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

Technology

Globecomm to Provide VSAT for PBJV Barge

Purpose-built accommodation and pipe-lay barge on charter to Petronas equipped with VSAT and L-Band services. Globecomm Maritime has been awarded a contract

LiveCom Selects iDirect Evolution to Enable Global Expansion

iDirect Asia Pte Ltd today announced that LiveCom Limited (“LiveCom”), a Hong Kong based ISP, has selected Evolution as the platform to help enterprise and government

FLNG Prelude: A New Dawn in the Age of Maritime & Energy

Longer than four football fields, as big as six Nimitz-class aircraft carriers and almost as tall as the Taipei 101 skyscraper, Royal Dutch Shell PLC is hoping that its record-setting,

Tanker Trends

Iraq's Kurds Have Right to Sell Oil While Squeezed by Baghdad

Iraq's Kurdish region has the right to keep selling oil as long as the Baghdad government keeps cutting its budget, the head of the Kurdish parliament's energy committee said on Tuesday,

Petroecuador Tenders to Buy 3.84m bbls of Naphtha

State-run oil company Petroecuador has launched tenders to buy a total volume of 3.84 million barrels of naphtha for delivery in the coming month at Esmeraldas,

Floating Production: $1.2b Speculative FLNG Ordered

The floating production business continues to be very strong, particularly in the LNG gas processing sector.  Last month saw a speculatively ordered floating liquefaction plant – a $1.

Bulk Carrier Trends

LUSCHI Begins Dredging at ArcelorMittal’s Canal

LUSCHI announced today it will mobilize its vessel Giovanella to Espírito Santo to assist in the dredging and final disposal of accumulated sediments in the seawater storage canal of ArcelorMittal,

Grounded Freighter Refloated in Lake St. Clair

The Federal Rideau, a 656-foot freighter that had been hard aground in the downbound shipping channel of Lake St. Clair since early Sunday morning, was refloated

News Flash! Greek Shipowners Prefer Bulkers

The buying interest from Greek ship owners is focused on bulkers to an increasing extent, BIMCO said. Data from VesselsValue.com reveal that Greek owners were at

Finance

Iraq's Kurds Have Right to Sell Oil While Squeezed by Baghdad

Iraq's Kurdish region has the right to keep selling oil as long as the Baghdad government keeps cutting its budget, the head of the Kurdish parliament's energy committee said on Tuesday,

Petroecuador Tenders to Buy 3.84m bbls of Naphtha

State-run oil company Petroecuador has launched tenders to buy a total volume of 3.84 million barrels of naphtha for delivery in the coming month at Esmeraldas,

Company Fined for Oil Spill Near Anacortes

Ecology issues $112,500 penalty for sunken vessel.   American Gold Seafoods faces a $112,500 penalty for an oil spill caused by the accidental sinking of its vessel,

Container Ships

XtendFRESH Now Available from Carrier Transicold

The XtendFRESH atmosphere control system, which preserves quality and extends shipping distances for perishables shipped in refrigerated containers, is now available from Carrier Transicold.

Diana Containerships Q2 & 1H 2014 Financial Results

Greece-based Diana Containerships Inc., a global shipping company specializing in the ownership of containerships, has reported net income of $0.6 million for the second quarter of 2014,

Danaos Corporation 2Q and 1H 2014 Results

Danaos Corporation ("Danaos") (NYSE: DAC), a leading international owner of containerships, today reported unaudited results for the period ended June 30, 2014.

Vessels

London Shipping Professionals Weigh in for SPNL Report

The Shipping Professional Network London (SPNL) has  released their full Future London report, an initiative that gathered the views and opinions of London’s young

U.S. Marshalls Ordered to Seize Kurdish Oil Cargo off Texas

Acting on a request from the central government in Iraq, a U.S. judge has signed an order telling the U.S. Marshals Service to seize a cargo of oil from Iraqi Kurdistan

Aker Philadelphia Shipyard ASA: Purchase of own shares

Aker Philadelphia Shipyard AKPS), a leading U.S. commercial shipyard constructing vessels for operation in the Jones Act market, has on July 25, 2014 purchased 1,

Surveyors

Rosneft Starts Up Field Work in the Kara Sea

On July 24 this year, research vessel Geolog Dmitry Nalivkin sailed from Kirkenes (Norway) to the Kara Sea. In the next three months 2D seismic survey, will

Andrew Weir to Support UK Navy in Antarctica

Andrew Weir Shipping Ltd. announced that it has been awarded the contract for the support and maintenance of HMS Protector (A173), following a competitive tendering process.

IACS Formal Safety Assessment (FSA) Training Course

The International Association of Classification Societies (IACS) says that to  facilitate a wider understanding of the Formal Safety Assessment (FSA) process, its

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Standards Naval Architecture Pod Propulsion Ship Electronics Ship Repair Ship Simulators Shipbuilding / Vessel Construction 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: 0.2087 sec (5 req/sec)