Shipping companies reduce speeds and affect the availability of ships

In this week’s Shipping Number of the Week, BIMCO Chief Shipping Analyst Niels Rasmussen examines the practice of line operators reducing average sailing speed amid the pandemic, a practice that could result in a 10% drop in sailing speed . before 2025, affecting supply.

“During the Covid-19 pandemic, line operators have increased average sailing speeds by up to 4% due to strong demand and widespread port congestion. Today the situation is very different and in the first quarter of 2023 the average sailing speed has slowed down to 13.8 knots, 4% less than last year and could decrease by 10% by 2025,” says Niels Rasmussen.

When ships adjust their speed, it affects transport capacity, and adjustment can be an effective way of managing capacity supply. Lower sailing speeds also reduce bunker fuel consumption and greenhouse gas emissions. Slow steaming was first introduced after the financial crisis and reduced sailing speed on main routes by up to 20%.

“The average sailing speed has decreased significantly, although the traditionally higher speed in the main hauling direction is maintained. The larger ships in intercontinental traffic have continued to sail faster than the smaller ships in intra-regional traffic. However, those traditions could also change,” said Rasmussen.

In 2019, the largest ships sailed an average of 2.6 knots faster than the smallest ships. In the first quarter of 2022 this speed difference had narrowed to 1.8 and in the first quarter of 2023 it had further narrowed to 1.6.

As a result, in the first quarter of 2023, the vessels’ TEU capacity-weighted average sailing speed fell by 6% year-on-year, while the simple average sailing speed fell by only 4% year-on-year. So the supply has decreased faster than the sailing speed.

Also the speed difference between headhaul and backhaul direction can be reduced in the future. To comply with the Energy Efficiency Existing Ship Index (EEXI), some ships have had to install Engine Power Limiters (EPL) that reduce their top speed. In order to maintain the buffer between the maximum speed and the scheduled speed (to allow ships to recover from delays in port or due to the weather), the scheduled speed must be reduced.

Of course, this mainly affects the faster propulsion direction and the small difference in speed between the directions. The Carbon Intensity Indicator (CII) regulation and overall greenhouse gas emission targets may lead to further reductions in sailing speed.

“In part, the lower average sailing speed may be due to improved port congestion and some vessels returning to the Asia-Pacific region at a slower than normal rate. However, we still believe this is a good indication of things to come. As highlighted in our 2022 Container Market Overview & Outlook reports, we believe sailing speed could drop by 10% ahead of 2025,” Rasmussen pointed out.

Source: News Network