Monday, January 21, 2008

Innovative and Adapt

Erik Kirschbaum of Reuters reports (Sun January 20, 2008) that "Oil at more than $90 a barrel is concentrating minds in the shipping indsustry. Higher fuel costs and mounting pressure to curb emissions are leading modern merchant fleets to rediscover the ancient power of the sail." The article reports news of the world's first commercial ship powered partly by a giant kite as it sailed on its maiden voyage. The 10,000 ton ship uses a computer-guided kite to harness ocean winds far above the surface. DHL Global Forwarding is the launch customer for the Beluga Shipping-owned MS Beluga SkySail. The ship will use a giant 160 square metre kite to save up to 15 per cent of fuel costs (up to $1,600/day) on its trans-Atlantic journey. The kite system runs on a metal track around the ship which allows it to move around the vessel depending on the wind’s direction.

The same article reports that "The number of shipping lines reducing speed to cut fuel costs has been growing steadily," as quoted by a source (Klein), whose organization runs safety surveys on more than 6,000 ships worldwide, told Reuters. "Slowing down by 10 percent can lead to a 25 percent reduction in fuel use. Just last week a big Japanese container liner gave notice of its intention to slow down," he added. The Hapag-Lloyd shipping company reacted to rising fuel prices by ordering its captains to slow down. As reported in the Reuters article, "the company in the second half of last year reduced the standard speed of its ships to 20 knots from 23-1/2 knots, and said it saved a "substantial amount" of fuel." Despite added costs associated with longer voyages (operating costs, charter costs, interest costs), Hapag-Lloyd reported that "slowing down still paid off handsomely."

The first trend suggests that the shipping industry is able to innovate, while the second suggests that simple operational adjustments are allowing this industry to adapt to econmonic forces.

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