The Marine Environmental Protection Committee (MPEC) of the International Maritime Organization (IMO) adopted an ‘Initial IMO strategy on [the] reduction of GHG emissions from ships’ on the 13th of April, 2018 (MEPC 2018). Within the initial strategy, the level of ambition for the reduction of GHG emissions from international shipping aimed for emissions to peak as soon as possible and ‘to reduce the total annual GHG emissions by at least 50 % by 2050 compared to 2008’ (MEPC 2018). The initial strategy also outlines an intention to phase out emissions from international shipping, which would ensure ‘a pathway of CO2 emissions reduction consistent with the Paris Agreement temperature goals’ (MEPC 2018).
The concept of slow steaming is specifically referred to in Section 4.7 (4) of the initial strategy as ‘the use of speed optimization and speed reduction as a measure, taking into account safety issues, distance travelled, distortion of the market or trade and that such measure does not impact on shipping's capability to serve remote geographic areas’.
The impact of slow steaming on bulk freight costs has been assessed in this paper for several types of bulk carrier based on different scenario assumptions with regards to the price of fuel; daily earnings and the relationship between the use of main power and electric power on the vessel. The key outcomes of the paper are summarized below and can be applied to any shipping route for bulk carriers as the result will show the relative change in bulk freight costs for different speed reductions.
- The adoption of progressively higher speed reductions extends the number of days at sea and this results in additional bulk freight costs (i.e. the longer voyages due to the introduction of speed reductions leads to an increase in operational, capital and revenue costs). However, these additional bulk freight costs are offset by the lower fuel costs in the majority of the scenarios assessed in this paper, unless the fuel price is very low or a ‘break-even point’ speed reduction is exceeded where the marginal fuel cost reductions no longer offset the marginal operational cost increases under slow steaming. The reason for this is that the extra time has a linear relationship with the speed reduction whereas the marginal benefits of reducing speed on fuel consumption are highest at full speed and decrease the slower a ship is already going.
- Even in circumstances where slow steaming may result in an increase in bulk freight costs (i.e. under the assumption of low fuel costs or high daily earnings), it likely to only have a negligible impact on product prices in most cases as maritime transport only accounts for a minor share of the total transport costs of a product.
- The results of the paper also demonstrates that the impact of slow steaming on the total costs of smaller vessels, such as handysize bulk carriers, is considerably less than for larger vessels such as either panamax or capesize bulk carriers. This is due to the fact that the relative importance of time based costs (i.e. crew, insurance, capital costs etc) compared to fuel costs are higher for smaller ships than for larger vessels. The same relative fuel savings therefore have a lower impact on the total costs of the trip.