BSR 2010: Maersk Slows Down to Go Greener

BSR 2010: Maersk Slows Down to Go Greener

Nearly two years after oil's record pricing run-up, many consumers and businesses have at least softened some of the dramatic changes that $5 per gallon gasoline induced. SUV sales will never be what they were, of course, but big vehicles still rule U.S. roads. And shippers like FedEx and UPS have backed up fuel surcharges, which were tacked onto some shipments.

On the high seas, though, Maersk Line has stuck with the cost-cutting steps it instituted during the energy price spike. At the time, Maersk, the world's largest operator of container vessels, broke with industry practice and proposed to its shipping clients that by slowing down its ships, Maersk could cut fuel use and lower shipping costs.

While 1,000-foot-long freighters may not have the same zip as a FedEx jet, the container industry has been subject to the same pressure to go "faster, faster, faster" in recent decades, so the move was a gamble, explained Jacob A. Sterling, head of climate and environment sustainability at Maersk Lines, at a BSR 2010 panel yesterday titled Extending Sustainability into the Transportation Sector.

"We've always known a minor reduction in speed could deliver energy savings," said Sterling. A 20 percent reduction in speed can cut fuel use and CO2 emissions by up to 40 percent, the ship operator found. "But for decades, the price of fuel has been so low, shipping costs didn't factor into companies analysis. The speed from factory to market mattered much more, so we kept pushing to go faster."

Today, the practice known as slow-steaming has been adopted by many shipping lines, but isn't the rule on every run. "On a given route -- from Asia to Europe, for instance -- we'll run the ships from Hong Kong to Rotterdam at normal speed, or a little slower, because of the high value of the electronics and manufactured goods onboard justifies the expenditure." But on the return trip, when the ship sails loaded with scrap metal and paper waste headed for Chinese recyclers, slow-steaming makes more sense. "The goods are worth less, and they're not as time sensitive," said Sterling. Over 18 months, the shift has cut company CO2 emissions by 7 percent. Maersk has committed to reducing its CO2 footprint by 25 percent by 2020.

And Maersk still has to balance the time-is-money needs of its clients. An executive from clothing maker REI, for example, pointed at that the extra few days needed for a slow voyage are days for a factory that would have used them to work in the past. This can drive up overtime costs.

The trade-off for slow-steaming, besides lower costs, is that the runs are more on-time, more often, Sterling replied. Industry average rates for on time delivery are no better than 50 percent he said, but Maersk has been able to get to 75 percent, and hopes to get higher.

As testament to Maersk's go-slower commitment, the company is selling some of its newest boats, designed specifically to go very fast. Just three years old, the super-fast freighters were built with oversized engines and propellers, designed to sail at nearly 30 knots, where standard cruising speeds are around 25 knots and slow-steaming is at 20 or less.

"These were speed boats, built to hold thousands of containers," said Sterling, but are up for sale now because they're not as easy to justify economically. Meanwhile, Maersk has a couple dozen new mega-vessels on order, to be built-in South Korean shipyards, and all optimized to improve their energy efficiency and freight capacity, rather than speed.

Maersk is also trying to cut the impact of its ship operations while in ports. Recently, it switched from burning standard "bunker fuel" commonly used by ships -- the dirtiest, most polluting grade of oil -- while in Hong Kong. The city has one of the busiest dock complexes in the world, very near city center, and sulfurous pollutants pouring out of ships' smokestacks are a major cause of the city's legendary smog. By switching to low-sulfur diesel in port, Maersk cut smog-forming emissions, and has led over a dozen other shipping lines to follow suit.

Photo CC-licensed by wirralwater.