Strategies for coping with slow-steaming

Strategies for coping with slow-steaming, new paper

The trend of reduced sailing speed, or slow-steaming, presents shippers with new, complex challenges. SSPA has together with Chalmers University of Technology and University of Gothenburg studied how the Swedish industry has met and managed these challenges. The study has recently been published in Journal of Shipping and Trade.

In this exploratory case study, the answers to the questions of how the shippers’ systems are affected by the widespread application of slow-steaming and how shippers manage these consequences are sought. To do so, a multiple case study consisting of six Swedish multi-national companies has been undertaken. The case study is based on data collected from interviews, seminars and workshops, secondary data, and literature reviews.

The shippers developed a set of strategies to cope with the low punctuality of containerised shipping, and these were categorised in the domains of transfer-the-problem, transport, sourcing and distribution, logistics and manufacturing, and product design. 

-    All firms applied changes in the transport domain, although the lack of service segmentation limited the effects of the strategy, says Christian Finnsgård, Head of Research at SSPA.

Examples of strategies

Coping by transferring the problem up- or downstream
The companies tasked the suppliers to minimising their delivery times, or the customer has to accept the longer lead times. 

Coping by changed transport system
The companies are locating production facilities closer to the market they supply in order to reduce the lead time to their customers. 

Coping by changed sourcing
The companies selects suppliers that are geographically closer or sourcing generic components to expand the lead time gap .

Coping by changed logistics and manufacturing concept
The companies expand the lead time gap by stocking production facilities closer to markets with generic components based on sales forecasts. 

Coping by redesigning the product
The companies reduce lead time by redesigning their product range to be able to assemble a large range of products from a handful of generic components.

About the paper

The paper; “Swedish shippers’ strategies for coping with slow-steaming in deep sea container shipping”, published in Journal of Shipping and Trade (2018) 3:8. Co-authored by Christian Finnsgård, SSPA Sweden, Joakim Kalantari, VTI, Swedish National Road and Transport Research Institute (and formerly at the time of the study, at SSPA), Zeeshan Raza, University of Gothenburg, Violeta Roso, Chalmers University of Technology and Johan Woxenius, University of Gothenburg. This research was funded by the Swedish Maritime Administration.

Abstract

When container shipping lines experience over-capacity and high fuel costs, they typically respond by decreasing sailing speeds and, consequently, increasing transport time. Most of the literature on this phenomenon, often referred to as slow-steaming, takes the perspective of the shipping lines addressing technical, operational and financial effects, or a society perspective focusing on lower emissions and energy use. Few studies investigate the effects on the demand side of the market for container liner shipping. Hence, the aim of this study is to elaborate on the logistics consequences of slow-steaming, particularly the strategies that Swedish shippers purchasing deep sea container transport services employ to mitigate the effects of slow-steaming. Workshops and semi-structured interviews revealed that shippers felt they had little or no impact on sailing schedules and were more or less subject to container shipping lines’ decisions. The effects of slow-steaming were obviously most severe for firms with complex supply chains, where intermediate products are sent back and forth between production stages on different continents. The shippers developed a set of strategies to cope with the low punctuality of containerised shipping, and these were categorised in the domains of transfer-the-problem, transport, sourcing and distribution, logistics and manufacturing, and product design. All firms applied changes in the transport domain, although the lack of service segmentation limited the effects of the strategy. Most measures were applied by two firms, whereas only one firm changed the product design.

The article is available online at jshippingandtrade