Container Ships on Go Slow

We wrote recently about the potential for manufacturers to differentiate their products on little more than the products’ carbon footprint. The thrust of the argument was that there is an evolving market in which faced with equal price and delivery terms a buying organization would opt for the supplier with a lower carbon footprint, perhaps out of a sense of environmental stewardship, perhaps in the expectation that in time they could incur costs or create marketing opportunities for themselves by reducing their supply chain carbon and wider emissions footprint.

So it was interesting to read in a NY Times article that the shipping industry is, for its own reasons, already taking positive steps to reduce the carbon footprint of every ton they transport. The lead shipping line in this development appears to be the Danish giant Maersk and they make great play of the reduced fuel consumption and carbon emissions that they have achieved simply by going slower. Call us cynics but we suspect the primary driver is it saves them a lot of money and has allowed them to compete more effectively on price in a market where buyers of shipping services focus more on cost than transit times. The reality is halving the top cruising speed can reduce fuel consumption by 30% and coincidentally have a similar impact on carbon emissions. The reason? – a slower speed reduces drag. For those of us that can dimly recall our physics classes, drag increases with the square of the speed, so the rise in drag is exponential all others factors remaining equal.

That principle holds true in the air and on land. Planes could easily reduce emissions by slowing down 10%, for example, adding just five or six minutes to a flight between New York and Boston according to the article. And simply driving at 55 instead of 65 miles per hour supposedly cuts carbon dioxide emissions of American cars by about 20%. Of course as the article points out, mile per mile, shipping even at conventional speeds is far more efficient than road travel. Shipping a ton of toys from Shanghai to Long Beach produces lower emissions than trucking them on to San Francisco afterwards but as container trade from Asia has risen 8 fold since 1985 and with zero tax on shipping, bunker fuels lines have sought ever faster transit times as a means of differentiating themselves in the market.

Never one to miss a tax raising opportunity, the European Union has suggested a tax be introduced on fuels used in shipping with the proceeds being used to help poor countries adapt to rising temperatures (after the EU has siphoned a large proportion off for themselves no doubt). China and India promptly objected as it would impact their exports to western markets and raise their import costs. Which raises the obvious solution to carbon emissions created by ocean shipping, move manufacturing closer to the markets in which the products are being consumed, a trend that we saw happening even before the credit crunch and was likely accelerated as volumes dropped.

The concept of slow running is not a total win-win though. Shipping lines have to balance fuel savings against greater labor costs as crews are kept at sea for longer and the possible impact on engines designed to run at high output being run at lower output for extended periods. However so popular have the savings been that some 220 vessels are practicing slow steaming, cruising at 20 knots instead of 24 or 25. Few take it to Maersk’s extreme of 12 knots but nevertheless the trend of a slow boat from China looks like it has caught on.

–Stuart Burns

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