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).
image
By Patrick Burnson, Executive Editor
April 27, 2011 - LM Editorial

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.

For related articles click here.



About the Author

image
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).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Having introduced into the California State Senate a new bill designed to give an exemption from sales and use tax for port terminal operators purchasing zero or “near zero-emission” equipment, Lara is trying to advance two agendas.

The notions of “green shoots” or “cautious optimism” in gauging the current state of the economy does not specifically exhibit what is really happening, when assessing how things are actually going, it seems. That was made clear by Bob Costello, chief economist at the American Trucking Associations, at last week’s NASSTRAC (National Shippers Strategic Transportation Council) Shippers Conference and Transportation Expo in Orlando, Fla. last week.

With a 6.8 cent gain to $2.266 per gallon, this week’s average diesel price is at its highest level since the week of December 28, when it was at $2.237 per gallon.

Manufacturing activity in April remained on the right side of growth for the second straight month, following six months of contraction, according to the April edition of the Manufacturing Report on Business from the Institute for Supply Management (ISM).

Some 22 centuries after the original Silk Road smoothed the path of Chinese silk merchants to Europe, a new effort is beginning to build a new 21st century highway between Europe and the burgeoning economy of China, now the world’s fastest-growing market.

Article Topics

News · Ocean Freight · Ocean Cargo · World Trade · All topics

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers 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. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2016 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA