Liner vessels have historically operated at higher speeds than their bulk or tanker counterparts. So, over recent years, containership operators have had to contend with a major problem in the form of rapidly increasing bunker prices. The changes to their cost structure have led them to explore cost-cutting measures, including, as has been well-documented, operating ships at slower speeds than previously.
Counting The Costs
    Two key costs for containership operators are the cost of the vessel (here we use the daily charter rate) and the cost of fuel (bunkers). Taking a generic 4,400 TEU Panamax boxship, at the 6-12 month timecharter rate, across 2003-06 the daily cost of bunkers averaged 85% of the daily vessel cost (based on the average quoted operating speed and consumption of the 4000-4999 TEU Panamax fleet at start Q2 this year of 24.3 knots and 145.4 tpd). Since then, as the Graph of the Month shows, the proportion of these costs accounted for by bunkers has increased dramatically. The bunker/vessel cost ratio reached 3.5:1 in July 2008 and post-downturn bunker costs have again increased dramatically. Combined costs are currently similar to those at the 2008 peak. However, at the end of April this year, at this speed, daily bunkers were ten times the daily vessel cost.
Slow Down To Save
    Of course, slowing vessel speed reduces fuel consumption significantly. Using the "cube rule" to estimate consumption at reduced speeds for the example vessel, slowing to 22 knots saves an estimated 37 tpd, while slowing to 20 knots saves a further 27 tpd, bringing consumption down to 81 tpd. At $700/tonne for 380cst bunkers, for example, our 4,400 TEU vessel, slowing from 24.3 to 20 knots would save an estimated $45,000/day; equivalent to $16.4 million per annum but still at a daily bunker cost 5.6 times bigger than the current daily vessel cost! Unsurprisingly, widespread boxship slow steaming has been implemented post-boom, with some ships now running below 18 knots on longer trades, with extra ships deployed in loops to maintain service frequency.
Design Evolution
    In light of these developments, shipyards have been forced to offer significantly more fuel-efficient designs, often with lower speeds in mind. Today's boxship designs are significantly more fuel-efficient than pre-downturn specifications. However, the majority of containerships currently being delivered now are still of more elderly design. 73% of the boxships scheduled to be delivered this year were ordered before 2009.
    This puts owners of existing tonnage, and newbuilds, in a quandary, as operating older designs will limit returns, even with slow steaming. With, as the figures here show, increased bunker prices bringing fuel costs into focus more starkly than ever before, it is no surprise that the industry is turning its attention to more efficient boxship designs.

Source: Clarksons