Full steam ahead: cheaper fuel may not help shipping industry

Singapore

A SLIDE in marine fuel prices to six-year lows should be a welcome break for global shipping - by slashing costs for an industry struggling to recover from its worst downturn in decades.

But shipping operators say the benefits on some routes risk being short lived as cheap fuel is encouraging firms enjoying better rates to ditch "slow steaming", a practice started from 2007 to operate ships below maximum speed to save cash after a jump in fuel prices.

This means that at a time when a slowing Chinese economy is hitting international trade an increase in the speed and number of trips on some routes could weigh on cargo rates and hit demand in a sector already suffering overcapacity. "Low bunker fuel prices are a negative factor as they lower the freight rate level at which ships will speed up and thus increase shipping supply," said Mats Berglund, chief executive at dry bulk s…