Extra slow steaming could soon reach limit

Apart from the savings in fuel costs, ESS provides a useful escape valve for carriers saddled with excess tonnage. According to Alphaliner, the additional capacity absorbed by ESS has reached 625,000 teu or 4.4% of the cellular fleet. However, the potential for further ESS on long haul routes may soon reach its limit.

Currently, 93% of the Far East-North Europe loops and 80% of the Far East-Mediterranean loops have already adopted ESS, based on Alphaliner estimates. If ESS was fully adopted on all FE-Europe loops and the currently skipped sailings were filled, this would only absorb an additional 60,000 teu. There is however still some room for ESS adoption on the transpacific route. Presently, 50% of the FE-US West Coast loops and 76% of the FE-US East Coast loops are slow steaming. A full adoption of ESS on all transpacific routes could absorb a further 140,000 teu.

The efficiency of ESS on the shorter FE-USWC loops is however less compelling. These services are more sensitive to the fixed costs of deploying additional ships, relative to the cost of existing ships. It is furthermore expected, that some of the niche carriers active on the transpacific routes will continue to run at faster service speeds in order to provide some competitive advantage over their larger competitors.

Other long haul services have also been slowed down to ESS. These are mostly services to Latin America and, to a lesser extent, to the Middle East. However, even if all of these long haul services were to adopt ESS, the amount of additional capacity which could be absorbed is estimated to reach only 150,000 teu.

This analysis suggests that only a further 350,000 teu could be absorbed by ESS. The upper limit of capacity absorption through ESS adoption would therefore stand at about 900,000 to 1 Mteu in total, or up to 7% of the current cellular containership fleet. Further speed reductions to super slow steaming (third-stage slow steaming with average speeds of 14-16 knots) will be limited due to the extra costs incurred by the need to bring in additional ships and equipment. Some ships are effectively run at such slow speeds on backhaul legs, while money-making headhaul legs are run at higher speeds, so that the average speed usually remains above 16 knots.

Despite the upper limit on slow steaming, the carrier’s recent moves re-inforce some shipping lines’ commitment to slow steaming as part of their longer-term strategies to contain operating costs, even as freight rates have recovered to pre-crisis levels. Alphaliner estimates suggests that extra-slow steaming is economically feasible as long as bunker fuel prices remain above $400/tonne, whereas first-stage slow steaming starts to be interesting at around $250/tonne.