Vessel operating costs in the shipping industry are expected to increase by 2.7% in 2018 and by 3.1% in 2019, according to Moore Stephens’s latest survey, ‘Future Operating Costs Survey’.
Drydocking is the cost category likely to increase most significantly in both 2018 and 2019, followed by repairs and maintenance. Specifically, the cost of drydocking is expected to rise by 2.1% in 2018 and by 2.3% in 2019, while expenditure on repairs and maintenance is predicted to increase by 2.0% in 2018 and by 2.3% in 2019.
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Expenditure for lubricants will also increase by 1.9% in 2018 and 2.1% in 2019, while increases in spares will be at 1.9% and 2.2% in the two years under review, and for stores are 1.6% and 1.9% respectively.
In addition, the survey showed that the outlay on crew wages will increase by 1.3% in 2018 and by 1.9% in 2019, with other crew costs likely to go up by 1.5% in 2018 and by 1.8% in 2019.
What is more,hull and machinery insurance cost will go up by 1.3% and 1.6% in 2018 and 2019 respectively, while for protection and indemnity insurance the increases are expected at 1.2% and 1.4% respectively. In the meantime, management fees will probably increase by 1.0% in 2018, and by 1.2% in 2019.
The overall cost increases were the highest in the offshore sector again, averaging 4.1% and 4.2% respectively for 2018 and 2019. On the other hand, cost increases in the bulk carrier sector were 1.8% and 2.6% for the corresponding years.
Additionally, operating costs for tankers are expected to increase by 2.4% in 2018, and by 2.9% the following year, while the respective figures for container ships are 4.2% and 3.8%.
As for the reasons that will lead to the higher costs, respondents focused on many areas of concern, with regulation being high on the list, with one respondent noting.
Furthermore, fuel costs were also another major cause, as they are expected to rise over the next two years, especially ahead of the 2020 sulphur cap.
Respondents were also concerned about environmental issues, trade wars, the cost of securing finance, and the global economic recession, all of which are thought to be able to increase operating costs.
However, the cost of new regulation is believed to be the most influential factor affecting operating costs over the next 12 months, at 23%, up from equal third place at 15% last year. 18% of respondents placed finance costs in second place, down from 20% and first place last year, while competition ranked in third place at 15% as it had last year. Finally, crew supply reduced to 12% compared to 19% and second place in last year’s survey.
Richard Greiner, Partner, Shipping and Transport, stated:
The predicted 2.7% and 3.1% increases in operating costs for 2018 and 2019 respectively compare to an average fall in actual operating costs in 2017 of 1.3% across all main ship types recorded in the recent OpCost study.
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