Vessel Operating Costs Expected to Rise Significantly

The latest study by Moore Stephens, international accountant and shipping consultant, reveals that vessel operating costs will likely rise by nearly three percent in both 2014 and 2015.

This new survey is based on responses from individuals in the international shipping industry – primarily managers and owners in Europe and Asia.

The responses revealed that the primary sources of the increase in costs are crew wages and repairs and maintenance. For example, crew wages are estimated to increase by 2.5 percent in 2014 and 2.6 percent in 2015. Repair and maintenance costs would likely climb by 2.3 percent in 2014 and 2.4 percent in 2015.

Other factors include:

According to Moore Stephens, management fees will likely increase the least – just 1.2 percent in 2014 and 1.5 percent in 2015.

Said one respondent to the survey, “Crew costs remain a critical factor. There will continue to be a high level of demand for trained crew, especially for top-end ships.”

Another responded that “[t]here will be further rises in crew costs, especially for officers and engineers, with a shortage of the latter in all sectors of the shipping industry.

According to Richard Greiner, shipping partner, “The predicted increases in ship operating costs for this year and next follow the findings in our recent OpCost report that ship operating costs fell by an average of 0.3 per cent across all the main ship types in 2013. But the level of increases anticipated for 2014 and 2015 are, at just under 3 per cent, still way below many of those we have seen in recent years.”

Greiner went on to express that, “[s]ensible owners with adequate funding are planning for the future by investing in eco-friendly ships and by weighing up the advantages of LNG propulsion. Such initiatives will bring long-term benefits but are likely to increase costs in the short term because new technology and associated research and development costs do not come cheap. On the plus side, oil and gas prices are falling, which should translate into savings for owners and operators, and shipping continues to attract new money from both internal and external investors.

“The projected increases in vessel operating costs for the next two years will be difficult for owners, operators and managers to absorb. History shows, however, that good husbandry, sound business planning, experience, patience and the right amount of entrepreneurialism are likely to carry the day.”

To view the full survey, go to this link to subscribe or purchase.