When you talk about the speed of ships, you often find that their maximum speed
is far higher than the usual cruising speed.
So, why don't they just go around everywhere at full speed?
Well, there are actually a variety of reasons.
It could simply be due to the itinerary, which is the case, particularly on passenger ships.
Take the Caribbean as an example:
If the schedule says you need to leave port at 5 PM
one day, and arrive at 6 AM in the next port,
it's just a case of distance over time to get your speed.
Interestingly, you do often find cruise ships
taking a distance added route if the speed required
to meet their itinerary is too low.
Cargo ships on the other hand simply have to get their cargo from A to B.
They plan their itinerary to take account of the passage length.
In recent years they've actually increased their planned passage times
so that vessels can set lower speeds in general—
a practice known as "slow steaming".
But there is somewhat more to it than just saving a bit of cash while running a bit slower.
It all kicked off back in the late 2000s when the oil price
rocketed up to almost US$150 per barrel.
Shipping companies began investigating ways
to reduce their fuel consumption.
Soon after that, the bottom fell out of the stock market
as the financial crisis hit [in 2003].
There was less money available for investment
and consumer confidence plummeted.
With people buying less, cargo volumes dropped, and the demand for ships reduced.
Compounding that, the 2008 Recession followed a run
of boom years during which shipping companies ordered lots of new vessels.
So, while cargo volumes are plummeting more and more vessels were still being delivered.
With over capacity like this, you're really only left with two options:
either you've got a lot of ships running almost empty,
or you have a few ships running at near full capacity.
Logically it makes most sense to run fewer ships,
but when each ship is owned by a different company, they naturally compete to be the last one standing.
They will drop the price they charge for moving cargo, rapidly leading to rock-bottom cargo rates.
Some companies will fold with others hoping to reduce their expenses enough to remain profitable.
Now, while there are a lot of expenses involved in running a ship, things like capital cost, insurance,
crew and maintenance, the biggest single expense that most ships face is for their fuel.
We know from a previous video that fuel consumption
is exponentially related to the speed of a ship.
You can trim a small amount off the top
of a ship's speed, and make actually quite
significant fuel and cost savings.
The further you drop the speed the more the savings
that are possible, but there are downsides.
Obviously, passage times do increase, but that can be balanced out by improved reliability.
A typical 30-day Asia-to-Europe passage might become 40 days instead.
If you consider a storm or bad weather could have delayed the original passage anyway,
having speed in hand means that the longer schedule can easily be maintained.
From an engineering perspective, engines and propellers are designed to run at specific loads.
Our power graph tells us that taking
the top off the speed means the machinery now runs
at a fraction of its designed load.
It's not necessarily an issue, but going against the design specifications
does need careful planning with engine manufacturers.
Of course, there are a raft of consequential benefits, as well.
Not only cost savings, but emissions are obviously reduced simply from burning less fuel.
Reduced sound from the engines has a positive impact
on marine mammals, and the slower speed of vessels
reduces the likelihood of whale strikes.
So, why don't we just slow steam all the time?
Well, one reason is that you do need greater overall capacity, as cargo spends more time on each ship.
To maintain the same weekly sailings from Asia to Europe, you need to physically add more ships onto the route.
In a recession, that's fine as you got excess capacity anyway,
but at other times that involves building more ships,
which does have its own impact, both financially and environmentally.
An incredible amount of energy is needed mining raw materials and actually constructing the vessel.
Another reason is that the increase in passage time
does have an impact during boom years when customers are willing to pay a premium for faster delivery.
It can be partially offset by the better scheduling that we discussed earlier,
but think of a car company; if they're selling cars as soon as they hit the showrooms,
of course they want them there as fast as possible.
Thirdly, if you remember the video about a bulbous bow—ships are actually designed for the speed they plan to run at.
We've already spoken about the machinery considerations,
but the physical hull has an impact, too.
Slowing down existing ships often removes benefits that they gain from design.
So what does the future look like?
If we plan ahead, we can design future ships to be most efficient at reduced speeds.
Bows can be optimised and machinery can be adapted.
Slow steaming itself will morph into smarter steaming.
Schedules can be optimised and communications improved to make the most efficient use of the speed available.
Longer term, automation could lead to a general slowing down, as well.
Reducing crewing costs means the proportion of costs taken up by fuel, increases.
Fuel savings would then have an even greater impact on the balance sheet than they currently do.
How about the global markets?
We are currently in a situation where we have lots of ships in anchorages around the world just waiting for cargo.
The downturn in cargo volumes and consequential
over-supply in capacity
means that there are plenty of vessels available.
Times like this are perfect for companies to promote slower steaming because they don't need to build any new ships.
But saying that, fuel prices have hit record lows, has reduced the profit available from speed optimisation.
Is it all about profit though? We are now entering an age of environmental awareness, so
maybe, just maybe, that will start to carry more weight than the profit available from speed of supply.
And now, all that's left is for me to thank you for your patience over the last few months.
I'm getting back into content creation now,
so be sure to subscribe and hit the bell
to be notified when I post new content.
Until next time, thank you for watching and goodbye.
