Survey estimates vessel operating cost to rise by 3.2% in 2014

Based on the responses from key players in the international shipping industry, especially ship owners and managers in Europe and Asia, the operating costs of vessels are likely to rise by over 3.2 percent in 2014, said a new survey conducted by Moore Stephens, an international accountant and shipping consultant, who is also Maritime London member.

The survey revealed that the crew wages and P&I insurance are likely to increase most significantly within the period under review. Crew wages, which grew by 2.4 percent in 2013, are expected to rise by 2.5 percent in 2014, with other crew costs likely to go up by 2.2 percent within the year under review.

The cost of P&I insurance, at 2.4 percent in 2013, will witness 2.5 percent increase in 2014, while the costs of hull and machinery insurance are expected to increase by 2.0 percent and 2.3 percent, respectively. Also, expenditure on spares that is currently at 2.1 percent is likely to increase by 2.3 percent in 2014.

According to stakeholders who responded to the survey, the cost of lubricants is anticipated to grow by 2.2 percent within the period under review, while the cost of stores, repairs and maintenance are expected to increase by 2.0 percent and 2.4 percent, respectively, in 2014. The cost of drydocking the vessel, which stands at 2.1 percent, is to rise by 2.4 percent in the period. Meanwhile, management fees that produced the lowest level of increase of 1.4 percent in 2013 will likely grow by 1.7 percent in 2014.

According to Richard Greiner, Moore Stephens’ shipping partner, the predicted increase in costs for this year and 2014 might come as something of a disappointment.

“In truth, the levels of increase anticipated for 2013 and 2014 are still way below many of those we have seen in recent years. Moreover, they have to be viewed against a number of serious challenges facing the owners and operators of vessels in today shipping industry,” said Greiner.

“Crew costs, as always, emerged as a major concern for respondents, which is no surprise given the potential budgetary implications of the entry into force of Maritime Labour Convention (MLC) 2006 and the increasing involvement of both international and regional bodies in the oversight of crew competence and its effect on safety. Continuing the theme of previous surveys, fuel costs again featured prominently as a cause for concern, as did the cost of having to comply with increased regulation generally in the shipping industry,” he added, further noting that the latter cannot be addressed by the expedient of applying new rules and regulations only to new ships, as suggested by one respondent.

“The regulators want a clean and safe shipping industry, and it is the industry itself, which includes a significant number of older vessels, that will have to underwrite the budget needed to achieve compliance,” he said.