Respone - Evergreen Shipping Us Final Nonconfidentialapr 5 (2).Doc

8/9/2019 Respone - Evergreen Shipping Us Final Nonconfidentialapr 5 (2).Doc

1/4

Not Confidential

Questions

Directed

to OceanLiner

Carriers

What does your company

see

a s

th e advantage s

and disadvantages of slow

steaming

A

A

A

Advantages

Slow steaming enables

vessels

to

sai l at

economic speeds cutting

down

fuel consumption costs

Slow s te am ing re duce s emiss ion of

greenhouse

gas

and

shipping

impact

o n the

environment

3Slow steaming offers

greater buffer time in

service

rotation and improves

on

time

performance

of

sailing schedule

Disadvantages

When vessels

sail at low

s pe ed s we

have

to refit th e main engines and require

mo re fre qu e nt

maintenance at our own

expenses

also slow steaming

requires

deployment of additional ships in a vesse l

string

to maintain

service

levels

Th is no t

only mitigates

somewha t though

not entirely

th e

fuel cost savings

it

als o ad ds

costs

to charter

such

vessels

Additional

equipment

is

required in

connectionwith these vessels which adds

further

costs

3

Do you

have p lans

to increase o r decrease slow

steaming

during 2

andor

th e

years that follow

In th e near future our fleet deployment is to decrease rather than increase

th e

scale of slow steaming in our serv ice

network

By doing so we can release

extra

vessels

to la un ch new services in line

with

in creas ing cus tome r demand

For example

we

are

planning to

adjust

th e fleet

of

AUE service

from

9

ships

back to 8 ships this year

4

What factors help your

company

decide to

s low

steam any given

service

string

What

factors

cause your company

to

decide whe the r to s lo w

steam in one

directiononly

Environmental benef i ts are a significant

factor

in our

decisions

However

Non Confidential


2/4

A

A

A

2

Not

Confidential

economic

factors

such

as

ve ss el co st and fuel

price are also

key

factors in our

s tudy of a slow steaming case When

th e saving

in fuel cos t outweighs th e

charter hire of an extra ship and th e re lated equipment costs it

is

worthwhile

to adjust

th e

serv ice to slow steaming mode

Apart from these factors

we

have to co ns id e r customers acceptance an d th e

availability of a

su itab le be r th

window

to

fit

th e adjusted

schedule

7

Do you

offer shippers

ove r

th e

same

trade lane

different

transit t imes by

reason

of

slow

steaming vs

normal steaming

Yes

we

offer

various se rv ic e op tion s

in

th e same trade lane Among th e

7

se rv ic e s tr ings

that we operate in

th e

Trans Pacific trade only

loops

are

running in slow steaming mode

Customers

can s ele ct the suitable services

based

on their

requirements

9

Are th ere any costs incurred

by

th e ships

your company

is

slow

steaming

that

would

not

accrue

if they we re op e ra tin g

at

normal

service speed and

if so

what are th e se cos ts and how significant are

they

Yes slow s te am in g re quire s th e deployment of extra vessels additional

container equipment on these s hips and refitting ofmain engines all of

which

involve

significant

additional costs

What factors constrain your companybility

to s lo w

steam

more services o r

to further slow

down

ships that are already

slow

steaming uperslow

steaming

The increase of charter hire for the additiona vessels needed can reduce the

cost saving

benef i ts

and discourage application of slow

steaming

in

more

service

strings

Th e extent to which we stretch service loops

for

slow steaming

is

also

determined by cus tomer accep tance

Th e

adjustment of transit time should not

cause major interruption to customers supply chains Otherwise it can result

in business loss

How many

ve sse ls d o you ad d

to

s e rv ice lo ops

that b eg in s lo w

steaming for

part or allof

th e loop

Are

t he re ins tances where

vessels

are

not

added

Non Confidential


3/4

2

Is

your company a dd in g new vessels

to

your fle et to

accommodate

slow

steaming

3

Are

new ship designs incorporating hull and propulsion engine innovations to

better accommodate slow steaming

4 How has slow steaming impacted your companyn time performance of

sailing schedules

5 Are some shipper accounts

more affected

by slow

s team ing than

others If so

please explain What measures

has your

company

taken

to

try

to mitigate any

adverse impact ofslow s team ing on specific shipper accounts

3

Not

Confidential

Each

of our

3

slow steaming

loops

receives

one extra vesse l

in

its

rotation

There

are

no s erv ice s

in

which we have implemented slow steaming

without

adding ships All 3 strings maintainweekly 7Day sai l ings

We

have no t had

any

new

building vessels

delivered in the pas t 2

years

Therefore we did no t d eplo y any new vessels for the pu rpo se of

slow

steaming in

rades

In light

of

more

and

more stringent

environment

standards we

believe

that

slowing

steaming will become

a

normal pattern

of

fleet deployment

Therefore

we are incorporating

th e application of slowing

steaming into

th e

designs

of our

new

buildings including vesse l

hull

main

engine and

relative

devices

Slowing steaming

does no t affect

th e

on time performance of our sailing

schedule

n fact slowing steaming

prov ides

greater buffer time

to absorb

poss ib le de lay

caused by

unexpected incidents

Th e perishable and time sensi t ive

cargoes require shor te r

transit

time

so as to

maintain

longer shelf life in th e import countries To mee t such

demand

we

provide

severa l

service

opt ions with different transit time

6 To what extent has slow steaming

affected

your companybility to maintain

or expand

capacity

in

th e

rad es and

or

its

ability

to maintain adequate

availability of

containers

at

appropriate

inland locations

Non Confidential


4/4

7 o

yo u

believe slow steaming is

sustainable

over th e long

run

Please

explain

why or why not

8 If your company

participates

in one

o r

more v es s el s ha rin g arrangemen ts

VSAs

descr ibe

whether and

to

what

extent

VSAs are positively or

negative ly impacted by slow steaming

Not

Confidential

After

being switched

to

s low

steaming

pattern our TPS AUE

and AUE

services maintain

th e

same weekly capacity

in

th e Trans

Pacific trade

carrying approximately

th e

same volumes of

cargoes

to US inland

points

Therefore

slow

steaming

does

not affect our capacity supply and our ability

to

provide

adequate

containers

at

inland

locations

Increasing environmental regulations

and

targets

make slow

steaming

attractive

Vesse l co st and

fuel

price will have a significant impact on whether

it is economically viable to adopt slow steaming As long as

th e

saving in fuel

cost exceeds th e charter hire of an additional

ship

we believe slow steaming

remains

a

sus tainable approach of

fleet deployment

Yes we

have a vesse l

sha ring a rrangement

with one partner inrade

Th e

adoption of s low steaming

is

not a main concern in our cooperation However

a s long as

s low steaming

conforms to our mutual interests we will apply it to

theVSAservices

Non Confidential

4

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Respone - Evergreen Shipping Us Final Nonconfidentialapr 5 (2).Doc