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Global Supply Chain News: Threat of IMO to Mandate Slow Steaming Gets No Traction – for Now

 

International Maritime Organization Trying to Find Ways to Meet CO2 Emissions Goal, could Still Tell Ships to Slow Down Further


May 27, 2019
SCDigest Editorial Staff

The move for the International Maritime Association (IMO) to mandate so-called "slow steaming" to meet carbon emissions goals did not gain any momentum at the recent meeting of the organization's Marine Environmental Protection Committee.

The idea of putting speed restrictions on ships was recently propsed by a group of nine environmental NGOs and 120 shipping companies (none of which being container lines) in an open letter to the IMO, as reported by the analysts at Drewry.

Supply Chain Digest Says...

More than 100 ship leasing owners did sign the letter, but almost all of those were non-operating companies that would not be directly impacted by new rules on speed.


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"Our preference would be to set maximum annual average speeds for container ships, and maximum absolute speeds for the remaining ship types, which take account of minimum speed requirements. Such a regulation should be implemented as soon as possible and the obligation for compliance should be placed both on ship owners and operators, including charterers," the letter said.

Slow streaming is a technique invented by Maersk Line, the sector's largest container shipping line, around the time of the Great Recession in 2008 as a mean to use less expensive bunker fuel in the face at the time of plummeting shipping rates.

The practice has remained in use across container carriers for many sailings, with container shipping rates still generally at levels that leave carriers struggling with profitability. Slow steaming also has helped to moderate the vessel surplus that has persisted in the industry, as demand flattened and carriers kept ordering new ships anyway. Increasing the time it takes a ship to make a voyage with slow steaming has the effect of reducing effective industry capacity.

But environmentalists have latched on to the potential for slow steaming to reduce carbon emissions as well through lower use of fuel for a given distance ships move at slower speeds. Also a factor: the IMO'S own goal, announced in 2018, of reducing CO2 emissions from the shipping sector by 50% by 2050 versus 2008 levels.

The IMO also said it was committed to reaching "to peak GHG emissions from international shipping as soon as possible" – meaning emissions levels would continue to fall even as volumes grow over time.

That IMO already has released phased requirements for more efficient new ships, but that may not be enough to reach its emission reduction goals.

The open letter to the IMO did not specify what the average speeds should be, but Drewry says with slow steaming being such a long-established feature of the container shipping industry it is questionable how much slower containerships can go. Its research of two Asia-North Europe services indicates that the current average speed hovers around 16 knots, well below potential speeds.

That estimate is supported by reporting from the UK's Financial Times, which found that speeds for large container ships dropped 22% to an average speed of 16 knots between 2007 and 2015

Drewry says it is possible the IMO could eventually force carriers to sail at speeds of just 12 knots.

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But nothing happened at the IMO meeting two weeks ago.

A tweet from The Wall Street Journal said, "At this point, it's basically dead," in reference to speed limits, though others were not as sure the measures were not still possible.

Container carriers have in general been strongly opposed to any IMO speed mandates The JOC reported that among the carrier's objections was the fact that lower speeds would likely require container lines to invest in additional old-technology ships to maintain weekly schedules,

More than 100 ship leasing owners did sign the letter, but almost all of those were non-operating companies that would not be directly impacted by new rules on speed.

Guy Platten, secretary general of the International Chamber of Shipping (ICS), said in a press release following the conclusion of the IMO meeting that "Although no final decisions have been taken it was clear that the majority of IMO Member States, including major economies such as China, India, the United States and many South American nations, had little appetite at present for initiatives such as mandatory speed limits, expressing concern that these would reduce the efficiency of maritime transport, in effect increasing the distance between economies and their markets, while acting as a disincentive to the take-up of new CO2 reduction technologies."

So for now, it looks like the sector will stick with regular slow steaming, not new "really slow steaming" or whatever you want to call it that would come from IMO rules to take the carriers' feet even further off the gas – for now.


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