Service blows away the logic of slow-steaming
Horizon Lines' announcement of speedier transpacific alternative raises some questions for carriers
“If slow-steaming is the answer, then overcapacity must be the question,” one forwarder told IFW last month, with a wink and a nudge.
The phrase came to mind again this week as Horizon Lines revealed its new transpacific strategy.
Deploying five 2,824teu-capacity, 23-knot, Hunter-class containerships from December, the US carrier’s new service will deliver military cargo to Guam, before carrying on to undisclosed ports in Asia, most likely in China.
Horizon was quick to point out that its link would provide a direct alternative to the slow-steaming services the world’s largest lines have been putting forward as environmentally friendly -- for example, via their membership of the Transpacific Stabilisation Agreement.
Chuck Raymond, Horizon Lines CEO, said a study of the market had revealed “an opportunity for a niche player”.
Slow-steaming strategies do offer environmental benefits in terms of fuel burn and emissions – that is not in doubt. But most in the industry find it hard to believe that carriers would introduce such strategies if they did not have a financial incentive to take capacity out of the system.
And the pressures faced by lines are not always the same as those faced by their customers. For shippers, more time at sea usually equals higher supply chain costs. Where discussion agreements or consortia hold sway, as they do on the transpacific trade routes, shippers can feel starved of alternatives, a point on which Horizon was also quick to jump.
The carrier claimed US importers had been “burned” by sudden capacity shortages over the past four to six months and now wanted to diversify their ocean shipping contracts, access alternative services during the peak season and achieve greater pricing stability.
Raymond said container rates in the Pacific trade lane were rebounding, China’s economy showing solid signs of recovery and many major importers had reported their service needs were not being met.
The Horizon vessels currently serve ports in Guam and China under a space charter agreement with Maersk, which runs out on 10 December. The new service will start next day. But its announcement now, in time for the May contract season, raises questions for carriers in the Pacific, as well as on other trades.
Firstly, how long before rivals draw the same conclusions as Horizon and decide that money can be made by breaking ranks and introducing faster services? And, once that threshold is breached, what are the odds on rate cuts, or the reintroduction of laid-up capacity?
In short, how long before slow-steaming strategies are abandoned in favour of a quick buck?
The phrase came to mind again this week as Horizon Lines revealed its new transpacific strategy.
Deploying five 2,824teu-capacity, 23-knot, Hunter-class containerships from December, the US carrier’s new service will deliver military cargo to Guam, before carrying on to undisclosed ports in Asia, most likely in China.
Horizon was quick to point out that its link would provide a direct alternative to the slow-steaming services the world’s largest lines have been putting forward as environmentally friendly -- for example, via their membership of the Transpacific Stabilisation Agreement.
Chuck Raymond, Horizon Lines CEO, said a study of the market had revealed “an opportunity for a niche player”.
Slow-steaming strategies do offer environmental benefits in terms of fuel burn and emissions – that is not in doubt. But most in the industry find it hard to believe that carriers would introduce such strategies if they did not have a financial incentive to take capacity out of the system.
And the pressures faced by lines are not always the same as those faced by their customers. For shippers, more time at sea usually equals higher supply chain costs. Where discussion agreements or consortia hold sway, as they do on the transpacific trade routes, shippers can feel starved of alternatives, a point on which Horizon was also quick to jump.
The carrier claimed US importers had been “burned” by sudden capacity shortages over the past four to six months and now wanted to diversify their ocean shipping contracts, access alternative services during the peak season and achieve greater pricing stability.
Raymond said container rates in the Pacific trade lane were rebounding, China’s economy showing solid signs of recovery and many major importers had reported their service needs were not being met.
The Horizon vessels currently serve ports in Guam and China under a space charter agreement with Maersk, which runs out on 10 December. The new service will start next day. But its announcement now, in time for the May contract season, raises questions for carriers in the Pacific, as well as on other trades.
Firstly, how long before rivals draw the same conclusions as Horizon and decide that money can be made by breaking ranks and introducing faster services? And, once that threshold is breached, what are the odds on rate cuts, or the reintroduction of laid-up capacity?
In short, how long before slow-steaming strategies are abandoned in favour of a quick buck?
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