MEMBER CENTER:
Trade News > Maritime News > FMC to Review Slow-Steaming
Print
Email
ShareThisFMC to Review Slow-Steaming
Chairman to assess economic effects to ensure no ‘unreasonable constraints’
Federal Maritime Commission Chairman Richard A. Lidinsky Jr. says he would like to assess the economic effects of slow-steaming to ensure the practice is not causing "unreasonable constraints" on the international supply chain.
In a message this week, Lidinsky said the FMC will devote a portion of its Jan. 26 meeting to looking at the economic effects of slow-steaming over the past year.
In January 2010 the commission gave the Transpacific Stabilization Agreement, which comprises carriers in the eastbound Pacific trade, authority to discuss operating at lower speeds to save fuel and reduce air pollution. Lidinsky said the practice "affords substantial cost savings during this period of financial stress."
At the FMC's Dec. 8 meeting, Lidinsky signaled his intention to go further, saying the commission should look at "the effects on our supply chain, capacity, rates, fuel charges and emissions over the past year."
In his message this week, Lidinsky noted TSA members now want to use their authority to look at increased use of alternative fuels, cold-ironing and the use of technologies to reduce air emissions.
"While these practices hold promise for reducing vessels' emissions," Lidinksy said, "the commission will closely monitor slow-steaming arrangements to ensure that they do not cause unreasonable constraints now that international shipping demand has recovered."
-- Contact R.G. Edmonson at bedmonson@joc.com.
Login or register to post comments
The impacts of slow steaming are known, in general. The carriers save on fuel consumption (between 20 and 40% dependent on how slow they go); the shippers have supply chain planning issues that include extended transit times leading to larger inventory requirements.
With that knowledge (which they already have), what would the FMC do? It is illogical for them to think that they could require the carriers to speed up the vessels, they don't have that authority. But they could seriously question Fuel Surcharges and how they are calculated at what speeds. It may require some in- depth knowledge of vessel fuel consumption and the impact on vessel costs, and maybe a new look at the formulas used to construct fuel surcharges.
- By 105DRVR on 1/7/11
FOLLOW US: 
ADVERTISEMENT
Heard and Noted
Shippers showcase #supplychain emission savings, green best practices. http://t.co/vkChKwEr
Feb 22, 2012 4:54PM GMT
Galleries
Shipping Port and Terminal Photos
Railroad and Intermodal Shipping Photos
In economic markets, whether in transport or otherwise, the supply side (in this case, the fleet) will try to ration supply. This is economics 101. And with the non linear fuel speed consumption curve, they save a lot of money and get margins back to where they can actually pay financial costs.
Echoing the previous post, I would be interested if the FMC could report on whether carriers are simultaneously hedging their fuel costs, and then also hitting their customers with fuel surcharges. I believe that this is perfectly legal, but better transparency would allow the cargo side to knock down the fuel surcharges when it becomes known that the carriers have used hedging to acheive some measure of energy cost protection.