Slow shipping vessel speeds cause supply chain headachesThe steady rise in fuel prices recently has prompted container vessels to sail at their slowest speeds in at least two years as they endeavor to cut fuel costs; these cost-cutting measures, however, ultimately drive up freight rates and the shares of shipbuilders, while simultaneously hurting consumers.

There are roughly 4,660 carriers globally and in the month of December, they moved an average speed of 11.44 knots - down 7.4 percent from the year prior and the slowest average speed since data was first kept back in May 2008. While slowing the speed of the vessels saves money on fuel costs, it also cuts the availability of ships and ensures owners reap hefty profits.

Moreover, the Hamburg Shipbrokers' Association reports that container costs increased by more than 100 percent over the last 12 months. According to experts, these slow rates could persist as oil is trading 16 percent higher than last year and the International Monetary Fund has forecast lower trade growth this year - both of which give owners little incentive to speed up.

In many instances, these slower vessels translate into goods reaching U.S. shores after they are scheduled to arrive. Unless economic variables start to realign, nonetheless, these slow shipping speeds could be the new normal for 2011. 
Share To:

Strategic Sourceror

Post A Comment:

0 comments so far,add yours