Buyers adjust inventory levels in response to slow steaming

9 September 2011
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9 September 2011 | Adam Leach

As carriers increase slow steaming to mitigate high oil prices, businesses are responding by increasing inventory supply levels, a survey has found.

The Managing your international supply chain: what companies are saying about the impacts of slow steaming report was published this week by Centrx. It quizzed 290 executives who make transportation decisions and found that 53 per cent of respondents from Europe and the Middle East have seen inventories rise as a result of slow steaming – where ships are operated at extraordinarily slow speeds often to preserve fuel.

In response, 47 per cent have moved to increase inventory stocks to compensate for the longer transit times. Moving to multiple carriers also proved a popular strategy with 43 per cent implementing this approach to take advantage of the range of rates and delivery times it provided.

While reducing costs is one of the strongest motivations (as well as boosting fuel economy) for cargo ships to adopt slow steaming 70 per cent would like to see the savings passed on through a reduction in freight rates.

Responding to the findings of the report, Nicole Howarth, managing director, Global Freight, said: “Transit times are varying to different destinations due to the slow steaming of vessels, sometimes this can be because of congestion at ports but also, the rising cost of fuel means ships consume less if slow steaming.” Citing the unrest in the Middle East as contributing significantly to the rising oil price, she concluded that slow steaming “is unlikely to end anytime soon”.


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