The concepts of virtual arrival and slow steaming look like very promising improvements for the shipping industry. In fact real examples and analysis’ show that they can provide significant savings, both in terms of costs and GHG. But then why is it that it still barely implemented? It’s not because of unavailable technology or that these concepts have low potential. The reasons are a bit more sophisticated and nuanced below are a few of the reasons that lead to the status quo

As explained in this section there are so many parties involved that it becomes very hard to align the goals and incentives of each stakeholder. The result is a so-called split incentive. As one can imagine, different stakeholders have different KPI’s and different incentives. For example, to reduce fuel costs and GHG emissions, the owners of the ships have to make investments. However, saving fuel is a benefit for the charter party and not the owners. Simultaneously, by going slower they increase their risk of not being able to meet agreements (such as arriving on time at a port). As they are not responsible they are very reluctant to take on additional risk while they are not benefiting from it. This is a key example of split incentives.