Shipping Operating Costs Rise 2.1%

Press Release
Wednesday, September 26, 2012
Richard Greiner, partner, Moore Stephens

Total annual operating costs in the shipping industry increased by an average 2.1% 2011, driven by crew costs, reports Moore Stephens


The findings are set out in OpCost 2012, 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 up in 2011, the financial year covered by the survey.  Both the bulker and tanker indices increased by 3 index points (or 1.7 per cent) on a year-on-year basis, while the container ship index (with a 2002 base year, as opposed to 2000 for the other two vessel classes) was up 5 index points, or 3.1 per cent. The corresponding figures in last year’s OpCost report showed increases in the bulker, tanker and container ship indices of 5, 2 and 3 points respectively.

There was a 3.3 per cent overall increase in 2011 crew costs compared to the 2010 figure. (By way of comparison, the 2008 report revealed a 21 per cent increase in this category). Tankers overall experienced increases in crew costs of 2.2 per cent on average, compared to 2.7 per cent in 2010. Within the tanker sector, Suezmaxes reported an overall increase of 3.4 per cent, while for operators of LPG carriers of between 3,000 and 8,000 cbm the crew bill was up by 6.7 per cent. For bulkers, meanwhile, the overall increase in crew costs was 2.8 per cent, compared to 4.0 per cent the previous year, with the operators of Panamax bulkers paying 5.4 per cent more than in 2010. For container ships, the increased spend on crew averaged 3.4 per cent (as opposed to 2.9 per cent in 2010), with smaller vessels (up to 1,000 teu) paying 3.9 per cent more than last year. Operators of larger dry cargo ships (above 25,000 dwt) and of smaller LPG carriers (between 3,000 and 8,000 cbm), however, experienced the biggest increase in crew expenditure – 6.7 percent in each case.

For repairs and maintenance, there was an overall fall in costs of 1.1 per cent, compared to the 4.5 per cent increase recorded for 2010. The only category of tonnage to show an increase here was container ships, where repairs and maintenance costs were up by 3.7 per cent. There was no overall increase in these costs in the tanker sector, and a 1.9 per cent fall in such expenditure for bulkers.  Handysize and Handymax were the only bulker types to spend more on repairs and maintenance in 2011, and Handysize product  tankers were alone among tankers in this respect. But in the container ship sector the bigger vessels (between 2,000 and 6,000 teu) spent 4.4 per cent more on repairs and maintenance. Container ships up to 1,000 teu, meanwhile, spent 3.2 per cent more, and the increased repairs and maintenance expenditure for box ships between 1,000 and 2,000 teu was 1.5 per cent.

After two successive years of declining expenditure on stores, OpCost this time revealed a 2.7 per cent increase in the level of such spending. Some of the biggest increases in this regard were witnessed in the tanker sector where Suezmaxes, for example, spent 5.5 per cent more on stores than in the previous year, and Aframaxes 5.4 per cent more. Panamaxes, where the stores spend was down by 2.4 per cent, were the only category of tanker to show black ink in this regard. And there was no black ink at all for stores in the gas market, with operators of LPG carriers of between 70,000 and 85,000 cbm paying 6.5 per cent more compared to 2010.  

Expenditure on insurance dipped overall by 1.5 per cent, this following a 4.7 per cent fall in 2010. The insurance spend was down for bulkers and tankers overall by 4.5 and 3.4 per cent respectively. Indeed, all categories of bulkers and tankers paid less for their insurance than they did in 2010. For container ships, though, it was more of a mixed picture. Whereas the larger box ships paid 0.7 per cent less for their insurance in 2011, operators of smaller container ships paid 3.5 per cent more.

Moore Stephens partner Richard Greiner says: “OpCost 2012 contains both good and bad news for the shipping industry. The bad news is that costs continue to rise. The good news is that costs are not rising as fast, or as steeply, as they were three or four years ago, and are in fact pretty much in line with predictions.

“Once again, it was an increase in crew costs which was the headline figure for the industry in 2011. The average overall increase in crew costs was in fact marginally down on the figure for 2010. This may be a reflection of the economic climate, and a consequence of more companies going out of business and more ships going into lay-up. But while crew costs remain the single biggest contributor to higher operating costs, they are still modest in comparison to some of the hefty increases posted in earlier years. Investing in good people is a must for the shipping industry, and will justify the price tag in the long term.

“There was a fall of just over one per cent in repairs and maintenance expenditure, this despite continuing increases in the cost of labour and raw materials. Again, this may be a direct result of the economic downturn, which shipping has weathered better than many other industries. But nevertheless there has been reduced activity, a number of victims, and significant pressure on spending in many of those companies that have survived.

“Spending on stores was up in 2011. This is no surprise since the category includes the likes of lube oils, the price of which continued to rise throughout 2011 along with the price of crude oil. New technology in lube manufacture promises to make ships more environmentally friendly, and more efficient, but that will come at greater financial cost.

“Insurance costs were down again, which is not a surprise but an anomaly, given the economic climate and the pure underwriting figures for recent years. In a classic underwriting market undistorted by rampant competition, rates would be going up. As it is, with very few exceptions, they are going down. One of those exceptions can be found in the container ship sector, where a 3.5 per cent increase in insurance costs for smaller box ships compares to an 0.7 per cent fall in costs for the biggest vessels. This would suggest that the age of the ship remains a greater concern for underwriters than its size, which is nothing new.

“The global economic outlook remains uncertain. Confidence in the shipping industry, while fragile, has held up remarkably well given the financial and political difficulties of recent years. Shipping will not welcome an increase in operating costs. But there should be some solace to be had from confirmation that the increases are more or less in line with predictions. In shipping, as elsewhere, it is easier in difficult times to plan for a probability than for an unexpected contingency. And better analysis and risk management makes an unexpected contingency less likely.”

 

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

Technology

Wärtsilä, Diesel United Renew Pact

Wärtsilä and Diesel United Ltd in Japan have signed a ten-year renewal of their co-operation agreement for the sale, manufacturing and servicing of Wärtsilä low-speed marine engines.

MARAD Tests Alternative Power for Ships

The Maritime Administration (MARAD) is testing state-of-the-art, environmentally efficient technology onboard the Training Ship (TS) Kennedy.   The National Defense

Ship Emissions: Chevron Lube Gains Key Approval

A new Chevron Marine Lubricants 100 BN cylinder oil, which is designed to offer ship owners the ability to achieve the latest emissions legislation, has received full sign off from a key engine maker.

Tanker Trends

DNV GL Approvals for SAACKE Scrubbers

Classification increases planning certainty for exhaust gas scrubber operators.   The classification society DNV GL has certified the SAACKE exhaust gas scrubber

China to Import 335 MT of Naphtha, Wants More

China is set to import more than 335,000 tonnes of naphtha and diesel, rare moves for the world's no. 2 oil consumer given it has been self-sufficient at meeting domestic oil product demand,

Total CEO: EU Must Fight US Crude Export Law

First major public appearance of new Total head; he challenges European politicians to fight US ban. The new head of French energy major Total challenged Europe to fight Washington over the U.

Bulk Carrier Trends

Equinox Class Scrubber Systems Receive Certification

Algoma Central Corporation (“Algoma”), the largest Canadian shipowner and operator of domestic Great Lakes vessels announces that it has received all requisite

Bulker Arrives to US on Her Maiden Voyage

The Port of Vancouver USA welcomed the Kypros Unity, commanded by Capt. Wilfredo F. Itable of Cyprus, on her maiden voyage Oct. 28. Capt. Itable and his 20-member

Vale CEO: Coal Deal Soon

Brazilian mining company Vale SA is close to making a "strategic" announcement concerning its coal unit, the company's chief executive Murilio Ferreira said on

Finance

St. Lawrence Seaway Workers Extend Strike Deadline

The union that represents workers on the St. Lawrence Seaway, the waterway that links the Great Lakes and the Atlantic Ocean, has extended a strike deadline to Monday at 5 p.

Mitsubishi Exits Cruise Business; Books $357m Loss

Mitsubishi Heavy Industries, Ltd. (MHI) announced its decision to book an extraordinary loss from its cruise ship business in the company's consolidated financial

China to Import 335 MT of Naphtha, Wants More

China is set to import more than 335,000 tonnes of naphtha and diesel, rare moves for the world's no. 2 oil consumer given it has been self-sufficient at meeting domestic oil product demand,

Container Ships

Asia-Euro Box Rates Jump 88 pct

Shipping freight rates for transporting containers from ports in Asia to Northern Europe jumped 88.2 percent to $1,312 per 20-foot container (TEU) in the week ended on Friday,

Seaspan Receives 5th 10K TEU Boxship

Seaspan Corporation announced yesterday that it accepted delivery of a 10000 TEU containership, the MOL Brightness.   The new containership, which was constructed

CMA CGM to Retrofit 10 More Bulbous Bows

The CMA CGM Group said it will retrofit 10 of its vessels’ bulbous bows to achieve improved energy efficiency for slow steaming. The modifications are in addition

Vessels

Wärtsilä, Diesel United Renew Pact

Wärtsilä and Diesel United Ltd in Japan have signed a ten-year renewal of their co-operation agreement for the sale, manufacturing and servicing of Wärtsilä low-speed marine engines.

MARAD Tests Alternative Power for Ships

The Maritime Administration (MARAD) is testing state-of-the-art, environmentally efficient technology onboard the Training Ship (TS) Kennedy.   The National Defense

St. Lawrence Seaway Workers Extend Strike Deadline

The union that represents workers on the St. Lawrence Seaway, the waterway that links the Great Lakes and the Atlantic Ocean, has extended a strike deadline to Monday at 5 p.

Surveyors

Braemar Hosts Insurance Experts

Braemar (incorporating The Salvage Association) welcomed an invited group of marine insurance professionals onto its specialist port and shipyard familiarization

DEA’s New 82-foot Survey Vessel Commissioned

David Evans and Associates, Inc.’s Marine Services Division commissioned its new 82-foot hydrographic survey and scientific vessel Blake in a ceremony held in the vessel’s homeport of Gulfport,

EnQuest Selects Technip for Mega Subsea Contract

Technip was awarded by EnQuest earlier this year a large(1) engineering, procurement, installation and construction (EPCI) contract for the Kraken development located in the North Sea,

 
 
Maritime Careers / Shipboard Positions Maritime Standards Naval Architecture Navigation Pipelines Pod Propulsion Port Authority Salvage Ship Repair Sonar
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: 0.2232 sec (4 req/sec)