Vessel operating costs are expected to rise by 3.8 percent in 2011 and by 3.7 percent in 2012, with lube expenditure and crew costs identified as the categories most likely to produce the highest levels of increase, according to a new survey by consultants Moore Stephens.
The survey is based on responses from key players in the international shipping industry, predominantly ship-owners and managers in Europe and Asia. Those responses identified lubricants as the cost category likely to increase most significantly over the two-year period – by 3.6 percent in 2011, and by 3.1 percent in 2012. Crew wages are expected to increase by 3.1 percent in both 2011 and 2012, while the cost of spares is expected to escalate by 2.7 percent and 2.6 percent, respectively, in the two years covered by the survey.
Expenditure on stores is expected to increase by 2.5 percent in each of the two years. The cost of repairs and maintenance is expected to increase by 2.8 percent and 2.6 percent in 2011 and 2012 respectively, while the increase in P&I costs for those two years was estimated by respondents at 2.4 percent and 2.3 percent respectively. As was the case in the previous survey, in 2010, management fees was identified as the category likely to produce the lowest level of increase in both 2011 and 2012, at 1.8 percent and 2.0 percent respectively.
A number of respondents expressed concern about overtonnaging and the weakness of rates in the freight and charter markets, "Overcapacity and newbuilding deliveries involving larger tonnage on the main routes will maintain downward pressure on rates," said one. Another maintained that there was "no sign of resolving the overtonnaging problems in the dry bulk sector", arguing that this, together with unpredictable trade volumes, would lead to pressure for cost increases and for reflagging as a means of driving operating costs down. Another respondent pointed out, "Depressed charter rates will lead owners to seek in vain to minimise operating costs."
Predictably, worldwide economic and political problems were uppermost in the thoughts of some respondents, with one commenting, "World financial conditions will depress shipping revenues, and this will impact on ship requirements and charter rates." Another respondent felt, "China's effective control of the market, together with inflation, will make shipping markets difficult for most people involved in the business."
Moore Stephens also asked respondents to identify the three factors that were most likely to influence the level of vessel operating costs over the next 12 months. Overall, 26 percent of respondents identified finance costs as the most significant factor, followed closely by crew supply (25 percent). Demand trends were in third place, with 14 percent. In last year's survey, 30 percent of respondents identified crew supply as the most significant factor, followed by finance costs, at 28 percent, and demand trends at 16 percent. Labour costs, competition and raw materials costs were other significant influencing factors which featured in the responses to the survey.
