Bunker procurement strategies in liner shipping companies : optimising vessel speed to accommodate bunker price fluctuations

Abstract

The shipping industry has struggled with severe business setting in 2009 and is probable to face the same state of affairs in 2010. In addition, to the unfavorable economic conditions, bunker prices have been escalating at an alarming rate. As the bunker fuel price accounts for almost 60% of the operating cost of the vessel, any increase in the price levels of bunkers will have a spiral effect on the vessel’s operating cost. The aim of this research project aims to find out the theory of slow steaming and how it is being applied by the liner companies. In particular, the study explores how slow steaming is affected by different roundtrip distances, profitability of the liner route and its effect on carbon emissions. It was found that slow steaming is more prevalent for the Asia-Europe trade route as it has the longest round-trip distance. Predictions of the future of slow steaming was made based on the historical trend, price of bunkers and also the possibility of further reduction in speed. Though slow steaming is deemed to improve schedule reliability but it is often proven not to be true in reality. Therefore, the future of slow steaming is uncertain for now.