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

Technology

BMT WBM to Showcase TUFLOW at World Bank Seminar

BMT WBM ( (BMT), a subsidiary of BMT Group Ltd, a leading international engineering and risk management consultancy, is delighted to announce that it will be presenting

Senator Kaine Tours NNS Apprentice School

Huntington Ingalls Industries (HII) apprises that it has hosted Sen. Tim Kaine, D-Va., for a tour of The Apprentice School at the company's Newport News Shipbuilding division.

Rosneft Restores Meteorological Observations System in Kara Sea

As part of a large-scale summer Arctic research expedition "Kara-Summer - 2014" a meteorological station was installed that meets the latest modern requirements for such equipment,

Tanker Trends

Iraqi Kurdistan Oil Shipments Reach 8.8m Barrels

Iraqi Kurdistan has shipped 8.8 million barrels of oil from the Turkish port of Ceyhan since May, Turkish Energy Minister Taner Yildiz said, as the autonomous region

Stena, Sonangol Launch Training Facility in Angola

The Centro De Formação Maritima De Angola (CFMA) was officially launched on August 27 by top management from Sonangol, the Angolan public sector energy company and the Stena Group of Sweden.

Iraq to Appeal US Court Decision on Kurdish Oil

The Iraqi oil ministry said on Thursday it would challenge a U.S. court decision that stopped U.S. Marshals from seizing some one million barrels of disputed Kurdish oil docked near Texas.

Bulk Carrier Trends

Scrap Metal Exporter Pens Terminal Agreement

Port Canaveral Scrap Terminal LLC (PCST), a bulk ferrous scrap exporter, has signed a lease with the Canaveral Port Authority to operate a terminal in the north cargo area at Port Canaveral.

US Rail Jams Force Rush to Roads and Rivers

U.S. coal-burning power utilities are being forced to turn to barges and more expensive trucks to move coal, desperate to shore up stockpiles left dangerously low

Latest Ocean-Going Shipbuilding Orders

Clarkson Hellas notes in its latest 'S&P Weekly Bulletin' shipbuilding orders placed in the dry bulk, tankship, gas carrier and containership sectors, as follows: Dry

Finance

Bollore First Half Boosted by Transport, Advertising Unit

French industrial group Bollore said first-half operating income rose 11 percent to 314 million euro because of strength at its transport business and advertising agency Havas,

CMA CGM Continues Expansion, Confirms Profits

The Board of Directors of CMA CGM Group, the world’s third largest container shipping company, met under the chairmanship of Jacques R. Saadé, Chairman and Chief Executive Officer,

Odfjell Drilling in Tighter 2Q North Sea Market

Odfjell Drilling reports second quarter 2014 financial results showing a profit of US$29-million. Profit & loss Q2 2014 Operating revenue for Q2 2014 was USD 272 million (USD 289 million),

Container Ships

CMA CGM Continues Expansion, Confirms Profits

The Board of Directors of CMA CGM Group, the world’s third largest container shipping company, met under the chairmanship of Jacques R. Saadé, Chairman and Chief Executive Officer,

Hamburg Süd Christens Containership in S. Korea

Hamburg Süd yesterday celebrated the christening of its new containership San Christobal with customers and business partners at the Hyundai Heavy Industries shipyard in Ulsan, South Korea.

Nine Share in US$6-B DoD Contract Modifications

The US Department of Defense informs that nine companies have each been awarded indefinite-delivery/indefinite-quantity fixed-price option-year two modifications

Vessels

Hamburg Süd Christens Containership in S. Korea

Hamburg Süd yesterday celebrated the christening of its new containership San Christobal with customers and business partners at the Hyundai Heavy Industries shipyard in Ulsan, South Korea.

Darwin, Australia Scene of KAKADU Exercise Planning

Over 1,200 military personnel from the Asia Pacific and Indian Ocean regions have completed collaborative, tactical warfare planning during the first week of the

British WWl Warship Refurbishment Project

Northern Ireland Office Minister, Dr Andrew Murrison MP, visited the historic HMS Caroline in Belfast’s Titanic Quarter as restoration grants are received, informs the UK Government.

 
 
Maritime Contracts Maritime Security Maritime Standards Offshore Oil Pipelines Pod Propulsion Port Authority Salvage Ship Electronics Shipbuilding / Vessel Construction
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: 0.2177 sec (5 req/sec)