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 Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

Ingram Barge Order 20 Tank Barges for 2015

Ingram Barge Company say they will be building 20 tank barges in 2015 to meet growing demand for chemical shipments. While most of the company’s recent tank barges have come through acquisitions,

Finland Grants Support to Three Small LNG Terminals

The Finnish government granted 65.2 million euros (84.22 million US dollar) in subsidies to build three small liquefied natural gas (LNG) terminals to cut on use

Senator Says 2015 Could Be Time for US Oil Export Bill

The top supporter in the U.S. Congress for reversing the 40-year ban on crude oil exports, Senator Lisa Murkowski from Alaska, said next year could be the time for a bill on lifting the restriction.

Finance

Statoil: New Compressor Means Heightened Production

The new compressor in operation on the Kvitebjørn field in the North Sea from 17 September will increase production there by 220 million barrels of oil equivalent

India's Coal Imports Causing Port Congestion

Congestion at Paradip expected to ease in a week if rains stop; higher-than-usual congestion at some other ports too. Indian power and steel companies are importing

Short-Term Perils of Lower Oil Prices: DW Monday

At present we are seeing lower oil prices as a function of softer demand growth in both Europe and China combined with recent output increases from OPEC, particularly Libya,

Container Ships

Specialised Reefer Container Operators can Thrive: DMR

Despite growing competition from container lines, specialised reefer operators can still thrive, according to Drewry’s latest Reefer Shipping Market Annual Review & Forecast,

Chevron To Find Buyers for Hawaiian Refinery

Chevron Corp has hired an investment bank to identify potential buyers of its 54,000 barrel-a-day refinery in Kapolei on the Hawaiian island of Oahu, a company official said.

South Carolina Ports Container Volume Up by 13%

SC Ports Authority reported container volumes up 13 percent fiscal year to date, a strong start to the first two months of the fiscal calendar. The SCPA handled 163,

Logistics

Statoil: New Compressor Means Heightened Production

The new compressor in operation on the Kvitebjørn field in the North Sea from 17 September will increase production there by 220 million barrels of oil equivalent

China's Navy Enters Strait of Hormuz

Bandar Abbas, home of Iran's navy and the main port in the strategically important Strait of Hormuz, is currently hosting two Chinese naval vessels on a five-day goodwill visit,

India's Coal Imports Causing Port Congestion

Congestion at Paradip expected to ease in a week if rains stop; higher-than-usual congestion at some other ports too. Indian power and steel companies are importing

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Pipelines Pod Propulsion Port Authority Salvage Ship Electronics Ship Repair
rss | archive | history | articles | privacy | terms and conditions | 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: 0.1278 sec (8 req/sec)