Owners' costs mounting

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

28 Sep 2007

Shipping may be enjoying one of its most buoyant periods in recent memory, but London-based shipping accountant Moore Stephens warns shipowners to keep an eye on operating costs. The firm's ship operating cost benchmark, OpCost 2007, reveals that all vessel categories covered by the report experienced an annual average increase of 8.5 per cent in total operating costs in 2006, the financial year covered by the survey, and that, generally, the increases were more marked than in the previous year. The OpCost bulker index increased by thirteen index points (10.7 per cent) on a year-on-year basis, with handymax bulkers recording the biggest increase (14.8 per cent) in 2006. The tanker index, meanwhile, experienced an index rise of twelve points (9.1 per cent).For the first time this year, OpCost includes a container ship index. This, using 2002 as its base year, showed a rise of thirteen index points (10.8 per cent) in operating costs in 2006.While expenditure on repairs and maintenance was up by an average of 9.7 per cent across all vessel categories, the biggest percentage increase – a hefty twenty per cent - was recorded in respect of stores. Moore Stephens partner Richard Greiner says, “So far as repairs and maintenance is concerned, there were significant variations in the cost movements experienced within individual vessel categories. These ranged from the 19.6 per cent recorded for handymax bulkers to the 6.0 per cent for reefers. In the container ship category, the increase was just over ten per cent.He adds: “It is perhaps not surprising that the biggest increase in all but one vessel category was recorded in respect of stores. A significant part of this will doubtless be attributable to increased costs and supply shortages in the lube oil markets, which are themselves attributable to underlying increases in the price of oil and other base materials. Although these increases first hit the shipping market some eighteen months ago, it seems likely that their effect on operating costs – offset in some cases by price advantages built into term contracts with suppliers - has taken a little while to filter through.”Elsewhere, insurance and crew costs were down on the double-digit increases recorded in both categories in OpCost 2006, but still showed percentage rises of 7.9 and 7.6 respectively. Once again, there were wide variations between different vessel types in both categories.