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Shippers question value of slow steaming

“This was particularly true on the transpacific, where carriers engage in a collective assessment of the rate structure,” said Peter Gatti, executive vice president of the National Industrial Transportation League (NITL).
By Patrick Burnson, Executive Editor
April 27, 2011

Responding to a request for comments from the Federal Maritime Commission on the effect of slow steaming on U.S. ocean liner commerce, most shippers found little or no rate or service benefit.

“This was particularly true on the transpacific, where carriers engage in a collective assessment of the rate structure,” said Peter Gatti, executive vice president of the National Industrial Transportation League (NITL). “We, of course, agree that there are environmental advantages to slow steaming, but shippers were also counting on a pricing break from the carriers comprising the Transpacific Stablilization Agreement (TSA) and that hasn’t happened.”

Indeed, added Gatti, one non-conference carrier operating a dedicated shuttle from Shanghai to Long Beach has been operating at normal knot-speed and delivering goods at a competitive price point.

“So from a money-saving perspective, slow steaming’s advantages are negligible,” added Gatti.

Spokesmen for the World Shipping Council, told LM that while its members comments were largely in support of continued slow steaming, the issue was largely confined to the transpacific lanes.

“To my knowledge, we don’t face this problem anywhere else in the marketplace,” said WSC spokesman, Anne Kappel. “Besides, the FMC does not have the enforcement powers to regulate any trade lane based on request for comments.”

According to the NITL, supply chains have suffered negative impacts as a result of slow steaming. Shippers said that transit times have risen, effective vessel capacity has dropped, shortages in containers and equipment have been exacerbated, and meeing customer expectations is more difficult.

“One of the key aspects of the supply chain is that transit times affects inventory,” said the NITL. “Initially, slow steaming accelerated the depletion of inventory making it harder for shippers to fill their store shelves and manufacturers’ production lines in a timely manner.”

Over time, however, shippers have been forced to adjust to lengthened voyage times by increasing the amount of inventory they carry, at higher costs, the NTIL added.

“Goods that sit in inventory are simply not producing real economic output or providing any societal benefit,” the NITL concluded.

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About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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