2Sustain

Have you been following the latest green shipping debate in the supply chain blogosphere? Essentially, it’s a conversation centered on Maersk Line and the eco-friendly shipping initiative called “slow steaming.”

Last summer, Maersk was named Sustainable Shipping Operator of The Year in recognition of the efforts the company has made in reducing the environmental impact of its business operations. In particular, Maersk proved that the two-stroke engines on its container vessels are able to run continuously at low loads ensuring a more flexible and energy-efficient vessel operation.  According to Maersk, this “slow steaming” results in a 10-30 percent reduction in fuel and CO2, and for a post-Panamax container ship, that amounts to annual savings of about $1 million, while reducing CO2 by 10,000 tonnes and fuel by 3,500 tonnes.

“Whenever we are able to cut fuel consumption we achieve two things at the same time: We lower our emissions of greenhouse gases and we save costs. Super slow steaming enables us to reduce costs with the additional advantage of benefiting the climate and without diminishing our service. This really has a lot of potential for us,” Robert Kledal, Vice President and Head of Products in Maersk Line, said in a press release.

Interest in Maersk’s green initiatives increased over this past winter when the World Shipping Council and its members proposed to the International Maritime Organization (IMO) and its member governments a new global Vessel Efficiency System, which would improve the carbon and fuel efficiency of the world’s fleet while reducing GHG emissions. The proposal is for the IMO to apply vessel efficiency design standards for both new and existing vessels in the world’s fleet.

But –and here’s where the debate begins –how does all this effect supply chain efficiency?

As Lisa Reisman points out in her post at Metal Miner, buyers need to realize that the environmental benefits of slow steaming may come at a short-term cost to the bottom line. Adding time to order cycles increases risk of not meeting demand. Plus, it extends financing costs, decreases throughput and increases your WIP, she says.

And, of course, slow steaming does not address what many consider the issue at the heart of the problem: today’s trade patterns. One surefire way to cut emissions would be to shorten the distance between production (Asia) and consumption (US, Europe) — but as David Bonilla, senior research fellow at the transport studies unit at Oxford University’s School of Geography and the Environment, told the New York Times, that’s unlikely unless fuel costs for long-distance shipping rise to the point where carriers are forced to invest in new, far more efficient boats or shift to shorter routes.

To me, the conversations over slow steaming perfectly illustrate the complexities facing global business. In order to be successful today, businesses must carefully weigh numerous –and often conflicting –factors, such as compliance, risk, cost, corporate responsibility, and environmental stewardship.

All of which leaves me curious about your thoughts. Do you see tighter shipping rules –and more slow boats –on the horizon? If so, how will you calculate the cost-benefit analysis? Would you be willing to pay variable rates, depending on shipment speed?

Ultimately, I agree with Jason Busch at SpendMatters: You have to think about all of these things in your terms. But, just be certain that your terms include a healthy appreciation for the evolving regulatory/compliance landscape and careful consideration of the growing expectations for responsible corporate behavior.