Visibility and agility will become more important to supply chains than speed
Better visibility and more responsive supply chains are the only way for shippers and their ...
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By Mike Wackett
The era of global slow-steaming by container lines could be about to end with the recent announcement of improved transit times on select services.
APL today announced the launch of its Eagle Express weekly transpacific service, which will offer a 13-day transit from Shanghai to Los Angeles, which the Singapore-based carrier said would be pitched to shippers with time-sensitive cargo, and follows the success of Matson’s China-Long Beach Express service.
APL president Kenneth Glenn said today: We are committed to adding robustness ...
Comment on this article
Jonathan Roach
October 08, 2015 at 3:54 pmI understand this EX1 trans-Pacific service will now omit Yokohama Japan eastbound and transit to directly to LA directly after departing Busan South Korea as last port call in Asia.
Even though bunker costs have halved in the short term, container ships are unlikely to increase service speeds to pre-2008 velocities.
Though in the unlikely event of freight rates sky rocketing, there is potentially room for faster ships but until then cost reduction by means slow steaming and service/port call efficiency will remain normal until liner revenues and profits permit any change in ship speed strategy.
Mike Wackett
October 09, 2015 at 8:24 amMany thanks Jonathan.
Indeed, we have been asked by APL to clarify that the improved transit time is due to network changes rather than faster steaming.
I agree with you that the die is cast on slow steaming and we are unlikely to see ships on liner services speeding up any time soon – not least because of the glut of tonnage.
Instead carriers will look for USPs of improved transits by rationalisation of port calls.
But you never know sustained lower fuel prices might just persuade operators to authorise masters to ‘put their foot down’ to regain a schedule if there is a saving on port costs by arriving earlier!
Andy Lane
October 09, 2015 at 5:19 amIt is nice to see a Line trying to create a differentiated product – albeit similar to the Matson service.
To make Busan to LA in 11 days, a speed of 20 knots is required. Or more if the vessel falls behind schedule and needs to catch-up – reliability will also be important. A lot of additional fuel will be burned, and a lot of cost incurred, even at the presently “low” fuel costs. The operating costs of this service could be a few hundred dollars per TEU more expensive than a 17-knot 10,000 TEU ship service. At 17 knots, Busan to LA would be 13 days (+2 days).
If as a shipper, you have a cost of capital of 3% and an FOB goods value of USD600,000 per TEU, then at a USD100/TEU premium you would break even. The potential market size for this product will be limited for sure. If however you have 6 otherwise idle ships, then it is worth a try and we can only commend APL’s approach here.
This is not likely the first step to wide-scale speeding up of ships – which will also compound the overall over-capacity within the industry.
Person
October 16, 2015 at 8:33 amHonnestly, there should not be any question about speeding up again the world fleet : it is an “ecological crime”.
For sure, faster transit will innevitably end up in new regulation against carbon emissions of the shipping industry. Should I remind that the EU Commission in working on a bunker levy of approx. 50 EUR per ton of CO2 (i.e. abt 150 EUR per ton of fuel oil) ?
This additionnal cost will destroy any profitability that would have resulted from faster transit times. Our industry is under scrutiny for the years to come as regards CO2 emissions, let’s behave the right way to avoid bad regulations.