Global shipping operating costs will rise over the next two years

2015-11-09 09:00

A recent survey by Moore Stephens, an international accounting and shipping consultancy, indicates that global ship operating costs will rise in both 2015 and 2016, with the most significant increases likely in crew wages, repairs and maintenance, and dry-docking.

The survey reportedly targeted businesses in the international shipping industry, primarily shipowners and ship management companies in Europe and Asia. The results show that ship operating costs will increase by 2.8% in 2015 and 3.1% in 2016.

Specifically, crew wages are projected to rise by 2.4% in 2015 and 2.3% in 2016. Other crew-related costs will increase by 2% in 2015 and 1.9% in 2016.

Repair and maintenance costs will increase by 2.3% in 2015 and 2.4% in 2016; dry-docking expenses will rise by 2.6% in 2015 and 2.3% in 2016.

Hull and machinery insurance costs will increase by 1.8% in 2015 and 1.9% in 2016; P&I insurance will rise by 1.7% in 2015 and 1.8% in 2016.

Ship spare parts expenses are expected to increase by 2.3% in 2015 and 2.2% in 2016; related storage costs will rise by 1.8% in 2015 and 1.9% in 2016; lubricant expenditure will increase by 1.1% in 2015 and 1.7% in 2016; and ship management fees will increase by 1.7% in both 2015 and 2016.

The offshore sector is projected to experience the highest overall cost increase in 2015, at 3.4%, compared to the average overall cost increase of 2.8% among survey participants.

In 2016, the tanker sector is expected to see the highest overall cost increase, at 3.4%, compared to the average cost increase of 3.1% among survey participants; the container ship sector will also see an increase close to 3.3%.

The survey also indicates that the implementation of new regulations, low crew competition, high bargaining power of oil giants, port maintenance and repairs, increasing complexity of marine machinery, and increased ship and equipment services, could all contribute to increased operating costs.

Another point worth highlighting is the high cost of financing new fleets. When Moore Stephens asked respondents to identify the three most influential factors affecting ship operating costs in the coming year, financing costs and competitiveness were ranked as the most significant factors, each accounting for 22% of respondents; crew supply was ranked third, accounting for 17% of respondents. Other factors included demand trends, labor costs, and raw materials.

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