The document discusses issues facing the container shipping industry due to falling bunker fuel prices. It notes that research shows slow steaming may no longer save costs as fuel prices have dropped significantly from a year ago. This could lead shipping lines to consider speeding up vessels instead of using as many ships at slower speeds. However, many factors would need to be considered in making this decision and shipowners have generally preferred slow steaming to manage excess capacity. The lower fuel costs may also allow some adjustment of shipping routes and vessel usage.

1. www.lloydslist.com Lloyd’s List 3
Continued from page 2
MSC Oscar is due to join MSC’s
Albatross service as part of the
2M network, with the first sailing
from Dalian, MSC confirmed to
Lloyd’s List. The next ship in this
series, MSC Oliver, is scheduled
for delivery in March.
Maersk and MSC unveiled
plans to team up in July, soon
after the proposed P3 Network,
which also would have included
CMA CGM, was disbanded
following China’s veto.
Covering all three east-west
trades, the VSA will consist of
193 vessels totalling 2.4m teu
serving 77 ships on 22 service
strings.
The alliance could not start
any earlier because of the need
for Maersk to withdraw from
consortia arrangements with
CMA CGM, which is now
joining the Ocean Three
alliance with China
Shipping and United Arab
Shipping Co.
That, too, starts about now.
Box lines faced with
slow steaming conundrum
Research shows that fuel
prices have reached the
point where slow
steaming no longer
saves bunker costs
BUNKER prices are reaching
the tipping point at which it
becomes less expensive to
operate fewer ships at a faster
speed than more of them at the
slower speeds, writes Damian
Brett.
In an analysis of the latest
bunker fuel prices, Dynamar’s
Dirk Visser said that with 380
cSt fuel oil now available from
Rotterdam at a level of $239 per
tonne, compared with $565 a
year ago, shipping lines will be
becoming increasingly nervous
about their slow steaming
strategies.
At present on the Asia-north
Europe trade as many as 12 ships
per string are being used to
ensure a weekly frequency can
be maintained at fuel cost saving
service speeds of around 17
knots in the headhaul direction.
But Mr Visser said that as well
as the price of fuel there are
various other factors that would
need to be considered before
speeding up ships.
For instance, shipowners had
made sometimes irreversible
modifications to ships already
in service, such as fuel injection
pumps, replaced stem bulbs and
propeller blades.
Also, new vessels were being
built to operate at slower
speeds. The lower fuel prices are
compounded by lower revenues
generated by carriers’ bunker
charges.
“Consequently,” Mr Visser
said, “for some the choice
between the devil and the deep
blue sea may have arrived:
either lose money and continue
steaming slow, or steam faster,
accepting the costs of laying up
(big, perhaps very big) ships.”
Other factors to be considered
are the cost of chartering
vessels, the cost of laying-up
unwanted ships, the impact of
excess capacity on freight rates,
container turnaround times,
environmental impact and
customers’ needs.
He added that forward prices
for a barrel of Brent crude oil
stood at $51.15 as of January 8.
The last time annual oil prices
averaged at this level, apart
from the financial crisis year
of 2009, was 2005, a few years
before slow steaming was first
introduced.
Excess capacity
So far shipowners and operators
have largely been against the
idea of speeding up ships
because slow steaming has the
added benefit of using up excess
capacity.
However, Gerry Wang of
Seaspan said that there could be
room for some slight increases
in speed.
AP Moller-Maersk chief
executive Nils Andersen recently
said that any savings made by
speeding up ships would likely
be frittered away by lower freight
rates.
Maersk Line chief executive
Søren Skou was also concerned
by the impact speeding up
vessels would have on the
environment.
Evergreen’s second vice-
group chairman Bronson Hsieh
pointed out the destabilising
risks to the whole container
shipping industry of faster
voyage times.
Price levels
There is also the varying cost of
fuel to consider.
Mr Visser said that it was
anyone’s guess as to how long
prices would remain at this level.
Jonathan Roach from broker
Braemar ACM Shipbroking said
that prices in Singapore for
380 cSt remained at $282 per
tonne and in fact increased on
Thursday.
Dynamar figures show that
380 cSt is even more expensive
in Tokyo and Genoa where it is
valued at $330 per tonne and
$284 per tonne respectively.
Mr Roach’s figures show
that the average speed in the
headhaul direction of the Asia-
Europe trade stayed largely the
same last year, at 18.2 knots in
the first half of the year and 17.7
in the second half.
“Speeding up could be
devastating for the liner trades
as it would help create more
overcapacity. So I think the
larger east-west trades will
maintain their slow steaming,”
he said.
“But liner operators will still
Continued on Page 4
380 cSt fuel oil is now available from Rotterdam at $239 per tonne,
compared with $565 a year ago.
More bunker news
Owners saving $9,000 per day on bunker fuel on spot
voyages
Big savings come as 2015 looks rosy for crude tankers but
might present challenges for product tankers as new vessels
hit the water
http://www.lloydslist.com/ll/sector/tankers/article455235.
ecearticle455249.ece
Aegean pounces on OW-operated vessels in Germany
US listed company continues moves to fill market gaps left by
collapsed bunker supplier
http://www.lloydslist.com/ll/sector/ship-operations/
article455302.ece

2. 4 Lloyd’s List www.lloydslist.com
NYK gung-ho on
LNG as others
highlight risks
Japanese shipowner
betting big on LNG as
others raise concern
over Asian LNG demand
growth and new cargo
supply from Australia
and the US
NIPPON Yusen Kaisha, owner
of one of the world’s largest
fleets of ships across all
sectors, has underlined its
unswerving faith in the global
growth of demand for liquefied
natural gas as the company
dramatically expands its LNG
fleet, writes Hal Brown.
The vote of confidence in the
future of LNG shipping comes
as the industry experiences
a few wobbles: spot rates are
down as new ships compete
for cargoes; some experts say
demand in Asia is down; and
other experts are concerned
that the new wave of cargo
supply might not materialise as
expected.
Nevertheless, Japanese
owner NYK believes prospects
ultimately remain robust and is
certainly betting big on LNG.
The number of LNG carriers
in its fleet has more than
doubled, from 28 at the end of
March 2004 to 67 by the end
of March 2014, NYK president
Yasumi Kudo said in a New
Year message yesterday.
With LNG ships priced at
around $200m, that is a huge
investment over those 10 years
of $7.8bn.
“We believe that world
demand for LNG in particular
will continue to show high
rates of growth going forward,”
said Mr Kudo.
Structural changes in energy
supply and demand in recent
years due to the shale gas
revolution are a factor in
creating this situation, he said.
LNG ships are not all that
NYK has been interested in.
“On the basis of the
technology and expertise we
have accumulated over many
years of LNG shipping, we have
been able to enter upstream
and midstream businesses in
the LNG value chain,” said Mr
Kudo.
“This is a first for a shipping
company and an achievement
we would not have even
considered possible 10 years
ago,” he added.
The growth in the LNG
industry, with new exporters
and importers entering the
game over the last few years,
means NYK has widened its
geographical scope.
It is not just focused on
shipping LNG cargoes into
Japan.
“Looking back at the growth
we have achieved in each of
our businesses over the past
10 years, it is clear that the
source of growth has shifted
rapidly from being centered on
Japan to service routes that do
not include Japan and to other
overseas businesses,” Mr Kudo
pointed out.
“This does not change in
any way the importance of
the Japanese market for NYK
going forward; however, it
does mean that securing
business overseas will become
increasingly important in order
Kudo: We believe that world demand for LNG will continue to show high
rates of growth going forward. NYK
NYK’s Kudo gloomy
on boxship and bulker
outlooks
President forecasts
persistent oversupply in the
two sectors during his final
New Year’s speech
http://www.lloydslist.
com/ll/sector/dry-cargo/
article455274.ece
Continued from page 3
be able to enjoy a better bottom
line as their cost base will be
significantly less as one of their
main costs is bunkers.”
However, he said the lower
bunker prices could have an
impact on regional services.
He said that additional port
calls on existing services that
would have previously been
unprofitable because of the
cost of fuel could now become
financially feasible. It could also
result in new services for the
same reason.
The lower prices could also
result in the charter market price
difference between ecofeeders
and older less fuel efficient
tonnage narrowing, he said.
However, he said newer vessels
would still be more reliable
and economical so would still
command a premium.
to expand our operations over
the next 10 years.”
Mr Kudo’s gung-ho attitude to
LNG shipping comes as others
raise concerns.
The “big surprise” of
2014 was that Asian LNG
demand was much lower
than expected, said Wood
Mackenzie LNG principal
analyst Giles Farrer.
“Demand in emerging
markets, like China, failed to
grow to the extent anticipated
and demand in the established
South Korean market fell
considerably,” added Mr
Farrer.
In addition, concerns have
been raised about global cargo
supply growth.
The next few years were
expected to witness the largest
increase ever of LNG global
export capacity, according to
Belfer Center senior associate
Leonardo Maugeri.
The US, Australia, and
potentially Canada and
Mozambique, were to be the
main contributors to such an
increase, Mr Maugeri said in a
recent study.
“However, the growth in LNG
export capacity will probably
fall short of the bullish
expectations of more than
200m tonnes per annum,” he
said.
“Most of these LNG planned
additions are based on very
high upstream and midstream
costs that would make them
hardly profitable even in a
high-price scenario.
Continued on Page 5