Throttling back across the bulk sectors

It is well understood that container lines cut their ships’ service speeds in the wake of the global crisis because cargo volumes were down, ship delivery volumes were running at record levels and fuel prices continued to climb. Absorbing extra capacity by spending a bit more time on each voyage was indeed useful because it forced fewer container ships into lay-up. But, say experts, make no mistake - the main reason for cutting ships’ speed was economics.

Maersk Tankers’ senior director Tommy Thomassen believes that the speed reductions in the container sector will be mirrored in the tanker market, and possibly in the bulk carrier business too. And he thinks they may well become permanent. Indeed Maersk Tankers, to the initial horror of many of its engineers, has adopted slow steaming across many of its vessels and “super slow steaming” – defined as engine loads of 40% or less – on board its VLCC fleet.

“We believe we have proven that it is worthwhile,” Thomassen declares. “It is something we want to drive in the industry.”

The Danish group’s tanker company was, in many respects, very fortunate. No shipping company anywhere is thought to have done more investigative analysis than the container company, Maersk Line, on the challenges surrounding the operation of large slow-speed diesel engines at part load. And Thomassen freely admits that this provided a sound foundation for similar moves in the tanker company.

The numbers are eye-watering. Running a VLCC at 40% of maximum continuous rating can still give a speed of 10-12 knots, Thomassen explains, although this varies to some extent from ship to ship. But cutting speed from 15 to 10 knots can halve fuel consumption – from 80 tonnes to 40 tonnes, for example. As bunker prices continue to climb, fuel savings can run into millions of dollars.

In drawing up the slow-steaming plan, there were many issues to address, both from a technical and personnel management point of view. Technical adjustments on board ship include the monitoring of a wide range of variables including cylinder lubrication, air supply, component wear and turbocharger performance but to almost everyone’s amazement, tests showed that electronically controlled Wärtsilä 7RTFlex84T engines, installed on the company’s eight 300,000dwt Nautilus-class VLCCs, could actually operate at engine loads as low as 9%.

On the technical front, managing risk was an important issue and the company had to make sure its customers were kept informed. A main engine failure resulting from low-load operation could be disastrous, Thomassen points out, so the development of the slow-steaming strategy had to be carried out not only with engine manufacturers and other suppliers, but with customers too. “What our customers buy from us is minimum risk,” Thomassen comments.

On the management front, one of the biggest challenges was persuading ships’ engineers that running main engines at low loads was not only possible, but also a good idea. “When we were talking about going below 35% load on these [Wärtsilä] engines, our engineers were running out of the room,” Thomassen recalls.

They warned him they would quit. But none has. And Thomassen says proudly that these engineers are now some of his best salesmen.

But although the container line and the tanker company share some of the key drivers in the group’s speed-cutting strategy, there are also different variables in each case. In Maersk Line, for example, which today operates a fleet of some 500 owned and chartered container ships, cutting fuel bills is right at the top of the agenda. Fuel is one of the largest single cost centres for container lines because they pay for their own fuel.   

Although ship operating economics also constituted a key driver in the move to cut speed for Maersk Tankers, the company is less exposed to high fuel costs because, under most charter contracts, bunkers are for charterer’s account. Fuel savings, therefore, directly impact the charterer’s bottom line, but make little difference to the operator.

Well – that’s what you’d think. But Thomassen points to a couple of other drivers which are equally as important for both the tanker company and the container line. There is the issue of excess shipping capacity in most sectors of the market. Running more ships at slower speeds helps to offset idling or laid-up volumes.

More importantly, however, for shipping companies which have adopted increasingly robust sustainability strategies – such as A P Møller-Maersk – slower speeds mean lower fuel consumption and fewer emissions as a result. In line with other group companies, Maersk Tankers has a target of cutting CO2 emissions by 15% between 2007, the start year, and 2015 and is already well on the way to meeting this. The company has installed sophisticated real-time performance monitoring systems on board ship, and engineers at sea liaise closely and permanently with superintendents in head office who monitor performance ship by ship.

Thomassen explains: “We have set some quite ambitious targets, and in order to achieve these, we have no choice but to look at optimising our speed and reducing the load on main engines. This is a very important part of achieving our target.”

There is one other significant difference between implementing the slow-steaming strategy in the group’s container line and its tanker company. Maersk Line executives are in regular dialogue with its major shippers – the Walmarts, IKEAs and Akzo Nobels of this world – over its sustainability initiatives. Shippers like these pride themselves on being able to say to their customers that their goods are shipping by companies with the most advanced environmental programmes in place.

However, for the tanker company, this is more difficult. Some major charterers, of course, have adopted advanced sustainability strategies, but they are not selling their cargoes directly to the world’s public. Moreover, some charterers certainly prefer to pay more by way of bunker bills for a cargo shipment that spends less time on the water. Still others couldn’t give a damn about cutting emissions.

Thomassen admits there are complex issues to address. But he says that Maersk Tankers is in continuing discussion with a number of its charterers although he concedes that there has been limited take-up so far. The low level of interest, he says, is partly a result of tradition and a charterparty system that never changes. At the moment, he concedes, there are few incentives in the commercial value chain and it will take time to “massage the message”.