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XPO launches Siemens Climate Solutions distribution system
XPO Logistics has created a UK distribution soluti...

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Emirates SkyCargo still flying high after 18 years
Emirates SkyCargo is celebrating its 18th Annivers...

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DP World backs Royal Challengers Bangalore
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Volumes up as airfreight tracks route to recovery
The gradual route to recovery to pre-COVID market ...

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ParcelHero: Revenge of the high street
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XPO launches Siemens Climate Solutions distribution system
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DP World backs Royal Challengers Bangalore
Emirates conducts additional flights for Onam season
Caribbean flying in with Covid-19 relief
CEVA commences CargoWise rollout
Volumes up as airfreight tracks route to recovery...
Virgin Atlantic Cargo announces new UK-Pakistan routes for...
ParcelHero: Revenge of the high street

 

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Robert Gora, global category management logistics vice-president for Siemens has called on ocean carriers to offer faster services between Asia and Europe, saying companies are willing to pay a premium for expedited options. However Drewry Maritime Research thinks carriers are so committed to slow steaming they would require a significant incentive to consider speeding up. The consulting service thinks shippers would have more success pressing for more reliable services:

Gora says it currently takes around 40 days door-to- door to ship from Shanghai to Germany, compared to 10 days for the much more expense airfreight option and 20 to 25 days for rail. While it is true that services have slowed down measurably since the advent of slow steaming, shippers do still have a fairly wide range of options available to them.

Currently, there are 13 weekly services from Shanghai to Hamburg with port-to-port transit times ranging from 29 to 36 days. Between Shanghai and Rotterdam there are 15 weekly services within the same band of transit times.

Assuming no interim ports, and ships sailing at 24 knots, Drewry calculates that the fastest possible transit time between Shanghai and Hamburg is 19 days, a potential saving of 10 days against the current best.

In theory, with smart planning shippers using the main ports should have no problem receiving a regular flow of cargo, regardless of the extended lead times. Slow steaming has become entrenched within the container industry and shippers have long since adapted to its demands, meaning the market for faster services would be relatively small, limited to shippers experiencing extraordinary demand peaks and/or having to plug occasional gaps caused by poor service reliability.

The onus is therefore on the likes of Gora at Siemens to prove the economic case to carriers for faster services. The big ship economies dominating the Asia to Europe trade mean that the smaller the ships deployed on any new fast loop, the bigger the premium would have to be. Diverting cargo from the existing slower and big ships would also make it harder to fill them, adding huge downwards pressure on already non-compensatory freight rates.

That is not to say fast premium rate services are completely out of the question, but in Drewry's opinion lines would require a long list of cast-iron guarantees in terms of minimum volumes, rates and floating bunker adjustment factor that would probably be unworkable for most shippers. Recent comments from major lines suggest the chances of fast services returning are slim and shippers would probably be better served making more demands on improving service reliability that remains poor.

Data from Drewry's Carrier Performance Insight has the average on-time performance (defined as +/- 24 hours from the scheduled arrival at the loading port) of East-West services since May 2014 at just 59 percent, although things have improved in the last couple of months.

In March, the aggregate on-time performance reached a five-month peak of 64 percent, a rise of 8.5 points over February. The increase was the consequence of much improved services in the Asia-Europe trade and gradually easing congestion on the U.S. West Coast following the resolution of the port labour dispute.

Better reliability is a win-win for shippers and carriers. Carriers shouldn't need extra incentives to meet their schedule promises as delays hurt them too, from missing berthing windows, feeder connections, customer resolutions, and generally from ships being less productive than they could be.

Convincing them there is a market for fast services will be much harder.

Based in London, Drewry is a specialist research and advisory organization providing analysis and reports for the global maritime industry.

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