Everyone aboard for the slow boat to market

The phrase "slow steaming" conjures up images of a jolly romp down a river aboard a Victorian-era paddleboat. Slow steaming, however, is the name for the new go-slow policy instituted by shipping companies desperate to reduce costs.

Fuel is their biggest input, explains Shippers Council chairman Greg Steed. "The bigger ships these days are designed to run at 23 knots, 24 knots, maybe a bit more." And they chew through a lot of fuel, several hundred tonnes a day in the case of the biggest container vessels.

"A way to combat the use of fuel is to run at a lower speed, as the engines aren't working as hard," Steed says. Millions of dollars in fuel costs are being saved by running the vessels at 17 or 18 knots, adding, he estimates, four or five days to the journey to Europe, depending on the route. Needless to say, those savings aren't passed on.

Of course the shipping companies still have to meet all their export obligations and to counter that commercial threat, they are putting more vessels into service. The companies are not short of spare ships at present. Often just one extra boat will meet their schedule requirements, says Steed.

Exporters, understandably, are not happy about slower journeys. "It is of real concern to the meat industry, given its impact on exports of time- sensitive, high-value chilled products," says Tim Ritchie, Meat Industry Association chief executive.

"The greater transit time eats into time available for distribution, retail and then consumption before the shelf life expires." The margin for error from, say, missing a connection at an Asian port, is gone.

Big bucks are at stake - more than $1 billion in chilled meat exports, $700 million of which is generated in distant Europe.

As if that wasn't bad enough, shipping companies are now talking of introducing "super slow steaming," a 14-knot crawl on the ocean routes.

"That's where it's unacceptable," says Steed. "That's going to cause a great deal of grief and there has to be an alternative, for meat in particular."

After all, Ritchie adds, "the shelf life of most chilled products would expire before they reach the market. If implemented, it could effectively end the current trade in chilled lamb."

Steed says shipping lines seem to have understood the message, particularly from big players such as Fonterra. General manager of strategy, trade and operations, Nigel Jones, is adamant that "the carriers need to be careful that they don't take [cost cutting] too far."

They have already slashed services to New Zealand and many exporters, according to Export NZ, have seen their cargo bumped from the schedule.

It's not just the smaller players, adds Jones. Fonterra too has had its problems getting shipments away.

That revelation draws a cynical response from other industry players: "Yeah, and then Fonterra got on the phone and got their way," says one. "Whoever has the biggest clout with the industry players will probably win the day."

Catherine Beard, Export NZ executive director, says exporters are not getting the service they need but adds that the new policy is a wake-up call to the industry. "Exporters need to get more sophisticated about the way they get their goods to market."

Steed agrees that exporters are often at fault when missing the boat. "It's not the shipping companies; the shipper generally has the problem, either with a letter of credit or something has gone wrong with the availability of the product."

But in the past, the excess shipping capacity meant exporters could pick up a vessel the following week. Now they can't. Better management of the supply chain will ease export problems, he says.

Super slow steaming may be off the agenda but slow steaming may be here to stay. Nineteen of the 23 Asia-to-Europe services have already implemented or are in the process of implementing slow steaming, Ritchie reports. After all, there are significant cost savings to be made and the reduced fuel use is better for the environment.

But Steed counsels: "Engineers suggest it may not be good for the ships to run them at anything but the designed speed - it may do them some harm." If so, a quicker boat to Europe beckons.