How Does Super-Slow Steaming Affect Buyers?

About a year ago, Maersk was named Sustainable Shipping Operator of The Year in recognition of the efforts the company has made to reduce the environmental impact of its business operations. In particular, the award recognized Maersk’s pioneering efforts on the sometimes controversial shipping method known as “slow steaming.”

As the name implies, slow steaming ships travel at reduced speeds, saving fuel and reducing greenhouse gas emissions. The approach is relatively straightforward and quite effective, and in fact, slow steaming has proven so successful that now many major companies have throttled down even more. These days, they’re “super-slow steaming” and traveling at speeds of only 12 knots (about 14mph).

While there’s no doubt that super-slow steaming saves fuel, cuts costs and lowers emissions for shippers, I have to wonder: What is the effect on buyers? How does slow steaming impact order cycle times, inventory management and supply chain efficiency, in general?

Interestingly, a recent article in the Guardian put all of this into historical context:

Travel times between the US and China, or between Australia and Europe, are now comparable to those of the great age of sail in the 19th century. American clippers reached 14 to 17 knots in the 1850s, with the fastest recording speeds of 22 knots or more.

So, is slow steaming a reasonable approach in the modern business marketplace? Does it make sense that today’s ships would be outrun by the likes of the Cutty Sark?

Maersk thinks so.

“Whenever we are able to cut fuel consumption we achieve two things at the same time: We lower our emissions of greenhouse gases and we save costs. Super slow steaming enables us to reduce costs with the additional advantage of benefiting the climate and without diminishing our service. This really has a lot of potential for us,” Robert Kledal, Vice President and Head of Products in Maersk Line, said in a press release.

But, others aren’t convinced.

Lisa Reisman points out in her post at Metal Miner that slow steaming may actually lead to higher costs and other “subtle losses” for buying organizations. And as David Bonilla, a senior research fellow at the transport studies unit at Oxford University’s School of Geography and the Environment, told the New York Times, there are limits to how much slow steaming can “green” global trade. He says one of the most effective ways to reduce emissions from global trade would be to reconfigure trade routes and shorten the distance between production (Asia) and consumption (US, Europe). But, certainly, that’s not going to happen unless fuel costs for long-distance shipping skyrocket significantly.

No, like it or not, it looks like slow steaming is here to stay, and that means you’ll have to figure in extra time for some deliveries –unless, of course, you decide to transport your goods on a clipper ship.

TAGS: Finance
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