Despite Low Bunker Prices, Hanjin Collapse, Box Shippers to Stick with Slow Steaming

Operators are slow steaming despite low fuel prices.

Despite a seasonal increase in demand, the removal of tonnage resulting from the recent collapse of Hanjin Shipping Co. Ltd (Hanjin), and a demolition spree, persistent supply overhang and low freight rates will see operators continue slow steaming practices, Platts reports.

"Despite low marine fuel prices, I believe slow steaming will continue," said Niklas Holck, Managing Director of Costamare Shipping Company S.A. (Costamare Shipping) in Singapore, noting that the company's fleet plans to continue to sail below 20 knots.

A global container line executive, also commenting on the situation, said: "in recent weeks we have seen customer demand rise [and] our vessel utilisation rate is also higher [but] we will continue slow steaming as increasing the speed would mean a major change to berthing schedules and could affect our operations."

Other sources are said to have found that, with current low charter rates, deploying an additional vessel can be more cost effective than increasing vessel speed.

However, Tan Hua Joo, Alphaliner executive consultant, says that slow steaming is also no longer limited to financial considerations as operational aspects supported it too.

Tan notes that, while Hanjin was the world's seventh largest container shipper in terms of fleet size with approximately 3 percent share of the global capacity, the potential impact from the removal of the company's tonnage was offset by the fact around 5.3 percent of the global fleet is currently idle.

"Hanjin is not a Lehman [sort] of event," he said

Further, Tan says that the capacity of newbuilds entering the market over the next four months will be similar to the amount of capacity removed by the Hanjin collapse.

In March, Ship & Bunker reported that, even though increasing the speed of vessels on certain routes would theoretically have numerous benefits at a time when bunker fuel has dropped below $200 per metric tonne (pmt), Alphaliner said carriers were resisting the urge to do so and maintaining a policy of slow steaming.