Maersk Reaps Profits And Praise By Taking It Slow

25 Nov 2011

Immigration News

World’s largest shipper calls slow steaming a “win-win-win”.

It’s not often that you hear of businesses boosting profits by slowing down, but that’s exactly what the Danish shipping giant Maersk Line has done. In addition, the company has earned the praise of environmental agencies for significantly cutting its carbon dioxide emissions.

Since 2008 Maersk has been saving huge amounts – of both cash and emissions – by reducing sailing speeds by an average of 27 percent.

“We finally dropped the old paradigm of just going faster and faster. This way is simply better for the bottom line and the environment,” Jacob Sterling, Maersk Line’s head of climate and environment, told Politiken newspaper.

The initiative is called ‘slow steaming’ – and it has taken hold throughout the global shipping industry – not just at Maersk – in large part because of its financial and environmental benefits.

Whereas Maersk’s container ships used to sail between 20 and 25 knots, they now average 15-20 knots. The 20 percent speed reduction saves 40 percent in fuel – with matching reductions in carbon dioxide emissions. And for a company with annual fuel bills of around 33 billion kroner, those savings are nothing to sneeze at.

To compensate for the slower sailing speeds, the shipping giant has increased frequency by adding one to two ships to each of its routes. Yet even with the extra ships, Maersk estimates that it has reduced emissions by seven percent per container since embracing slow steaming back in 2008.

“It’s a really good example of how initiatives that make a difference on the climate front aren’t necessarily coming out of the UN, but instead from underneath,” Richard Baron, the leader of the climate department of the International Energy Association (IEA), told Politiken.

“We have come to realise that it often pays economically-speaking to be climate friendly.”

Verdensnaturfonden, the Danish division of the World Wildlife Foundation (WWF), praised Maersk for committing to reducing emissions.

“Maersk Line in particular has made a serious and broad effort,” John Nordbo, Verdensnaturfonden’s head of environmental and climate projects, told Politiken.

At first slow steaming faced strong scepticism from engine manufacturers. But today even they acknowledge its advantages. The German multinational Man Diesel, which has a daughter company in Copenhagen, is one large engine manufacturer that now fully promotes slow speed engines as well as technologies that can be added to older engines to regulate them more efficiently at slower speeds.

According to the shipping industry analysts Mirae Asset Securities widespread adoption of slow steaming is the biggest thing that has happened to the global shipping industry since the Second World War.

And there’s no foreseeable reason why shippers will speed up again when the economy does.

Besides the cost savings and environmental advantages, Maersk maintains that slow steaming allows it to serve customers better by making scheduling and logistics more predictable.

Before, when trip times were predicted based on maximum sailing speeds, there was no way to compensate for delays. Now that planning is based on slower speeds, there is greater flexibility – and the opportunity to speed up for stretches, if necessary, in order to arrive at the time scheduled. Slow sailing thus helps prevent delivery delays and bottlenecks at entry ports, Maersk Line reports.

“Slow steaming is here to stay because it is a win-win-win situation. It’s better for our customers, better for the environment, and better for our business,” Eivind Kolding, Maersk Line’s managing director, said.

The company has even invested in 20 of the gigantic, four-cornered Triple-E-class ships. Triple-Es are 30 percent more energy efficient than other new container ships and are actually designed to sail more slowly – and that’s a good thing.


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