Over the next five years ocean forwarders will face new regulation on air emissions and fuel charges that are likely to raise costs significantly. Among the looming changes will be the creation in 2012 of a 200-nautical mile Emission Control Area (ECA) around North America, stipulating the use of ECA specific fuel by 10-15% in volume, similar to zones established in the Baltic and North seas. Other
regulations coming into force are instruments on the carbon factor of marine fuels by 2013, as well as a sulphur content rule coming
into effect by 2015. At a modest estimate, costs will rise by $200 per tonne of fuel.
Moving vehicles will be more expensive and fuel consumption will have to be reduced. While the industry waits for vessels driven by solar panels and pulled by kites, a range of more immediate strategies are being pursued. And according to Melanie Moore, Wallenius Wilhelmsen Logistics’s global head of environment, a rethink is necessary across the supply chain with the reduction of shipping speed a central premise.
As outlined at its Environment Club meeting held in London this Spring, WWL believes that shipping speed should be reduced from the 19 knots typical of car carriers to a new 10-knot standard. According to Moore, the industry needs to compensate for slower shipping times by creating velocity in the supply chain and delivering vehicles in a more efficient way. This does not automatically mean adding
extra factory-to-dealer days, but finding those days as efficiency gains elsewhere. WWL states that 40% of its customers’ lead time is
spent standing still; through dialogue, Moore believes the industry can find ways to compensate.
“I think we are at a time in the industry where it is OK to look at supply chain change,” said Moore. “The time is ripe to create this sort of paradigm shift.”
But as the industry recovers so does the renewed incentive for competitive shipping times, and taking twice as long to ship vehicles does not sound anything like competitive. Moore admitted that understanding the compromise between speed and cost was the biggest single issue WWL faces in that dialogue with its customers: “The goal is to create the right conversation with the customer, to
know where they see the costs coming from in the next five years and help them understand that the single biggest change they can make on it is working with us on speed.”
The question remains whether slower shipping means having to invest in more ships. Ro-ro vessels are more expensive than container ships but have faster turnaround times, an advantage removed once speed is reduced. And would efficiency gains gleaned elsewhere
in the supply chain be anything other than marginal?
WWL believes it is industry-wide issue and will inevitably involve its competitors. “There’s a whole bunch of players in the industry that need to make the change,” said Moore.