Focus on Cash Control Impacts Ship Operating Costs
Friday, September 27, 2013

International accountant and shipping consultant Moore Stephens says total annual operating costs in the shipping industry fell by an average 1.8% in 2012. This compares with the 2.1% average rise in costs recorded for the previous year. There was a significant reduction in costs across all categories and it was clear that ship owners had been focusing on managing costs and conserving cash in 2012.

The findings are set out in OpCost 2013, Moore Stephens’ unique ship operating costs benchmarking tool, which reveals that total operating costs for the three main tonnage sectors covered – bulkers, tankers and container ships – were all down in 2012, the financial year covered by the survey. The bulker index was down by 7 points, or 3.9%, on a year-on-year basis, while the tanker index fell by 5 points, or 3.0%. The container ship index was meanwhile down by 3 index points, or 1.8%. The corresponding figures in last year’s OpCost report showed 3-point increases in both the bulker and tanker indices, and a 5-point increase in the container ship index.

There was a 0.2% overall average fall in 2012 crew costs compared to the 2011 figure. (By way of comparison, the 2008 report revealed a 21% increase in this category.) Tankers overall experienced a fall in crew costs of 2.3% on average, compared to the 2.2% increase recorded in OpCost 2012. Within the tanker sector, Aframaxes reported an overall fall of 5.2% in crew costs, while for operators of Suezmaxes and product tankers the reductions were 4.0% and 3.8% respectively. The only tanker categories to show significant increases in crew costs were 3,000-8,000 cbm LPG carriers and Panamax tankers, where such costs were up by 5.2% and 2.8% respectively.

For bulkers, meanwhile, the overall average fall in crew costs was 0.5%, compared to a 2.8% increase the previous year. The operators of Panamax bulkers paid 3.7% less than in 2011. Handysize bulkers and those in the 10,000-20,000 dwt range, meanwhile, each experienced crew cost reductions of 4.8%. For container ships, the reduced spend on crew averaged 1.0% (as opposed to a 3.4% increase in 2011), although operators of reefer tonnage did pay 3.7% more than in the previous year.

For repairs and maintenance, there was an overall fall in costs of 1.9%, compared to the 1.1% increase recorded for 2011. The only categories of tonnage to show a significant increase here were dry cargo ships of 25,000 dwt and above (5.0%) and 70,000-85,000 cbm LPG carriers (3.2%). The overall fall in repairs and maintenance costs for the bulker sector averaged out at 4.6%, for the tanker sector it was 2.9%, and for container ships it was 2.0%.

Expenditure on stores was down this time by 2.1% overall, having risen by 2.7% in OpCost 2012. The biggest fall in such costs was the 7.7% recorded by bulk carriers in the 10,000-20,000 dwt range. For bulk carriers overall, stores costs fell by an average of 4.5%, while in the tanker and container ship sectors the overall reductions in costs were 2.9% and 1.4% respectively. The most significant increases in stores expenditure was recorded by the operators of 40,000-50,000 dwt chemical tankers (4.5%).

The biggest overall drop in operating costs was the 6.2% recorded in respect of insurance. Only RoRos (5.1%), LPG carriers of between 70,000 and 85,000 cbm (3.0%) and very large container ships (1.4%) actually spent more on insurance in 2012 than in 2011. Reefer operators actually spent 16.4% less, but it was the bulker sector which recorded the biggest reduction in terms of its overall payments to underwriters, averaging out across all tonnage sizes at 8.9%, compared to 7.0% for tankers.

Moore Stephens partner Richard Greiner says: “There is a lot of ‘red ink’ in costs, which actually translates into ‘black ink’ in the bottom line for owners. Significantly, 2012 recorded a year-on-year reduction in operating costs, only the second time this has occurred since OpCost was launched.

“It is no coincidence that, during the operating period covered by OpCost 2013, confidence levels in the shipping industry dropped to their lowest point in the past five years, according to the Moore Stephens Shipping Confidence Survey. So it is unsurprising to find that expenditure declined. The industry generally was under extreme pressure during an extended global economic downturn, and attending to items of manageable cost control was an imperative at a time when revenues were declining.

“That said, however, the 6.2% overall fall in insurance costs across all tonnage types is something of a surprise, given the repeated warnings issued by hull underwriters of the dangers of pitching rates too low. It is perhaps simply the case that declining vessel values are being reflected in declining premium costs.

“The fall in operating costs recorded in OpCost 2013 is good news for owners and operators. So, too, is the fact that the global economic outlook is starting to look brighter. But any optimism should be tempered with caution. Foreseeable – if not entirely quantifiable – costs, not least those related to regulatory compliance, have the potential to make a large hole in the industry’s cashflow over the coming year. So a mix of optimism, forward planning, and ongoing risk management would seem to be a good recipe for the future.”

Maritime Today

The Maritime Industry's original and most viewed E-News Service

Maritime Reporter November 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

Idling Fleet Continues to Surge

Owners are rapidly laying up containerships as the market slows. The size of the idle fleet will get bigger while rates and profits slide, says Drewry Shipping Consultants Limited.

Egypt to Complete East Port Said Side Channel in 2016

Egypt plans to complete a side channel in East Port Said, near the Suez Canal, that would speed up shipping and allow ships direct entry into the port by the end of June 2016,

Concordia Maritime Charters MR Tanker

Concordia Maritime has signed a contract for the charter of an IMO2/3 class MR tanker, the company announced today. The vessel will be chartered jointly with Stena Weco,

Bulk Carrier Trends

Evoqua, Drew Marine Ink BWMS Deal

Evoqua Water Technologies and maritime solutions and logistics expert, Drew Marine, have announced a partnership to provide a full compliance package for ballast water management.

Need to Monitory Coal from Indonesia - UK P&I

There are various hazards associated with the trade in coal. UK P&I Club’s Loss Prevention Team highlights the risks involved, and advises on the relevant actions

Deltamarin to Designs First LNG Handysize Bulk Carriers

Deltamarin Ltd proudly announces that it has signed a contract to design the world’s first LNG handysize bulk carriers, which will point the way towards greener shipping of commodities.


S&P Raises Steamship Mutual outlook to Positive

Poor’s has revised its outlook on Steamship Mutual to Positive from Stable. The A- financial strength rating has been reaffirmed. In their announcement Standard

Norwegian Escape with Biggest Scrubbers sets Sail

On a sunny October day in the German harbor-town of Hamburg, M/V Norwegian Escape, a brand new cruise ship, sets sail for the first time. On board are five Yara SOx scrubbers – one for each engine.

ZIM Integrated Shipping Remains Profitable

Despite challenging market environment with freight rates reaching historic lows in several key trades,  ZIM Integrated Shipping Services continues to outperform

Container Ships

SSA Welcomes Decision To Extend BEO

The Singapore Shipping Association (SSA) has welcomed the decision by Singapore’s Minister for Trade and Industry to extend the Competition (Block Exemption

Evergreen Line Orders Ten 2,800 teu Ships

Taiwanese shipping company Evergreen is ordering ten 2,800 TEU container ships from Japanese shipbuilder Imabari Shipbuilding Co.,Ltd and compatriot CSBC Corporation.

Pressure on Container Market Akin to 2008 Recession: UASC

A marked drop in Asian imports to Europe, made worse by a strong dollar, has exacerbated the pressure on shipping lines already struggling with massive over capacity,


Evergreen Line Orders Ten 2,800 teu Ships

Taiwanese shipping company Evergreen is ordering ten 2,800 TEU container ships from Japanese shipbuilder Imabari Shipbuilding Co.,Ltd and compatriot CSBC Corporation.

ZIM Integrated Shipping Remains Profitable

Despite challenging market environment with freight rates reaching historic lows in several key trades,  ZIM Integrated Shipping Services continues to outperform

Controversial Nicaragua Canal Project Postponed

China's Hong Kong Nicaragua Development (HKND) Co. said it is delaying the start of construction on a controversial $50 billion inter-ocean canal across Nicaragua until late 2016.

Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Maritime Standards Navigation Pipelines Port Authority Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0852 sec (12 req/sec)