Slow Steaming in Container Shipping

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Article · January 2012

DOI: 10.1109/HICSS.2012.529

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Slow Steaming in Container Shipping

Jasper Meyer

Student at the

University of Hamburg and

Hamburg University of Applied

Sciences, Germany

jasper_meyer@gmx.net

Robert Stahlbock

Institute of Information Systems

University of Hamburg

and Lecturer at FOM University

of Applied Sciences,

Essen/Hamburg, Germany

stahlbock@econ.uni-

hamburg.de

Stefan Voß

Institute of Information Systems

University of Hamburg

stefan.voss@uni-hamburg.de

Abstract

International supply chains heavily rely on

maritime shipping. Since the beginning of the latest

economical crisis, the containership fleet is slowing

down. This paper gives a short overview of the slow

steaming history as well as the widely assumed

coherence between a ship’s speed and its fuel

consumption. Calculating fuel consumption as a

function of speed provides decision support regarding

the decision to which extent slowing down should be

performed. It can be assumed that, compared to sailing

at full speed, a speed reduction has a positive

economic and also environmental impact. This paper is

focused on the economic aspects. We show the

considerable cost saving potential of a lower ship

speed as a result of the decreasing fuel consumption.

In combination with other variables of a container

vessels’ profit function, this may lead to the profit

optimizing speed of a container carrier.

1. Introduction

In the last decades, container shipping companies

were trying to deliver their goods as quickly and

reliably as possible. Even the ever-increasing fuel

prices could not stop this trend. The resulting costs

could be compensated by the growing revenues

resulting from the worldwide increasing demand of

transport capacity due to globalization. However,

based on the impacts of the economic crisis on the

global trade market in the last years, activities on the

transport market as well as revenues dropped severely.

Not only the demand of transport capacity was

shrinking in an unexpected way, but additionally the

supply was growing extremely fast. This vicious cycle

seems typical for the container shipping industry. In an

economic boom, shipping companies order large

capacities (a large number of ships and/or ships with a

large capacity), which are delivered later, possibly in a

recession phase. In combination with the trend of

growing ship size and the decreasing demand as a

result of a recession, this cycle leads to a large

mismatch between supply and demand of transport

capacity. As a result, freight rates decrease. One

strategy to cut down operational costs is to moor some

vessels with minimal crew for a longer time until new

cargo has to be loaded. Indeed, an increase of the

number of laid-up vessels could be observed as a result

of the global crisis.

An additional strategy for shipping companies is to

slow down vessels compared to sailing at full speed.

The basic idea of this slow steaming is not new as it is

well known, that the fuel consumption of large cargo

vessels is rising exponentially with a vessel’s velocity.

Due to this fact, ships were operated with a lower

speed in former times as well. But compared to today,

it was never applied to such a large part of the

worldwide fleet because of the exceptional

circumstances in the latest crisis. However, even

nowadays, as the crisis in the transport sector is nearly

over, slow steaming remains a common operating

mode for container ships. Due to the lack of interest in

former times, important parts of the theoretical

background of slow steaming are unknown or not

reflected in some parts of the literature.

In this paper we provide decision support regarding

the question to which extent slow steaming is

profitable and how profit optimizing vessel speeds can

be calculated. After a literature review we discuss

various effects of slow steaming in Section 3.

Calculations are shown in Section 4 and Section 5

concludes the paper.

2. Literature review

The calculation of optimal speed for freight vessels

and related performance indicators such as freight rates

were analyzed a few decades ago, e.g., in [9, 10]. In

[27], an analysis of the effect of oil price on the

optimal vessel speed is presented. The calculations for

2012 45th Hawaii International Conference on System Sciences

DOI 10.1109/HICSS.2012.529

1306

optimal speed are different in these publications but the

main principles of the relationship among impact

factors and speed seem to be correct. However, the

research was based upon the common but old-

fashioned ‘admiralty formula’ which assumes that the

daily fuel consumption is rising by the power of three

with regard to the speed. This admiralty formula stems

from times when ships were operated by coal. In

particular today, this formula is not appropriate as a

basis for reliable calculations of fuel consumption

under real world conditions.

While the speed of a vessel may be optimized,

especially in the liner and container shipping business

various side constraints may come into play. Among

others, this concerns the interplay between different

vessels of a fleet operating to achieve some common

goals. In [24], fuel costs are modeled as a nonlinear

function of a vessel’s speed. The problem of vessels’

allocation to routes is combined with the problem of

speed selection in an optimization model. Based upon

[15, 25], an integer programming model for mini-

mizing operating and lay-up costs for a fleet of liner

ships operating on various routes is presented in [26].

Basic fuel consumption characteristics of vessels are

used as model input. However, environmental aspects

were not in the focus at that time. In [17], the optimal

vessel speed considering costs and environmental

aspects by lowered fuel consumption is briefly

analyzed and discussed.

Independent from the container shipping industry,

[3] provides a simple and yet effective spreadsheet

based approach for saving considerable amounts of

fuel for US navy ships without the need of new

respect to the ratio of operational and design speed.

According to [7], the relationship between speed and

fuel consumption depends on an engine’s type and its

load. In particular with loads below 25% maximum

continuous rating, common rules of thumb fail. The

study reports potential emission reductions in the order

of 30% without the need of specific slow steaming

equipment. Recent calculations and detailed analysis of

economical and technical aspects in [11, 12] indicate

that the fuel savings potential by speed reduction is

considerably higher than claimed in numerous previous

publications.

According to our observation as well as [22] in

most formulations of maritime transportation

problems, time and cost of sailing are not varied

regarding speed. The latter paper builds upon [8] and

provides an extended formulation by introducing

variables for the sailing speed for each ship and sailing

leg, as well as an adjusted cost function and constraints

to incorporate speed as decision variables. For advising

solution methods such as multi-start local search based

methods the authors advise discretized arrival times. In

[4], it is shown for container shipping that slow

steaming has reduced emissions by around 11% over

the years 2008-2010 without the adoption of new

technology. Furthermore, a bunker break-even price

with the slow steaming strategy and the resulting

emission reduction being sustainable in the long run is

calculated. For the main container trades it is found

that considerable reductions can only be sustained with

a high bunker price of at least $350–$400. Therefore,

’market-based solutions‘ (e.g., tax levies and/or cap-

and-trade systems) are recommended in order to