International accountant and shipping consultant Moore
Stephens reports an average fall of 2% in total annual
operating costs in OpCost 2010, its unique ship operating
costs benchmarking tool. This is the first time since 2002 that
OpCost has revealed a fall in total operating costs, which
compares with the 15.8% average increase recorded in
OpCost 2009. All cost categories were down this time,
except for crew costs, which in recent years have been the
single largest contributor to total increases.
OpCost 2010 reveals that the majority of vessel categories
experienced a decrease in total operating costs in 2009, the
financial year covered by the survey. Costs for the main
vessel types in the three sectors covered — bulkers, tankers
and container ships — were down. The bulker index
decreased by 4 index points (or 2.3%) on a year-on-year basis,
while the tanker index witnessed a bigger decrease this year
of 5 index points (2.7%). The container ship index (with a
2002 base year) experienced the biggest decrease of 13 index
points (7.5%), having recorded the smallest increase amongst
the three sectors the year before.
The increases in crew costs in 2009 were at their most
moderate levels for a number of years. Costs in this category
were up overall by 2.2%, compared to the 21% recorded for
the previous year. All tankers experienced increases in crew
costs of 2.5% on average. For bulkers, meanwhile, crew costs
for smaller tonnage increased by 2.9% on average, but those
for the bigger vessels — Panamax and Capesize — decreased
by an average of 2.0%. The box trades experienced decreases
in crew costs ranging from 1.2% for container ships to 5.2%
and 4.5% for container Feedermaxes and container main
liners respectively.
For repairs and maintenance, there was an overall decrease
across all vessel types. The average decrease of 11.3%, which
was the biggest decrease across all cost categories, was in
stark contrast to the increase of 13.5% for 2008 and of 12.8%
for 2007. There were variations in the cost movements
experienced within vessel categories. In general, bulkers
recorded an overall decrease of 11.1%, while for tankers and
container ships the fall was 12.6% and 15.9% respectively.
Stores experienced the second biggest decrease, of 6.7%,
across all the main tonnage types, and 7.9% across all vessel
categories used to produce the indices. This item includes
lube oils and other stores expenditure.
The insurance category showed an average marginal
decrease of 1.5%, compared to the previous year’s increase of
8.0%. In the cost breakdown, P&I insurance increased by 3.4%
on average, while other marine insurance decreased by 5.2%.
In general, insurance dropped by 3.4% for bulkers, 4.1% for
tankers and 4.9% for container ships.
Moore Stephens partner Richard Greiner says, “These
decreases have long been anticipated and are due mainly to
the marked fall in costs for stores, repairs and maintenance.
The period covered by the report embraces the very peak of
the worldwide economic recession, and the effects of that can
be seen in each of the cost categories.
“Repair and maintenance costs, for example, were down by
more than 11% in 2009, having shown an average increase
over the previous two years of more than 13%. But 2007 and
2008 were comparative years of plenty for shipping, while
2009 saw reduced pressure on labour and material costs at
repair yards due to demand reductions. The rise in P&I costs
was to be expected, given the clubs’ need to recover the
costs of a number of expensive casualties and to meet the
requirements of the regulator in the run-up to Solvency II.
And the fall in the cost of other marine insurance is no
surprise, given that particular sector’s continuing competitive
appetite for business and the decline in vessel values.
“Finally, the rise in crew costs, albeit by only just over onetenth
of the figure for the previous year, shows that, despite
technical innovation, people are still shipping’s most valuable,
and scarcest, asset. Ultimately, costs are a reflection of what
the market will bear. Confirmation of the overall fall in
operating costs, coinciding as it does with evidence to suggest
that confidence in the industry generally is holding up
comparatively well, indicates that shipping is sufficiently robust
to survive even the most severe economic downturn.”