Port Efficiency, Just-in-Time-Arrival, Economic Speed and Slow Steaming

I am a mechanical engineer expert in failure investigation (how and why an asset failed, so as to recover losses), asset integrity (how to prevent it from failing, to maximize availability and to minimize disruption) and efficiency (how to make it more efficient, to maximize productivity and profitability). Lately I have been working on solutions for the above in connection with Industry 4.0 and Shipping 4.0.

One of the major source of inefficiency in shipping is for ships to wait at the anchorage before being assigned a berth in port for loading / unloading.

Civil aviation has long since solved this issue: nowadays aircrafts do little loitering before being allowed to land.

Solving this issue, coordinating ships arrival so that as little time as possible is wasted at anchorage before berthing and commencing commercial operations will improve the efficiency of the entire logistic chain. This is a focal topic for Shipping 4.0.

However an increase in efficiency in port operations and just in time arrival is unlikely to foster slow steaming, quite the opposite: the faster turn around in ports will inevitably foster a higher speed while underway.

The reason is very simple, and it is called Economic Speed.

Economic Speed is the speed at which a means of transport yields the best financial result under the given constraints.

In simple terms it all boils down to maximize profits given the fixed costs (e.g. manning, managing the vessel, repayment of loans for CAPEX...) the variable costs (e.g. fuel) and the revenues for that trip.

Even if keeping the revenues per trip fixed (i.e. supposing the charterers are not willing to pay premium for a faster delivery, Amazon Prime anyone?), the lower the idle time at the anchorage the higher the economical speed.

It is Calculus 101. Three simple functions: one constant (fixed costs), one linear (revenues) and one (more or less) quadratic with the speed (variable costs).

In other words efficient port operations and just in time arrival result in a higher economic speeds, not in slow steaming.

Of course when a ship is underway, the master and the routing service should strive to reach the destination "just-in-time" which often means reducing the intended speed, this is a tactical solution to a point-in-time problem.

But the strategic approach is exactly the opposite!

When considering the fleet design and composition, and planning ahead on how to be most profitable in moving goods from A to B, the port efficiency / just-in-time paradigm results in a higher transit speed, and (for the same total capacity) in fewer (and larger) ships.

Slow steaming is not a way to increase efficiency. Slow steaming is way of reducing costs and capacity (possibly also raising earnings in times of overcapacity).

Port efficiency, on the contrary, is a way to increase the total capacity by increasing asset utilization (with the added benefits of cutting costs per trip).

Hence Port efficiency and Slow steaming can rarely match, if ever.

Better keep swiping...