Focus on Cash Control Impacts Ship Operating Costs

MarineLink.com
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.”

moorestephens.co.uk
 

Maritime Today


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

Maritime Reporter April 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

ICS Criticises 'Prestige’ Judgement by Spanish Court

At a meeting of the International Oil Pollution Compensation Funds (IOPCF) this week, the International Chamber of Shipping (ICS) has strongly criticised the judgement

Blacklisted Oil Tanker Returning to Libya

An Indian-flagged oil tanker is returning to Libya, the North African country's rival oil corporation said on Thursday, after its failed first attempt to export

India Instructs Disputed Tanker to Await UN Orders

India has instructed an Indian-flagged oil tanker that has been blacklisted by the U.N. not to discharge its cargo of crude oil from Libya's rival eastern government

Bulk Carrier Trends

Entrance to Port of Santos Reopens

The entrance to Brazil's largest  reopened on Thursday, after rough seas prevented ships from entering or leaving for more than 30 hours during peak soy export season.

French Wheat Exports Await Indonesia Approval

French wheat exports to Indonesia are on hold as traders await the approval of a food safety agreement between the two countries, something exporters say is being

Baltic Index Dips on Weaker Rates for Bigger Vessels

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Thursday, hurt by lower rates for capesize and panamax vessels.

Finance

Cargotec Logs Higher Profits

Cargotec's January-March 2016 interim report: Profitability improved according to target   * Strong order intake in Kalmar and Hiab   * MacGregor profitability

ANZAC Class Frigate Sustainment Deal Signed

The Turnbull Government has signed a long-term contract for the sustainment of ANZAC Class Frigates centred in Western Australia.   The strategic partnership

"K" Line Review of Medium-Term Management Plan

Kawasaki Kisen Kaisha, Ltd. (“K” Line) reviewed “K” Line Group’s medium-term management Plan, which was formulated in March 2015 as the business strategy toward our 100th anniversary in 2019,

Container Ships

Matson Announces Q2 Dividend of $0.18/Share

The Board of Directors of Matson, Inc. today declared a second quarter dividend of $0.18 per common share. The dividend will be paid on June 2, 2016 to all shareholders

Fitch: M&A, Not Alliances to Help Revive Container Shipping

The following statement was released by the rating agency: Mergers and acquisitions, rather than the historically more popular alliances, are inevitable to address

DP World Volume Up 3.7%

DP World Limited today held its Annual General Meeting for the year ended 31 December 2015.  DP World Chairman, Sultan Ahmed Bin Sulayem, made the following statement

Logistics

Almira, Ex. Dir. Palm Beach Port Honored by FCBF

Port of Palm Beach Executive Director Manuel Almira was inducted into the Florida Custom Brokers & Forwarders Association Hall of Fame. Mr. Almira was recognized

Ageing Seaborne Steel Products

In 2015, seaborne steel products trade accounted for around a fifth of minor bulk trade, having grown on average by 6% per annum since 2010, according to Clarksons Research.

CKYHE Alliance to Reorganize US East Coast Service

CKYHE Alliance, COSCON, “K”Line, Yang Ming, Hanjin and Evergreen Line, is reorganizing their service network for Asia-US East Coast trade in 2016.   CKYHE Alliance

 
 
Maritime Security Maritime Standards Navigation Offshore Oil Pipelines Port Authority Salvage Ship Electronics Ship Simulators Sonar
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: 0.0857 sec (12 req/sec)