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Current Trends in the Shipping Industry

In: Business and Management

Submitted By olymungo
Words 570
Pages 3
Current Trends in the Shipping Industry

1. Introduction 2. Practical Application 3. Conclusion 4. References

1. Introduction
“On the high seas, majority of shipping companies are nowadays replacing the full speed ahead with slow and steady speed to maximize profit”. With the intention of cutting costs of fuel, ocean shipping companies are instructing their Captains at sea to throttle back the engines and this phenomenon is what is being called as “Slow Steaming”. In most of the cases, the vessels are taking as many as 15 days to make an Atlantic crossing that used to take just 10 days.

2. Practical Application
According to Asaf Ashar, the head of the National Ports and Waterways Institute in Washington “Companies are more focused on reducing costs, not speed of delivery, and the trend will continue even after the global economy comes back." Nearly all of the world's shipping lines are using slow steaming at least part of the time, he said. I sail onboard crude oil carriers, managed by Wallem Shipmanagement and Stena Bulk, and this practice of throttling back on engine to save fuel was used in all voyages we made in 2011.
One of the companies which has recently reported huge savings with this practice is the Copenhagen-based A.P. Moeller-Maersk, the world's biggest ocean cargo line. Maersk, which has a fleet bigger than the U.S. Navy, swung to a 639 million dolar profit in the first three months of the year 2010, the most recent quarter reported, from a 373 million dollar loss in the same period last year 2009. The sharp improvement came with the help of a 9% saving in fuel consumption because Maersk's ships slowed down. Such cost-saving ploy “is what will make Maersk more competitive going forward," Says Nils Smedegaard Andersen, Maersk's group chief executive.
For companies like Maersk, adopting this principle has proven a really cost effective technic; If you think of the costs involved in running the ships, fuel is the main issue and a company who defines their operations strategy right will only gain from it.
According to Slack, Lewis (2008), “the tension between the market requirements perspective and the operations resource perspective is central to all operations strategy decision making”. MARPOL 73/78 has established new rules concerning Air pollution prevention from ships. Throttling back on engines has an impact on environment as it helps reducing emission into the air of CO2, NOx, Sox and Particulate Matters (PM) from ships. As it can be seen from this, Maersk group in not simply following the Market requirements to gain competitive advantage to other companies , on the contrary they have developed “long-term capabilities that competitors will find difficult to imitate”, Slack, Lewis (2008).

3. Conclusion
In the case of Maersk we see a very good application of a top-down approach on their management of operations, how well the decisions are being taken at the top levels, how they are adjusting to this trend of the industry, and most important the good relation that they maintain with the customers. Although slowing down engines sometimes causes upset due to the fact that the goods arrive late, but in turn it keeps more ships in service and lower emissions.

4. References
Los Angeles Times, July 31 2010, Article by Ronald D. White
Slack & Lewis, 2008, Operations strategy, 4th Edition, Prentice Hall, pp 7-14.

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