[Federal Register Volume 76, Number 25 (Monday, February 7, 2011)]
[Notices]
[Pages 6616-6619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2482]
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FEDERAL MARITIME COMMISSION
Notice of Inquiry; Solicitation of Views on the Impact of Slow
Steaming
AGENCY: Federal Maritime Commission.
ACTION: Notice of Inquiry.
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SUMMARY: The Federal Maritime Commission (``FMC'' or ``Commission'') is
issuing this Notice of Inquiry (``NOI'') to solicit public comment on
the impact of slow steaming on U.S. ocean liner commerce. Generally,
the Commission seeks public comment as to how the practice of slow
steaming has (1) Impacted ocean liner carrier operations and shippers'
international supply chains; (2) affected the cost and/or price of
ocean liner service; and (3) mitigated greenhouse gas emissions.
DATES: Responses are due on or before April 5, 2011.
ADDRESSES: Submit comments to: Karen V. Gregory, Secretary, Federal
Maritime Commission, 800 North Capitol Street, NW., Room 1046,
Washington, DC 20573-0001.
Or e-mail non-confidential comments to: [email protected] (e-mail
comments as attachments preferably in Microsoft Word or PDF).
FOR FURTHER INFORMATION CONTACT: Austin L. Schmitt, Director, Bureau of
Trade Analysis, Federal Maritime Commission, 800 North Capitol Street,
NW., Washington, DC 20573-0001, Telephone: (202) 523-5796, E-mail:
[email protected].
SUPPLEMENTARY INFORMATION: Submit Comments: Non-confidential filings
may be submitted in hard copy or by e-mail as an attachment (preferably
in Microsoft Word or PDF) addressed to [email protected] on or before
April 5, 2011. Include in the subject line: ``FMC Slow Steaming--
Response to NOI''. Responses to this inquiry that seek confidential
treatment must be submitted in hard copy by U.S. mail or courier.
Confidential filings must be accompanied by a transmittal letter that
identifies the filing as ``confidential'' and describes the nature and
extent of the confidential treatment requested, e.g., commercially
sensitive data. When submitting documents in response to the NOI that
contain confidential information, the confidential copy of the filing
must consist of the complete filing and be marked by the filer as
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``Confidential- Restricted,'' with the confidential material clearly
marked on each page. When a confidential filing is submitted, an
original and one additional copy of the public version of the filing
must be submitted. The public version of the filing should exclude
confidential materials, and be clearly marked on each affected page,
``confidential materials excluded.'' Questions regarding filing or
treatment of confidential responses to this inquiry should be directed
to the Commission's Secretary, Karen V. Gregory, at the telephone
number or e-mail provided above.
Background
Over the past two years most ocean liner carriers regulated by the
Commission have implemented the practice of slow steaming by which the
normal service speed of ships is reduced in an effort to reduce bunker
fuel costs which account for a high proportion of ship operating costs.
Initially, ocean carriers took these measures in response to severely
depressed international trade conditions, but slow steaming also is
used to mitigate greenhouse gas emissions in response to new
environmental initiatives and concerns.\1\ By slow steaming, ocean
liner carriers address both of these problems by significantly reducing
total bunker fuel consumption and the associated emissions.\2\
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\1\ International shipping reportedly generates about three
percent of global carbon emissions. See International Maritime
Organization, Marine Environment Protection Committee, Second IMO
GHG Study 2009, at 7, U.N. Doc. MEPC 59/INF. 10 (Apr. 9, 2009),
available at http://www5.imo.org/SharePoint/blastDataHelper.asp/
data--id%3D26047/INF-10.pdf.
\2\ According to the United Nations Conference on Trade and
Development, a 10 percent reduction in speed will reduce emissions
by 19 percent per ton-mile. See United Nations Conference on Trade
and Development, Review of Maritime Transport 2010, at 66, U.N. Doc.
UNCTAD/RMT/2010 (Dec. 20, 2010), available at http://www.unctad.org/Templates/webflyer.asp?docid=14218&intItemID=&lang=1&mode=downloads.
Similarly, one ocean carrier has found that reducing a ship's
average operating speed by 20 percent may lower its daily fuel
consumption by as much as 40 percent. See Press Release, Maersk,
Slow Steaming Here to Stay (Sept. 1, 2010), available at http://www.maersk.com/AboutMaersk/News/Pages/20100901-145240.aspx.
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In the U.S. ocean liner trades, the practice of slow steaming
appears to be most prevalent in the transpacific trade. Data derived
from Alphaliner, for example, shows that more than half of the 45
weekly services operating between U.S. west coast ports and Asia are
currently slow steaming, while more than three-fourths of the 15 weekly
services operating between U.S. east coast ports and Asia are doing
so.\3\ In contrast, just 20 percent of the 15 weekly services operating
between the United States and North Europe are currently slow steaming.
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\3\ In addition to the weekly services that call exclusively at
either the U.S. west coast or east coast, an additional six pendulum
services call at ports on both coasts; two-thirds of these latter
services are slow steaming.
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This time last year, the Transpacific Stabilization Agreement
(``TSA'') added authority to its basic agreement that allowed its
member lines to discuss and reach agreement on programs to reduce
sources of environmental pollution caused by ocean liner operations.\4\
So far, however, no specific TSA program has materialized under this
authority, even though slow steaming has become more prevalent during
this time in the transpacific trade and in other U.S. trades.
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\4\ See Article 5(d) of the TSA's basic agreement available at
http://www2.fmc.gov/agreement_lib/011223-045-MC.pdf. (Agreement No.
011223-45)
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Slow steaming is a complex issue with advantages and disadvantages
for both carriers and shippers depending on trade conditions and
commodity transported. For example, when carriers are experiencing high
bunker costs and low charter rates, slow steaming becomes more
attractive to the carrier. When these conditions do not exist, slow
steaming does not offer the carrier the same advantages. Thus, in the
coming years, potential increases in fuel costs and planned vessel
deliveries will weigh in favor of carriers continuing or expanding slow
steaming, but a continued recovery in demand and rates will tend to
mitigate the trend.
While a good deal of commentary and analysis have appeared in the
trade press regarding the benefits that carriers derive from slow
steaming services, information about how this practice has affected
American exporters and importers is limited. In cases where shippers of
low-value commodities receive lower rates as a result of the carrier
passing along some of the fuel savings achieved through slow steaming,
the additional time for transport may not be an issue for these
shippers. On the other hand, shippers of high-value commodities may not
find slow steaming advantageous because a potentially lower freight
rate may not outweigh the added delay in accessing payments for goods
rendered. Likewise, shippers of chilled meat and fresh produce may find
slow steaming disadvantageous because the resulting longer transit
times could lead to increased spoilage and less shelf-time in grocery
stores.
These tradeoffs for U.S. importers and exporters assume that
carriers pass at least a portion of the cost savings from slow steaming
on to their customers. In the U.S. trades, where the vast majority of
liner cargo travels under annual service contracts, it is unclear
whether ocean carriers' customers have received those savings--either
through adjustments to bunker fuel surcharges or the underlying rates.
Finally, slow steaming has efficiency and environmental benefits
that should be factored into both carriers' and shippers' equations.
But an accurate analysis of the impact requires reliable methods to
measure and quantify those environmental benefits. Better information
and more transparency on emissions savings from slow steaming would
allow carriers and their customers to make shipping choices that reduce
their carbon emissions--and receive full credit for those measures.
The Commission, therefore, has decided to request public comment on
the effects of slow steaming practices on ocean liner operations,
shippers' supply chains and their underlying businesses, capacity
availability, container availability, ocean freight rates, fuel
surcharges, and greenhouse gas emissions. Although slow steaming
primarily affects the operations of shippers, carriers and rate
discussion agreements, the Commission encourages all interested
parties, including ports, maritime terminal operators, trade
associations, environmental groups, and other governmental entities to
submit comments or to identify any economic and environmental data and
studies related to slow steaming. The questions below seek to solicit
comments on how slow steaming has affected shippers' and carrier's
business operations and the environment. Commenters may address any or
all of the questions and are welcome to submit comments on the effects
of slow steaming not addressed by any of these questions.
Questions Directed to Shippers
1. What do you see as the advantages and disadvantages of slow
steaming?
2. How has slow steaming of ocean liner services impacted your
overall business costs? How significant are those costs? What measures,
if any, has your company taken to mitigate any negative cost impact on
your business arising from slow steaming?
3. Has your company benefited from the fuel cost savings that slow
steaming makes possible by obtaining, for example, lower freight rates
or bunker adjustment surcharges? If so, identify those benefits and
explain how significant they are.
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4. Describe how, and to what extent, the slow steaming of ocean
liner services has impacted your company's supply chain, space
availability, and container availability.
5. Are different services, i.e., slow steaming vs. normal steaming,
available to your company from different ocean carriers over the same
trade lane? Alternately, do any individual ocean carriers offer your
company different transit times over the same trade lane with varying
rates or other service features?
6. In the past year or so, have ocean transit times lengthened
between the major port-pairs used in your company's ocean shipping
operations on account of the slow steaming of services? If so, how much
longer have those transit times become and between which port pairs?
7. Do ocean transit times vary significantly among the different
services that link the major port-pairs used in your company's ocean
shipping operations? When arranging shipments, what role do differences
in transit time play in your carrier or service selection process?
8. If you have service contracts with ocean carriers, were transit
times or slow steaming provisions included in those contracts? Was slow
steaming consistent with your governing service contract provisions?
9. As a U.S. exporter, has the slow steaming of ocean liner
services in the U.S. trades put your company at a competitive
disadvantage in overseas markets? If so, please explain.
10. Identify and describe what benefits your company has derived
from slow steaming (e.g., more reliable and predictable sailing
schedules, a more stable supply chain, etc.).
11. Do you believe slow steaming is sustainable over the long-run?
Please explain why or why not.
12. Do ocean carriers provide you with information on fuel, cost,
or emissions savings that allow you to calculate and consider the
benefits of slow steaming in choosing among transportation options?
13. Discuss whether your company uses slow steaming services to
help reduce its carbon footprint on the goods it sells? If so, how
substantial are these reductions? How do you measure or quantify these
reductions? What type or form of information would better assist you in
making choices that reduce your carbon footprint?
Questions Directed to Ocean Liner Carriers
1. What does your company see as the advantages and disadvantages
of slow steaming?
2. What proportion of the ships your company operates in the U.S.
trades slow steam? What proportion slow steam outbound from the United
States? What proportion slow steam inbound to the United States? Please
break this information down by trade lane.
3. Do you have plans to increase or decrease slow steaming during
2011 and/or the years that follow?
4. What factors help your company decide to slow steam any given
service string? What factors cause your company to decide whether to
slow steam in one direction only?
5. In the past year, by how much (i.e., absolute amount and as a
percent of the total) has your company reduced its bunker consumption,
bunker fuel expenses, and carbon emissions as a result of slow steaming
ships in U.S. ocean liner services?
6. Do you make this information on fuel, cost, and emissions
savings available and transparent to your customers? If not, do you
have plans to, and what is your goal date? If not, why not?
7. Do you offer shippers, over the same trade lane, different
transit times by reason of slow steaming vs. normal steaming?
8. Have you passed cost savings along to shippers through
adjustments to any bunker surcharge formulas, or by lowering rates? If
not, do you have plans to, and what is your goal date? If not, why not?
9. Are there any costs incurred by the ships your company is slow
steaming that would not accrue if they were operating at normal service
speed and, if so, what are these costs and how significant are they?
10. What factors constrain your company's ability to slow steam
more services or to further slow down ships that are already slow
steaming (i.e., super-slow steaming)?
11. How many vessels do you add to service loops that begin slow
steaming for part or all of the loop? Are there instances where vessels
are not added?
12. Is your company adding new vessels to your fleet to accommodate
slow steaming?
13. Are new ship designs incorporating hull and propulsion engine
innovations to better accommodate slow steaming?
14. How has slow steaming impacted your company's on time
performance of sailing schedules?
15. Are some shipper accounts more affected by slow steaming than
others? If so, please explain. What measures has your company taken to
try to mitigate any adverse impact of slow steaming on specific shipper
accounts?
16. To what extent has slow steaming affected your company's
ability to maintain or expand capacity in the U.S. trades and/or its
ability to maintain adequate availability of containers at appropriate
inland locations?
17. Do you believe slow steaming is sustainable over the long-run?
Please explain why or why not.
18. If your company participates in one or more vessel sharing
arrangements (``VSAs''), describe whether and to what extent VSAs are
positively or negatively impacted by slow steaming.
Questions Directed to Rate Agreements That Establish a Bunker Surcharge
Guideline
1. Within the geographic scope of your agreement, what proportion
of the ships used by your members slow steam? What proportion slow
steam outbound from the United States? What proportion slow steam
inbound to the United States? Please break this information down by
trade lane.
2. Please explain your method used for developing the bunker
surcharge guideline. How can the formula be modified to reflect the
savings realized from slow steaming?
3. Has your agreement discussed possible ways to pass cost savings
along to shippers? If not, do you have plans to, and what is your goal
date? If not, why not?
4. What measures has your agreement taken to try to mitigate any
adverse impact of slow steaming on the trade?
5. To what extent has the prevalence of slow steaming within the
geographic scope of your agreement influenced the type of discussions
that take place or the type of information exchanged under the
authorities contained in your agreement?
Questions Directed to All Interested Parties
1. What are the major benefits and costs associated with slow
steaming?
2. To what extent has the slow steaming of services in the U.S.
ocean liner trades reduced greenhouse gas emissions?
3. Discuss the likely long-term prevalence of slow steaming and its
potential impacts on the economy and/or the environment.
4. How important is slow steaming in the overall effort to reduce
emissions of greenhouse gases and other air pollutants arising from
ocean liner operations?
5. What data sources are available to measure the economic and
environmental impacts of slow steaming?
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Along with comments, respondents should provide their name, their
title/position, contact information (e.g., telephone number and/or e-
mail address), name and address of company or other entity and type of
company or entity (e.g., carrier, exporter, importer, trade
association, etc.).
Responses to the NOI will help the Commission ascertain more
precisely the impact of slow steaming on U.S. ocean liner commerce, the
ocean liner industry, the economy, and the global environment with a
view to determining whether, and if so, what additional analyses or
action by the Commission may be necessary.
To promote maximum participation, the NOI questions will be made
available via the Federal Register and on the Commission's Web site at
http://www.fmc.gov in a downloadable text or pdf file. They can also be
obtained by contacting the Commission's Secretary, Karen V. Gregory, by
telephone at (202) 523-5725 or by e-mail at [email protected]. Please
indicate whether you would prefer a hard copy or an e-mail copy of the
NOI questions. Non-confidential comments may be sent to
[email protected] as an attachment to an e-mail submission. Such
attachments should be submitted preferably in Microsoft Word or text-
searchable PDF.
The Commission anticipates that most filed NOI comments will be
made publicly available. The Commission believes that public
availability of NOI comments is to be encouraged because it could
improve public awareness of the impact of slow steaming on the
environment and various segments of the maritime industry.
Nevertheless, some commenting parties may wish to include commercially
sensitive information as relevant or necessary in their responses by
way of explaining their liner shipping experiences or detailing their
responses in practical terms. To help assure that all potential
respondents will provide usefully detailed information in their
submissions, the Commission will provide confidential treatment to the
extent allowed by law for those submissions, or parts of submissions,
for which the parties request confidentiality.
By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2011-2482 Filed 2-4-11; 8:45 am]
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