Getting up to speed

Malcolm Latarche
Malcolm Latarche

09 February 2016


Yesterday, trade consultants Drewry circulated a report that suggests at current bunker prices of just over $100 per tonne container operators in the Asia – Europe trade would be better off if they ran services with 9 ships running at higher speed than 11 vessels steaming as at present. Even if bunker prices rose to almost $300 per tonne there could still be advantages in terms of slot costs. Another part of the report highlighted the fact that in terms of slot costs, Panamax box ships of 4,000teu are just as economic on the Asia-US West Coast as larger 8,000teu vessels while bunker prices are at current levels. While the report concludes that operators are unlikely to increase speed because of the effect would only be to add more over capacity it does say that some might realise other benefits such as adding extra calls to loops, as the incremental cost of faster steaming will be lower; improving schedule reliability or even gaining a marketing advantage by offering a fast transit service on key routes using the additional speed capability of their vessels. With regard to the smaller vessels serving the US West Coast, the conclusion was that they would be given an extended lease of life. While it is difficult to argue with the conclusions if all ships were controlled by the line operators, some different scenarios arise if chartered in vessels are released back to their owners who, by and large, are financial institutions with no experience of operation. A pool of such vessels offers tempting opportunities to newcomers establishing new operations. Within the ranks of the current staff of any of the major operators there will be individuals and teams that have the confidence and acumen to reach out and grasp such opportunities. It has happened before and it will happen again. Last year all the talk was of consolidation among lines and it has happened but circumstances are changing and while the low bunker price may not last forever nobody can accurately predict when they may begin rising again. A year or two with sufficient vessels taken under time charter might just provide the toehold for an entrepreneur to become established.