Slow steaming likely to be here to stay

BUNKER prices have dropped dramatically over the past year, ending for now at least a long period where fuel costs were increasing relentlessly. The chairman of the International Bunker Industry Association (IBIA), Jens Maul Jorgensen, noted recently that lower oil prices had given rise to speculation that they will mean the end of slow steaming. "But," he says in IBIA's magazine World Bunkering, "will owners really change back to what was 'normal speed'?"

"I don't think most owners will be pushing the throttles forward again. Maybe a few will. In the end, though, it comes down to a calculation and owners will realise that if ships return to sailing at normal speed again, freight rates will definitely not follow that upward trend. They could drop further, even though current levels are unbelievably low. Time will tell, so let's see what happens."

Part of the answer is in Maersk Line's "very satisfactory" 2014 results. The container carrier made a US$2.34 billion profit, which was a 55 per cent improvement compared to 2013. More importantly, the operation brought in a 11.6 per cent return on invested capital (ROIC), up from 7.4 per cent. Breaking the 10 per cent ROIC is an important achievement and one, for example, that eluded P&O Nedlloyd before it was bought by Maersk