Dynamar says fuel savings may not offset cost of extra ships.
The sharp drop in oil prices may make slow steaming unattractive for some liner services, says the consulting firm Dynamar.
In its latest Dynaliners newsletter, the Netherlands-based firm says “at
the present bunker prices ‐Rotterdam $239/ton 380 Cst‐ the tipping
point at which the up to four (in a North Europe‐Far East sling) extra
ships can no longer be financed from fuel savings will meanwhile have
been reached with reduced revenue from BAFs further contributing to
this. Consequently, for some the choice between the devil and the deep
blue sea may have arrived: either lose money by continue steaming slow, or steam faster, accepting the costs of laying up (big, perhaps very big) ships.”
Dynamar says “Although carriers have so far firmly maintained
that they have every intention to continue slow steaming as is, some
nervousness seems to be emerging on the seemingly never‐ending decline
of oil prices and therewith fuel prices.”
Complicating the decision making for shipping companies are “sometimes irreversible,
modifications to ships.”
It referenced a recent newsletter from the shipping company Marfret which said “Given that the technical specifications of ships on order have factored-in the long-term use of slow steaming and shipowners have carried out irreversible technical modifications on ships in service (antifouling, fuel injection pump modifications, changing the stem bulb or propeller blades etc), there’s no going backwards for the time being.”
Marfret said “with the chronic over-capacity, the return on
the market of the vessels having been absorbed by slow steaming would
have a disastrous effect on freight and charter rates. Moreover, on the
operational side, this would mean renegotiating terminal slots with port
operators. If the situation were to continue, the economies of
scale warranted to absorb the effects of higher oil prices may well have
a detrimental effect after having contributed to reducing freight
levels.”
Dynamar noted that forward
prices for a barrel of Brent crude oil on January 8 was $51.15. Ignoring 2009, it said the last time that that level was reached
was in 2005, when slow
steaming had yet to be implemented.
Falling oil prices make slow steaming less attractive
