Ship operating costs expected to rise

Richard Greiner: Richard Greiner: "These latest predicted increases, whilst a cause for concern, should not unduly surprise or concern shipping" Photo: Moore Stephens

International accountant and shipping consultant Moore Stephens says that total vessel operating costs in the shipping industry are expected to rise by 2.7% in 2018 and by 3.1% in 2019.

That’s according to responses to the firm’s latest annual Future Operating Costs Survey, which revealed that drydocking is the cost category likely to increase most significantly in both 2018 and 2019, accompanied in the latter case by repairs and maintenance.

Richard Greiner, Moore Stephens partner, Shipping and Transport, said: “Projected increases in operating expenditure are part and parcel of the workings of any industry and must be factored into budget projections.”

“But these latest predicted increases, whilst a cause for concern, should not unduly surprise or concern shipping, an industry which has seen – and in many cases endured – much larger increases during the past decade.”

Costly repairs

The survey revealed that the cost of drydocking is expected to increase by 2.1% in 2018 and by 2.3% in 2019, while expenditure on repairs and maintenance is predicted to rise by 2.0% in 2018 and by 2.3% in 2019.

Meanwhile, the increase in expenditure for lubricants is expected to be 1.9% in 2018 and 2.1% in 2019.

Projected increases in spares are 1.9% and 2.2% in the two years under review, while those for stores are 1.6% and 1.9% respectively. The survey also revealed that the outlay on crew wages is expected to increase by 1.3% in 2018 and by 1.9% in 2019.

Predicted overall cost increases were once again highest in the offshore sector, where they averaged 4.1% and 4.2% respectively for 2018 and 2019.

On a more general level, respondents voiced concerns about environmental issues, trade wars, the cost of securing finance and the global economic recession, all of which were perceived to have the potential to result in increased operating costs.

Overall, the cost of new regulation was identified as the most influential factor likely to affect operating costs over the next 12 months, at 23%, up from equal third place at 15% last year.

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