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Lower bunker fuel prices are unlikely to impact vessel speeds
SHIPPING executives believe that slow steaming will continue because any speed-up to reflect the fall in oil prices would only create surplus tonnage and pull down rates.
Paragon Shipping chairman and CEO Michael Bodouroglou, owner of containership owner Box Ships, said there had been no request to increase speed.
"The reason is simple. Bunker prices still have a long way to fall, more than they have already dropped for ships to be incentivised to go faster," he told Lloyd's List.
For example, a supramax earning US$9,000 a day with bunker burning $600 per tonne, the optimal speed would be seven knots, whereas in practice ships are currently able to reduce only to 11 or 10 at slowest.
"Ships are going much faster than the optimal speed so you can understand that there is a lot of room for bunker prices to drop further [without affecting service speeds]."
Mr Bodouroglou said that if bunker prices dropped to the point that vessels did increase speed it would not be to the industry's benefit.
"If ships start to go faster this will create a tonnage surplus in the market and affect rates downward," he said. But the market was "a long way" from that point.
Chief financial officer of containership owner Costamare, Gregory Zikos, agrees.
"For the time being," he said, the company had not received any requests from charterers for speeding up.
"We may have a long way to go [for that to happen]," said Mr Zikos.
Paragon Shipping chairman and CEO Michael Bodouroglou, owner of containership owner Box Ships, said there had been no request to increase speed.
"The reason is simple. Bunker prices still have a long way to fall, more than they have already dropped for ships to be incentivised to go faster," he told Lloyd's List.
For example, a supramax earning US$9,000 a day with bunker burning $600 per tonne, the optimal speed would be seven knots, whereas in practice ships are currently able to reduce only to 11 or 10 at slowest.
"Ships are going much faster than the optimal speed so you can understand that there is a lot of room for bunker prices to drop further [without affecting service speeds]."
Mr Bodouroglou said that if bunker prices dropped to the point that vessels did increase speed it would not be to the industry's benefit.
"If ships start to go faster this will create a tonnage surplus in the market and affect rates downward," he said. But the market was "a long way" from that point.
Chief financial officer of containership owner Costamare, Gregory Zikos, agrees.
"For the time being," he said, the company had not received any requests from charterers for speeding up.
"We may have a long way to go [for that to happen]," said Mr Zikos.
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