Rising oil costs could spark shipment delays

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A leading freight company is urging exporters to plan early for possible delays in shipments deliveries because of the rising cost of oil.

Ships deliberately cutting back their speeds, known as "slow steaming", to conserve fuel is a practice which award-winning Global Freight believes could affect businesses relying on overseas trade.

Managing director Nicole Howarth said some shipping lines, like leading Danish company Maersk, were refusing to cut sailing speed despite a 15 per hike in oil prices since the beginning of 2011.

But others, including Asia's largest container line Nippon Yusen KK, were continuing to slow their vessels by an much as ten per cent.

She said: "Transit times are varying to different destinations due to the slow steaming of vessels, sometimes this can be because of congestion at ports but also the rising cost of fuel means ships consume less if slow steaming. Unrest in the Middle East is affecting oil prices and with the crisis situation affecting Libya and other oil producing countries in the region, this is unlikely to change any time soon."

Global Freight's comments came as a new survey revealed that slow-steaming can increase delivery times by 30 per cent of more, with shippers wanting ocean carriers to reduce freight rates as a result of the savings made by slow steaming.

Maersk Line has said it will pass on fuel costs to clients and consider cutting speeds only under "extreme" conditions .

Nicole said container vessels were travelling at an average of 14 knots although they are capable of up to 25 knots. The biggest container ships use about 300 metric tons of fuel a day at top speed and sailing 10 per cent slower cuts fuel use by about 27 per cent, she added.

"There are other reasons for slow steaming and delayed shipment deliveries. One is the impact on the climate, the slower a ship steams the more its carbon emissions are reduced.

"Some shipments in parts of the globe where pirates are active can also be delayed. The vessels tend to sail closer to the mainland to escape pirates further out to sea, especially so in the Gulf of Aden, which separates Yemen and Somali, where they request an armed escort as it's an area rife with pirate activity."

Nicole said Global Freight is monitoring the situation and is able to advise clients on timings for deliveries, with a recent shipment to Busan taking about five days longer to reach the destination that the usual shipping time.

"Of course, there can be situations which are unforeseen, but companies should be aware of issues which can affect shipment dates. We'd be happy to speak to any businesses concerned about getting their vital deliveries where they need to be intact and on time."

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