Shippers count cost of slow steaming
Cargo owners are facing higher warehousing costs in Hong Kong and other Asian countries as they need to keep more inventory of goods and raw materials to overcome possible supply disruptions as a result of container shipping lines slowing the speed of their ships, reported the South China Morning Post.
Jacques Chan, general manager for Hong Kong and South China with global logistics group BDP International, said shippers in Hong Kong were also experiencing a shortage of space, in addition to higher costs.
He warned that if Hong Kong was saturated with cargo with no spare warehouse space, shippers would move to Singapore. "There would be a loss of Hong Kong business."
Chan was speaking after BDP International released the results of a survey of 290 cargo owners on the impact of container lines cutting vessel speeds. Of the shippers surveyed, 37 per cent were from the Asia-Pacific region.
Arnie Bornstein, BDP International executive director, said carriers such as Orient Overseas Container Line, Cosco Container Lines and Taiwan's Evergreen Marine, had cut the speed of their ships from around 25 knots to about 14 knots following the economic downturn in 2008. This has cut fuel consumption and exhaust emissions by 40 to 50 per cent.
But he said slow steaming had also increased voyage times. A transpacific trip from Hong Kong to Los Angeles that previously took 14 days now took an extra four to seven days. A 20-day trip from Hong Kong to Europe was lengthened by five to seven days, he said.
Bornstein said there was a lack of information from carriers over which services were sailing slower. Consequently, shippers were faced with uncertain delivery schedules and now no longer knew when their consignments would arrive. Shippers had to boost inventory, increasing their costs, to overcome these potential supply shortages.
"Practices companies have honed over the last 20 years have had to change," Bornstein said.
He added that shippers were "paying the price" in uncertain delivery schedules and higher inventory carrying costs, while shipping lines reaped the benefit of lower fuel bills.
Bornstein said the economic advantages of slow steaming enjoyed by carriers meant "all the signs are that slow steaming is here to stay".
But he said BDP's survey of exporters and importers, representing firms in the chemical, consumer goods, health-care and electronics industries, revealed that 92 per cent of cargo owners in Asia were feeling an impact from slow steaming.
Bornstein said the biggest impact for shippers in Asia was on customer service, inventory levels and scheduling of shipments. Some 48 per cent said they had changed the way they sourced raw materials.
About 38 per cent said they had moved from using three or four carriers to multiple shipping lines to get the best transit times and freight rates, while 36 per cent of firms had increased inventory levels.
Asked about how shipping lines could share the benefits, Bornstein said 73 per cent of Asian cargo owners would like lower freight rates, while 40 per cent wanted improved customer service.
Bornstein said: "In carriers' zeal to protect their business, they have overlooked they're also in business to serve their customers. Shippers want a more collaborative environment with carriers."
The results of the survey, which was carried out in March and April, bore out the responses given to the US Federal Maritime Commission when it launched an inquiry into slow steaming earlier this year. Shippers, including big US retail groups, said they had not seen any benefit from slow steaming. They complained that fuel cost savings had not been passed on to them.
B
Thursday, July 28, 2011
Monday, July 25, 2011
MARITIME-ENVIRONMENT
Improving ships environmental performance
The shipping sector could become cleaner than the aviation industry following the approval by the UN shipping agency of a new energy efficiency design index and other measures aimed at improving ships' environmental performance, according to an NGO.
The new rules, adopted by the International Maritime Organisation earlier this month, could also save the shipping industry US$5 billion in fuel costs and cut carbon dioxide emissions by 20 million tonnes a year on new ships by 2020, said Peter Boyd, chief operating officer of the Carbon War Room, an NGO set up by a group including British billionaire Richard Branson.
Boyd said the IMO's new rules would lead to fuel savings of $50 billion a year and an annual reduction in carbon dioxide emissions of more than 220 million tonnes if the standards were applied to the existing fleet of 60,000 ships, reported the South China Morning Post.
Boyd was commenting after the IMO approved regulations to implement efficiency ratings for ships over 400 gross tonnes, which are expected to enter into force on January 1, 2013. The measure, which will apply to ships ordered after a specific date, was approved overwhelmingly by 48 countries that voted at the IMO's marine environment protection committee about 10 days ago.
China was one of only five countries that voted against the measure. Consequently, while mainland shipyards are likely to build more energy-efficient ships for foreign owners, there will be no pressure on those shipyards to comply when building ships to be registered in China for mainland owners such as China Ocean Shipping (Group).
Clauses in the pact allow countries to delay implementation for up to four to six years after the commencement date of the rules. As a result, there is some uncertainty over how quickly the energy-efficiency design index and the associated energy efficiency management plan will be implemented.
Under the IMO regulations shipowners will have to meet the new efficiency ratings for each type of vessel they order. Dry cargo bulk carriers will have a different rating than tankers or container ships.
The IMO also leaves the choice of technologies used in a specific ship design to the maritime industry. This could include changes to the hull design or propulsion system, which are already being incorporated by some shipowners, including Hong Kong operators.
Asked if shipping companies would seek early compliance with the ratings or take advantage of the potential delay given to some countries, Arthur Bowring, managing director of the Hong Kong Shipowners' Association, said: "It really depends on the cost of compliance. Shipbuilders might try to ask for a premium [on the cost of a new ship] to implement early because it is not yet required by regulation."
But Bowring said the industry was "suffering an overcapacity of shipbuilding and so the cost might well be absorbed, at least partially".
"Whether flag states will take advantage of the four-year delay could well be a political decision to object to the process rather than anything else," Bowring said. He also thought it was "actually in the owner's interest to have the energy efficiency design index for his new buildings, in that it should make the ship more attractive as a sale candidate later on."
Tim Huxley, chief executive of Wah Kwong Maritime Holdings, which operates a fleet of tankers and dry cargo ships, said it was too soon to assess the impact of the regulations on its operations, "although it will obviously have an impact on any new ships we might build in the future. The interesting part is going to be how quickly the shipbuilding and engine manufacturers respond."
One Hong Kong shipowner said vessels were designed to have a lifespan of 25 to 27 years, but the impact of the IMO regulations meant that some ships being delivered now could already be obsolete.
Jan Rindbo, chief operating officer of Pacific Basin Shipping, said: "We are supportive of the creation of sensible but effective industry-wide measures to reduce emissions, and for such measures to be the jurisdiction of the IMO."
The shipping sector could become cleaner than the aviation industry following the approval by the UN shipping agency of a new energy efficiency design index and other measures aimed at improving ships' environmental performance, according to an NGO.
The new rules, adopted by the International Maritime Organisation earlier this month, could also save the shipping industry US$5 billion in fuel costs and cut carbon dioxide emissions by 20 million tonnes a year on new ships by 2020, said Peter Boyd, chief operating officer of the Carbon War Room, an NGO set up by a group including British billionaire Richard Branson.
Boyd said the IMO's new rules would lead to fuel savings of $50 billion a year and an annual reduction in carbon dioxide emissions of more than 220 million tonnes if the standards were applied to the existing fleet of 60,000 ships, reported the South China Morning Post.
Boyd was commenting after the IMO approved regulations to implement efficiency ratings for ships over 400 gross tonnes, which are expected to enter into force on January 1, 2013. The measure, which will apply to ships ordered after a specific date, was approved overwhelmingly by 48 countries that voted at the IMO's marine environment protection committee about 10 days ago.
China was one of only five countries that voted against the measure. Consequently, while mainland shipyards are likely to build more energy-efficient ships for foreign owners, there will be no pressure on those shipyards to comply when building ships to be registered in China for mainland owners such as China Ocean Shipping (Group).
Clauses in the pact allow countries to delay implementation for up to four to six years after the commencement date of the rules. As a result, there is some uncertainty over how quickly the energy-efficiency design index and the associated energy efficiency management plan will be implemented.
Under the IMO regulations shipowners will have to meet the new efficiency ratings for each type of vessel they order. Dry cargo bulk carriers will have a different rating than tankers or container ships.
The IMO also leaves the choice of technologies used in a specific ship design to the maritime industry. This could include changes to the hull design or propulsion system, which are already being incorporated by some shipowners, including Hong Kong operators.
Asked if shipping companies would seek early compliance with the ratings or take advantage of the potential delay given to some countries, Arthur Bowring, managing director of the Hong Kong Shipowners' Association, said: "It really depends on the cost of compliance. Shipbuilders might try to ask for a premium [on the cost of a new ship] to implement early because it is not yet required by regulation."
But Bowring said the industry was "suffering an overcapacity of shipbuilding and so the cost might well be absorbed, at least partially".
"Whether flag states will take advantage of the four-year delay could well be a political decision to object to the process rather than anything else," Bowring said. He also thought it was "actually in the owner's interest to have the energy efficiency design index for his new buildings, in that it should make the ship more attractive as a sale candidate later on."
Tim Huxley, chief executive of Wah Kwong Maritime Holdings, which operates a fleet of tankers and dry cargo ships, said it was too soon to assess the impact of the regulations on its operations, "although it will obviously have an impact on any new ships we might build in the future. The interesting part is going to be how quickly the shipbuilding and engine manufacturers respond."
One Hong Kong shipowner said vessels were designed to have a lifespan of 25 to 27 years, but the impact of the IMO regulations meant that some ships being delivered now could already be obsolete.
Jan Rindbo, chief operating officer of Pacific Basin Shipping, said: "We are supportive of the creation of sensible but effective industry-wide measures to reduce emissions, and for such measures to be the jurisdiction of the IMO."
MARITIME-PORT PERFORMANCE
Malaysian ports see 10% rise in box throughput
Malaysian ports handled 10.5 per cent more containers in the first six months of the year, said Transport Minister Kong Cho Ha, reported Bernama Daily News.
He said 9,856,859 TEUs were handled between January and June against 8,921,113 TEUs registered in the same period last year.
"This reflected a booming container handling business in the country," he said.
Kong said the encouraging performance indicated that Malaysian ports were strategically located to handle containers to and from abroad.
He also disclosed that Port Klang and Port of Tanjung Pelepas last year succeeded in retaining their 13th and 17th position in the top 20 list of container ports in the world.
The ministry said Port Klang handled the largest number of containers in the first six months of the year. Westports and Northport together handled 4.7 million TEUs of containers against 4.3 million TEUs registered in the same period last year.
Malaysian ports handled 10.5 per cent more containers in the first six months of the year, said Transport Minister Kong Cho Ha, reported Bernama Daily News.
He said 9,856,859 TEUs were handled between January and June against 8,921,113 TEUs registered in the same period last year.
"This reflected a booming container handling business in the country," he said.
Kong said the encouraging performance indicated that Malaysian ports were strategically located to handle containers to and from abroad.
He also disclosed that Port Klang and Port of Tanjung Pelepas last year succeeded in retaining their 13th and 17th position in the top 20 list of container ports in the world.
The ministry said Port Klang handled the largest number of containers in the first six months of the year. Westports and Northport together handled 4.7 million TEUs of containers against 4.3 million TEUs registered in the same period last year.
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