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NOL says no plans to drop slow steaming despite lower bunker price

NOL says no plans to drop slow steaming despite lower bunker price
Neptune Orient Lines (NOL) says it has no plans to stop slow steaming even given the lower bunker price and believes it will continue for “quite some time”.

With the bunker price at $350 per tonne compared to double that a year ago the question as to whether container lines will reduce or drop slow steaming altogether is high on the agenda

Asked if NOL liner arm APL plans to drop slow steaming, president Kenneth Glenn said at its full year results briefing: “In terms of increasing the speed of vessels across the board purely based on the lower cost of bunker we have no intention to do that. As for at what cost it would make sense I don’t have a number as I don’t think the number could go low enough.

“We do not see circumstances where we would speed up vessels based on the cost of fuel.”

Glenn did see a case for speeding up individual vessels that were behind schedule but not across the fleet as whole.

NOL president and ceo Ng Yat Chung flagged the impact that dropping slow steaming would have on boxship fleet capacity.

“The primary impact on speeding up is not just on the cost, the primary impact is even more is bringing in more capacity that is locked up by slow steaming and it would exacerbate the overall oversupply. That would not be helpful,” Ng explained.

“For us we foresee slow steaming to be with us for quite some time even with a reduced bunker rate.”

NOL reported a full year net loss of $260m for 2014 compared to a $76m loss in 2013, however, the previous year's result included a one time gain of $200m from the sale of its headquarters building in Singapore. Revenues were 2% down in 2014 at $8.62bn.

Commenting on the state of the market Ng said: “While we are seeing some benefits from the current trend of lower bunker prices, the longer term impact of the drop in fuel price on container freight rates is uncertain. More port congestion, resulting from further deterioration in the labour situation on the US West Coast, is a potential risk factor.”

Kenneth Glenn APL president will be speaking at Sea Asia 2015 on 21 - 23 April in Singapore.