Ship operating costs rise further
Ship operating costs accelerated moderately in 2018, as uncertain recovery in freight markets across most cargo sectors gained momentum.
A new report by a shipping consultancy, Drewry, said average vessel operating costs rose for the second year in a row following two years of marked declines, but cost inflation is set to accelerate on higher insurance premiums. Drewry said daily operating cost across the 46 different ship types and sizes covered in the report rose 1.1 per cent in 2018, succeeding the previous year’s rise of 0.7 per cent. This followed a period in which operating cost (opex) spending contracted over two consecutive years by almost nine per cent in 2015-2016.
This is in consonance with a recent survey by Moore Stephens, which estimated that total vessel operating costs in the shipping industry are would rise by 2.7 per cent in 2018 and by 3.1 per cent in 2019.
The latest assessments include vessels in the container, chemical, dry bulk, oil tanker, LNG, LPG, general cargo, RoRo and reefer sectors, as well as the recently introduced car carriers segment. Year 2018 represents the first time in seven years that all vessel sectors recorded rising average operating costs.
Drewry expects the pressure on costs to continue with believe that continued overcapacity in certain sectors and an uncertain trade outlook “will still make market conditions challenging for most shipowners over the coming years.”However, Moore Stephens noted that drydocking is the cost category likely to increase most significantly in both 2018 and 2019, by 2.1 per cent, and 2.3 per cent respectively, while expenditure on repairs and maintenance is to rise by 2.0 per cent in 2018, and by 2.3 per cent in 2019.
The survey also revealed that the outlay on crew wages is expected to increase by 1.3 per cent in 2018, and by 1.9 per cent in 2019, with other crew costs thought likely to go up by 1.5 per cent in 2018 and by 1.8 per cent in 2019.
Moore Stephens added that the predicted overall cost increases were once again highest in the offshore sector, where they averaged 4.1 per cent and 4.2 per cent respectively for 2018 and 2019.
By way of contrast, predicted cost increases in the bulk carrier sector were 1.8 per cent and 2.6 per cent for the corresponding years. Operating costs for tankers are expected to rise by 2.4 per cent in 2018, and by 2.9 per cent next year, while the corresponding figures for container ships are 4.2 per cent and 3.8 per cent.
Overall, the cost of new regulation was identified as the most influential factor likely to affect operating costs over the next 12 months at 23 per cent, up from equal third place at 15 per cent last year. About 18 per cent of respondents identified finance costs in second place, down from 20 per cent and first place last year. Competition ranked in third place at 15 per cent as it had last year. Meanwhile crew supply fell to 12 per cent compared to 19 per cent and second place in last year’s survey.