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Swedish shippers’ strategies

The trend of reduced sailing speed, or slow-steaming, presents shippers with new, complex challenges. In this exploratory case study, the answers to the questions of how the shippers’ systems are affected by the widespread application of slow-steaming and how shippers manage these consequences are sought. Few studies investigate the effects on the demand side of the market for container liner shipping. Hence, the aim of this study is to elaborate on the logistics consequences of slow-steaming, particularly the strategies that Swedish shippers purchasing deep-sea container transport services employ to mitigate the effects of slow-steaming. All firms applied changes in the transport domain, although the lack of service segmentation limited the effects of the strategy. Most measures were applied by two firms, whereas only one firm changed the product design.

 

Shippers’ slow-steaming mitigation strategies

Swedish shippers’ strategies: Global supply chains minimizing labor costs for each manufacturing step involves true challenges by reintroducing long transport lead times; slow-steaming amplifies these effects.  In manufacturing, most parts are procured from domestic suppliers while the strategic parts, which are characterized by a high value and being produced utilizing economies of scale, are purchased from other countries. The phenomenon has attracted substantial scientific attention since then. According to Deardorff (2005), theories of international trade often assume that transport is costless and instant, or it is simply treated as an add-on. For example, when interviewing Swedish manufacturing firms, Lindau et al.

Swedish shippers’ strategies

Slow-steaming and its effects on logistics

Swedish shippers’ strategies: Slow-steaming, as a measure for reducing fuel consumption and emissions, is extensively examined in the literature and can be divided into Finnsgård et al. Journal of Shipping and Trade. Slow-steaming is the most potent measure for reducing fuel consumption with existing vessels, and it offers shipowners an attractive mix of reduced operational costs, lower external effects. The negative external effects of shipping and the subsequent need for a substantial reduction of these externalities is increasingly accepted in the maritime community. The study of the technical validity and quantification of the impact Of slow-steaming on ships’ fuel consumption and emissions, and (2) the economic viability of this strategy from the shipowners’ perspectives, primarily through the study of speed optimization aimed at cost minimization or profit maximization.

 

Coping by changed sourcing

Swedish shippers’ strategies: Generic components are sourced in distant countries and semi-generic products in nearby countries and successively move the source closer to the assembly facility because the components are more unique. A contradiction is that generic components are often heavy or voluminous products with comparatively low labor content. Generic components are sourced in distant countries and semi-generic products in nearby countries and successively move the source closer to the assembly facility because the components are more unique.

 

Coping by redesigning the product

Swedish shippers’ strategies: To really reap the benefits of global sourcing, manufacturers are likely to increase the share of generic components. Channel relationships are obviously not an option for firms with a weak position in the supply chain. Strongly positioned firms will pay a price in one way or another. Nevertheless, it is a significant simplification that the magnitude of change increases to the right in the figure. In the long run, the product design domain will be further affected by the globalization of supply chains.

Swedish shippers’ strategies

Data collection methodology

Swedish shippers’ strategies: The firms were represented by senior logistics managers. The interviews aimed to identify the firms’ experience from slow-steaming in deep-sea container shipping during the last years; Firms were invited based on their fit to the scope of the study, and larger companies were favored in the selection. The final version was also reviewed by representatives from the forwarders involved in the project. The presence of the latter was regarded as useful because discussions were livelier. The data collected during the interviews were transcribed, processed and sent back to the informants for validation. The results from the case study database, in conjunction with the discussions at the second workshop, resulted in the matrix presented in Table.

 

Effects of slow-steaming as perceived by the shippers

Swedish shippers’ strategies: The reduction of sailing speed since 2008–2009 has resulted in 20–50% longer transport times for the shippers in this study. The first phase of this exploratory case study aimed to understand how shoppers are affected by the widespread application of slow-steaming. All the case companies more or less confirmed that they did not experience any increase in punctuality after the introduction of slow-steaming. Companies applying MTS to deliver their products to final consumers off the shelf from retail locations, meaning that the lead time gap is maximally expanded. The environmental benefits by the increased energy efficiency are highlighted in the slow-steaming literature.

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