2015 just may be the year that shipping lines start making money again. Or rather stop losing money. The driver of this potential financial revival will be the recent drop in fuel prices. Bunker prices are, at the time of this writing, hovering around a four-year low, with many commentators suggesting that they will fall further. Maersk, for example, burns about 8 million tons of fuel a year, so a $200-per-ton drop in the price of fuel (that we have seen over the past year) lowers costs by a rather significant $1.6 billion.
But the big question for the year ahead is whether the discipline of slow-steaming is maintained, or does the new price paradigm prompt a breaking of ranks and a desire to steam faster and provide “improved’ service?
With the world fleet continuing to grow — for example there will be a further 50 vessels of more than 13,000-TEU capacity in the water by end-2015, increasing that segment to about 150 ships — supply of vessels is plentiful. Capital is available, and the liner companies are continuing to seek a better (more fuel-efficient) mousetrap. The slow-steaming push has meant that strings in, say, Asia-Europe that hitherto were covered by eight or nine ships are now being serviced by anywhere from 10 to 12 ships. There is perhaps as much as 1.3 million TEUs in capacity currently absorbed by slow-steaming as the lines deploy additional tonnage. A reversion to the original schedules would potentially create a significant supply overhang.
Slow-steaming helps the environmental footprint, too, and carbon emissions have been reduced by the carriers, in some cases by as much as 40 percent by slower steaming.
Slow-steaming was never intended as a permanent fixture for the industry, but now that we have it to lose, it could be devastating.
Peter S. Shaerf, Managing Director and Deputy Chairman, AMA Capital Partners; Seaspan