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

The Institute for Supply Management’s (ISM) August edition of the Manufacturing Report on Business saw its PMI, the ISM’s index to measure growth, fall 1.6 percent to 51.1, following a 0.8 percent decline to 52.7 in July. Even with the relatively slow growth over the last two months, the PI has been at 50 or higher for 31 consecutive months.

Hackett observed in the new report that China’s economy has lost steam, with actual growth falling short of targeted rates, while the United States most recent second quarter GDP reading at 3.7 percent outpaced expected targets, even though it was negatively impacted by gains in manufacturing and retail inventories.

The proposed merger of Cosco and CSCL could spark further container consolidation

The average price dropped 4.7 cents to $2.514 per gallon, which now stands at the lowest weekly average price for diesel since July 2009, when it was at $2.542 the week of July 27, 2009, according to EIA data.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement partners Canada and Mexico in June dropped 3.8 percent annually to $99.0 billion. This followed a 10.8 percent decline in May to $92.7 billion.

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 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA