[Federal Register Volume 76, Number 25 (Monday, February 7, 2011)]
[Notices]
[Pages 6616-6619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-2482]


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FEDERAL MARITIME COMMISSION


Notice of Inquiry; Solicitation of Views on the Impact of Slow 
Steaming

AGENCY: Federal Maritime Commission.

ACTION: Notice of Inquiry.

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SUMMARY: The Federal Maritime Commission (``FMC'' or ``Commission'') is 
issuing this Notice of Inquiry (``NOI'') to solicit public comment on 
the impact of slow steaming on U.S. ocean liner commerce. Generally, 
the Commission seeks public comment as to how the practice of slow 
steaming has (1) Impacted ocean liner carrier operations and shippers' 
international supply chains; (2) affected the cost and/or price of 
ocean liner service; and (3) mitigated greenhouse gas emissions.

DATES: Responses are due on or before April 5, 2011.

ADDRESSES: Submit comments to: Karen V. Gregory, Secretary, Federal 
Maritime Commission, 800 North Capitol Street, NW., Room 1046, 
Washington, DC 20573-0001.
    Or e-mail non-confidential comments to: [email protected] (e-mail 
comments as attachments preferably in Microsoft Word or PDF).

FOR FURTHER INFORMATION CONTACT: Austin L. Schmitt, Director, Bureau of 
Trade Analysis, Federal Maritime Commission, 800 North Capitol Street, 
NW., Washington, DC 20573-0001, Telephone: (202) 523-5796, E-mail: 
[email protected].

SUPPLEMENTARY INFORMATION: Submit Comments: Non-confidential filings 
may be submitted in hard copy or by e-mail as an attachment (preferably 
in Microsoft Word or PDF) addressed to [email protected] on or before 
April 5, 2011. Include in the subject line: ``FMC Slow Steaming--
Response to NOI''. Responses to this inquiry that seek confidential 
treatment must be submitted in hard copy by U.S. mail or courier. 
Confidential filings must be accompanied by a transmittal letter that 
identifies the filing as ``confidential'' and describes the nature and 
extent of the confidential treatment requested, e.g., commercially 
sensitive data. When submitting documents in response to the NOI that 
contain confidential information, the confidential copy of the filing 
must consist of the complete filing and be marked by the filer as

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``Confidential- Restricted,'' with the confidential material clearly 
marked on each page. When a confidential filing is submitted, an 
original and one additional copy of the public version of the filing 
must be submitted. The public version of the filing should exclude 
confidential materials, and be clearly marked on each affected page, 
``confidential materials excluded.'' Questions regarding filing or 
treatment of confidential responses to this inquiry should be directed 
to the Commission's Secretary, Karen V. Gregory, at the telephone 
number or e-mail provided above.

Background

    Over the past two years most ocean liner carriers regulated by the 
Commission have implemented the practice of slow steaming by which the 
normal service speed of ships is reduced in an effort to reduce bunker 
fuel costs which account for a high proportion of ship operating costs. 
Initially, ocean carriers took these measures in response to severely 
depressed international trade conditions, but slow steaming also is 
used to mitigate greenhouse gas emissions in response to new 
environmental initiatives and concerns.\1\ By slow steaming, ocean 
liner carriers address both of these problems by significantly reducing 
total bunker fuel consumption and the associated emissions.\2\
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    \1\ International shipping reportedly generates about three 
percent of global carbon emissions. See International Maritime 
Organization, Marine Environment Protection Committee, Second IMO 
GHG Study 2009, at 7, U.N. Doc. MEPC 59/INF. 10 (Apr. 9, 2009), 
available at http://www5.imo.org/SharePoint/blastDataHelper.asp/
data--id%3D26047/INF-10.pdf.
    \2\ According to the United Nations Conference on Trade and 
Development, a 10 percent reduction in speed will reduce emissions 
by 19 percent per ton-mile. See United Nations Conference on Trade 
and Development, Review of Maritime Transport 2010, at 66, U.N. Doc. 
UNCTAD/RMT/2010 (Dec. 20, 2010), available at http://www.unctad.org/Templates/webflyer.asp?docid=14218&intItemID=⟨=1&mode=downloads. 
Similarly, one ocean carrier has found that reducing a ship's 
average operating speed by 20 percent may lower its daily fuel 
consumption by as much as 40 percent. See Press Release, Maersk, 
Slow Steaming Here to Stay (Sept. 1, 2010), available at http://www.maersk.com/AboutMaersk/News/Pages/20100901-145240.aspx.
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    In the U.S. ocean liner trades, the practice of slow steaming 
appears to be most prevalent in the transpacific trade. Data derived 
from Alphaliner, for example, shows that more than half of the 45 
weekly services operating between U.S. west coast ports and Asia are 
currently slow steaming, while more than three-fourths of the 15 weekly 
services operating between U.S. east coast ports and Asia are doing 
so.\3\ In contrast, just 20 percent of the 15 weekly services operating 
between the United States and North Europe are currently slow steaming.
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    \3\ In addition to the weekly services that call exclusively at 
either the U.S. west coast or east coast, an additional six pendulum 
services call at ports on both coasts; two-thirds of these latter 
services are slow steaming.
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    This time last year, the Transpacific Stabilization Agreement 
(``TSA'') added authority to its basic agreement that allowed its 
member lines to discuss and reach agreement on programs to reduce 
sources of environmental pollution caused by ocean liner operations.\4\ 
So far, however, no specific TSA program has materialized under this 
authority, even though slow steaming has become more prevalent during 
this time in the transpacific trade and in other U.S. trades.
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    \4\ See Article 5(d) of the TSA's basic agreement available at 
http://www2.fmc.gov/agreement_lib/011223-045-MC.pdf. (Agreement No. 
011223-45)
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    Slow steaming is a complex issue with advantages and disadvantages 
for both carriers and shippers depending on trade conditions and 
commodity transported. For example, when carriers are experiencing high 
bunker costs and low charter rates, slow steaming becomes more 
attractive to the carrier. When these conditions do not exist, slow 
steaming does not offer the carrier the same advantages. Thus, in the 
coming years, potential increases in fuel costs and planned vessel 
deliveries will weigh in favor of carriers continuing or expanding slow 
steaming, but a continued recovery in demand and rates will tend to 
mitigate the trend.
    While a good deal of commentary and analysis have appeared in the 
trade press regarding the benefits that carriers derive from slow 
steaming services, information about how this practice has affected 
American exporters and importers is limited. In cases where shippers of 
low-value commodities receive lower rates as a result of the carrier 
passing along some of the fuel savings achieved through slow steaming, 
the additional time for transport may not be an issue for these 
shippers. On the other hand, shippers of high-value commodities may not 
find slow steaming advantageous because a potentially lower freight 
rate may not outweigh the added delay in accessing payments for goods 
rendered. Likewise, shippers of chilled meat and fresh produce may find 
slow steaming disadvantageous because the resulting longer transit 
times could lead to increased spoilage and less shelf-time in grocery 
stores.
    These tradeoffs for U.S. importers and exporters assume that 
carriers pass at least a portion of the cost savings from slow steaming 
on to their customers. In the U.S. trades, where the vast majority of 
liner cargo travels under annual service contracts, it is unclear 
whether ocean carriers' customers have received those savings--either 
through adjustments to bunker fuel surcharges or the underlying rates.
    Finally, slow steaming has efficiency and environmental benefits 
that should be factored into both carriers' and shippers' equations. 
But an accurate analysis of the impact requires reliable methods to 
measure and quantify those environmental benefits. Better information 
and more transparency on emissions savings from slow steaming would 
allow carriers and their customers to make shipping choices that reduce 
their carbon emissions--and receive full credit for those measures.
    The Commission, therefore, has decided to request public comment on 
the effects of slow steaming practices on ocean liner operations, 
shippers' supply chains and their underlying businesses, capacity 
availability, container availability, ocean freight rates, fuel 
surcharges, and greenhouse gas emissions. Although slow steaming 
primarily affects the operations of shippers, carriers and rate 
discussion agreements, the Commission encourages all interested 
parties, including ports, maritime terminal operators, trade 
associations, environmental groups, and other governmental entities to 
submit comments or to identify any economic and environmental data and 
studies related to slow steaming. The questions below seek to solicit 
comments on how slow steaming has affected shippers' and carrier's 
business operations and the environment. Commenters may address any or 
all of the questions and are welcome to submit comments on the effects 
of slow steaming not addressed by any of these questions.

Questions Directed to Shippers

    1. What do you see as the advantages and disadvantages of slow 
steaming?
    2. How has slow steaming of ocean liner services impacted your 
overall business costs? How significant are those costs? What measures, 
if any, has your company taken to mitigate any negative cost impact on 
your business arising from slow steaming?
    3. Has your company benefited from the fuel cost savings that slow 
steaming makes possible by obtaining, for example, lower freight rates 
or bunker adjustment surcharges? If so, identify those benefits and 
explain how significant they are.

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    4. Describe how, and to what extent, the slow steaming of ocean 
liner services has impacted your company's supply chain, space 
availability, and container availability.
    5. Are different services, i.e., slow steaming vs. normal steaming, 
available to your company from different ocean carriers over the same 
trade lane? Alternately, do any individual ocean carriers offer your 
company different transit times over the same trade lane with varying 
rates or other service features?
    6. In the past year or so, have ocean transit times lengthened 
between the major port-pairs used in your company's ocean shipping 
operations on account of the slow steaming of services? If so, how much 
longer have those transit times become and between which port pairs?
    7. Do ocean transit times vary significantly among the different 
services that link the major port-pairs used in your company's ocean 
shipping operations? When arranging shipments, what role do differences 
in transit time play in your carrier or service selection process?
    8. If you have service contracts with ocean carriers, were transit 
times or slow steaming provisions included in those contracts? Was slow 
steaming consistent with your governing service contract provisions?
    9. As a U.S. exporter, has the slow steaming of ocean liner 
services in the U.S. trades put your company at a competitive 
disadvantage in overseas markets? If so, please explain.
    10. Identify and describe what benefits your company has derived 
from slow steaming (e.g., more reliable and predictable sailing 
schedules, a more stable supply chain, etc.).
    11. Do you believe slow steaming is sustainable over the long-run? 
Please explain why or why not.
    12. Do ocean carriers provide you with information on fuel, cost, 
or emissions savings that allow you to calculate and consider the 
benefits of slow steaming in choosing among transportation options?
    13. Discuss whether your company uses slow steaming services to 
help reduce its carbon footprint on the goods it sells? If so, how 
substantial are these reductions? How do you measure or quantify these 
reductions? What type or form of information would better assist you in 
making choices that reduce your carbon footprint?

Questions Directed to Ocean Liner Carriers

    1. What does your company see as the advantages and disadvantages 
of slow steaming?
    2. What proportion of the ships your company operates in the U.S. 
trades slow steam? What proportion slow steam outbound from the United 
States? What proportion slow steam inbound to the United States? Please 
break this information down by trade lane.
    3. Do you have plans to increase or decrease slow steaming during 
2011 and/or the years that follow?
    4. What factors help your company decide to slow steam any given 
service string? What factors cause your company to decide whether to 
slow steam in one direction only?
    5. In the past year, by how much (i.e., absolute amount and as a 
percent of the total) has your company reduced its bunker consumption, 
bunker fuel expenses, and carbon emissions as a result of slow steaming 
ships in U.S. ocean liner services?
    6. Do you make this information on fuel, cost, and emissions 
savings available and transparent to your customers? If not, do you 
have plans to, and what is your goal date? If not, why not?
    7. Do you offer shippers, over the same trade lane, different 
transit times by reason of slow steaming vs. normal steaming?
    8. Have you passed cost savings along to shippers through 
adjustments to any bunker surcharge formulas, or by lowering rates? If 
not, do you have plans to, and what is your goal date? If not, why not?
    9. Are there any costs incurred by the ships your company is slow 
steaming that would not accrue if they were operating at normal service 
speed and, if so, what are these costs and how significant are they?
    10. What factors constrain your company's ability to slow steam 
more services or to further slow down ships that are already slow 
steaming (i.e., super-slow steaming)?
    11. How many vessels do you add to service loops that begin slow 
steaming for part or all of the loop? Are there instances where vessels 
are not added?
    12. Is your company adding new vessels to your fleet to accommodate 
slow steaming?
    13. Are new ship designs incorporating hull and propulsion engine 
innovations to better accommodate slow steaming?
    14. How has slow steaming impacted your company's on time 
performance of sailing schedules?
    15. Are some shipper accounts more affected by slow steaming than 
others? If so, please explain. What measures has your company taken to 
try to mitigate any adverse impact of slow steaming on specific shipper 
accounts?
    16. To what extent has slow steaming affected your company's 
ability to maintain or expand capacity in the U.S. trades and/or its 
ability to maintain adequate availability of containers at appropriate 
inland locations?
    17. Do you believe slow steaming is sustainable over the long-run? 
Please explain why or why not.
    18. If your company participates in one or more vessel sharing 
arrangements (``VSAs''), describe whether and to what extent VSAs are 
positively or negatively impacted by slow steaming.

Questions Directed to Rate Agreements That Establish a Bunker Surcharge 
Guideline

    1. Within the geographic scope of your agreement, what proportion 
of the ships used by your members slow steam? What proportion slow 
steam outbound from the United States? What proportion slow steam 
inbound to the United States? Please break this information down by 
trade lane.
    2. Please explain your method used for developing the bunker 
surcharge guideline. How can the formula be modified to reflect the 
savings realized from slow steaming?
    3. Has your agreement discussed possible ways to pass cost savings 
along to shippers? If not, do you have plans to, and what is your goal 
date? If not, why not?
    4. What measures has your agreement taken to try to mitigate any 
adverse impact of slow steaming on the trade?
    5. To what extent has the prevalence of slow steaming within the 
geographic scope of your agreement influenced the type of discussions 
that take place or the type of information exchanged under the 
authorities contained in your agreement?

Questions Directed to All Interested Parties

    1. What are the major benefits and costs associated with slow 
steaming?
    2. To what extent has the slow steaming of services in the U.S. 
ocean liner trades reduced greenhouse gas emissions?
    3. Discuss the likely long-term prevalence of slow steaming and its 
potential impacts on the economy and/or the environment.
    4. How important is slow steaming in the overall effort to reduce 
emissions of greenhouse gases and other air pollutants arising from 
ocean liner operations?
    5. What data sources are available to measure the economic and 
environmental impacts of slow steaming?


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    Along with comments, respondents should provide their name, their 
title/position, contact information (e.g., telephone number and/or e-
mail address), name and address of company or other entity and type of 
company or entity (e.g., carrier, exporter, importer, trade 
association, etc.).
    Responses to the NOI will help the Commission ascertain more 
precisely the impact of slow steaming on U.S. ocean liner commerce, the 
ocean liner industry, the economy, and the global environment with a 
view to determining whether, and if so, what additional analyses or 
action by the Commission may be necessary.
    To promote maximum participation, the NOI questions will be made 
available via the Federal Register and on the Commission's Web site at 
http://www.fmc.gov in a downloadable text or pdf file. They can also be 
obtained by contacting the Commission's Secretary, Karen V. Gregory, by 
telephone at (202) 523-5725 or by e-mail at [email protected]. Please 
indicate whether you would prefer a hard copy or an e-mail copy of the 
NOI questions. Non-confidential comments may be sent to 
[email protected] as an attachment to an e-mail submission. Such 
attachments should be submitted preferably in Microsoft Word or text-
searchable PDF.
    The Commission anticipates that most filed NOI comments will be 
made publicly available. The Commission believes that public 
availability of NOI comments is to be encouraged because it could 
improve public awareness of the impact of slow steaming on the 
environment and various segments of the maritime industry. 
Nevertheless, some commenting parties may wish to include commercially 
sensitive information as relevant or necessary in their responses by 
way of explaining their liner shipping experiences or detailing their 
responses in practical terms. To help assure that all potential 
respondents will provide usefully detailed information in their 
submissions, the Commission will provide confidential treatment to the 
extent allowed by law for those submissions, or parts of submissions, 
for which the parties request confidentiality.

    By the Commission.
Karen V. Gregory,
Secretary.
[FR Doc. 2011-2482 Filed 2-4-11; 8:45 am]
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