Slow Steaming Logistics - the shippers’ challenges following slower sailing speeds
About 90% of all goods travel on the sea for at least a part of their transport chain. The trend of reduced sailing speed, or slow steaming, presents shippers with new, complex challenges. The Slow Steaming Logistics project aims to study how the industry has met and managed these new challenges, in order to create the knowledge base necessary for designing supply chains optimized for slow steaming. With the financial support of the Swedish Maritime Administration, the two prominent forwarders, DHL and Schenker, have teamed up with SSPA to address this topical and – for Swedish industry, commerce and the economy – critical issue.
Slow steaming in context
Of all the transport modes, shipping is the only one where the throttle is clearly used a mechanism for capacity control. This, combined with linear deep sea container shipping operators unilaterally optimizing fleet speeds, schedules and routes with regards to profits, have set the stage for slow steaming to regularly reoccur as a phenomenon in times of high bunker prices, low demand, abundant capacity and low freight rates.
The return of slower speeds in 2008/2009, after decades of increasing sailing speeds, was therefore hardly a surprise for anyone in this sector. At the same time, the speed/fuel consumption characteristics of the vessels make a reduction in speed a potent measure for reducing emissions from shipping and greater energy efficiency of the fleet; crucially an important attribute from a societal point of view, which also comes at a negative abatement cost.
The technical and maritime economic aspects of slow steaming are well researched, but the major issue that is historically underattended is how reducing speed impacts the customers of the service, i.e., the shippers, and how these effects can be managed effectively.
The idea for the Slow Steaming Logistics project originated at SSPA and together with partners from academia, Chalmers and Gothenburg University, and partners from the industry e.g. DHL freight and Schenker Air and Ocean, the project was formed and received funding from the Swedish Maritime Administration. After the start of the project, other key industry players from e.g. furniture manufacturing and distribution, steel production, industrial machinery, fashion etc., expressed an interest in allowing researchers from the project team to study their supply chains, how slow steaming has impacted them and how they managed these new circumstances.
The interest shown from the shippers emphasizes the notion that the questions this project seeks to answer are very topical and of critical importance for major players in trade and industry.
The two-year project is planned to be finalised by 2015 and the business partners and associates are eager to get the results as soon as possible.
The analysis of the empirical data collected from the companies in the study, is expected to yield an evaluation of how different shippers value the trade-off between lead-time and through-put time on the one hand and reliability and frequency on the other. Additionally, descriptive and explanatory models of how different systems have managed the impact of slow steaming in their supply chains and how this has impacted their supply chain performance, are also being sought.
Finally, a model for designing a new or modifying an existing supply chain that is optimized for marginally longer lead-times and through-put times is to come out of this study. Given these elements, the questions surrounding how shippers can manage the impact of slow steaming effectively enough to cope with slower sailing speeds, without losing competitiveness, would be answered to a satisfactory degree.
Opportunities for expansion
Even though this specific project has not yet reached the finishing line, a number of intriguing opportunities for expansion have already been identified.
Firstly, to expand the scope of the project to include other segments of shipping e.g. short sea shipping or ro-ro operations, are of greater interest especially with regards to sulphur emission regulations starting in 2015.
Secondly, a global consequence analysis of prolonged and widespread application of slow steaming is of interest for both the shipping industry and its customers; in particular, issues regarding capacity requirements for the shipping sector and the design of supply and distribution structures for the shippers.
Finally, concepts and solutions aimed at reducing the impact of slower sailing speeds on the lead-times for door-to-door transportation are where the greatest potential for expansion of this area of inquiry lies.