"Slow-steaming" on the shorter trade routes of the liner shipping industry

After the global crisis and the extraordinary rise of bunker prices in 2008, the liner shipping industry decreased the commercial speed of their ships for saving bunker costs. With the operation of slow steaming, they created a method to decrease their C02 emissions. According to the liner shipping companies, the implementation of slow steaming helps them to sustain in times of high bunker costs. Instead, shippers complain about slow steaming. They face higher costs, and longer transit times. In recent articles, the effects for shippers were not taken into consideration. This thesis will therefore create an integrated analysis of all economic consequences of slow steaming on the shorter trade routes for shipping companies and shippers in terms of efficiency, effectiveness, and sustainability. It can be concluded from the calculations in this thesis that slow steaming is effective in reducing bunker costs for a shipping company from $90000 to $2.2 million can be saved with a single speed reduction of 2 knots. This implies a 50% cost reduction when every vessel makes one round-trip with a speed of 15 knots instead of 23 knots. This scale of cost savings in short term cannot be reached by using cheaper kinds of fuel. Slow steaming is an economically sustainable method when bunker prices are above the $600 per ton. When these prices are lower, sailing at higher speeds involves less cost than sailing at lower speeds. However, shipping companies do already have an incentive to reduce their vessel speeds at bunker prices of $250. With their current market power, bad profit forecasts for the coming year, overcapacity and expected emission bunker levies and emission trading schemes, it is expected that slow steaming will remain implemented till bunker prices are under the $250 per ton, and although this would be socially undesired. Therefore, more pressure for a fairer treatment is expected from shippers.Plymouth Business Schoo