Ship Operating Costs Decline for Sixth Successive Year

International accountant and shipping consultant, Moore Stephens, has said that total annual operating costs in the shipping industry fell by 1.3 percent in 2017.

This compares with the 1.1 percent average fall in costs recorded for 2016. For the third successive year, all categories of expenditure in 2017 were down on those for the previous 12-month period, most notably for insurance costs and stores.

Operating costs for the tanker, bulker and container ship sectors were all down in 2017. On a year-on-year basis, the tanker index was down by three points, or 1.7 percent, while the bulker index also fell by three points, or 1.9 percent, with the decline in both indices repeating that seen in the previous year. The container ship index, meanwhile, was down by two points, or 1.3 percent, compared to the fall in the previous year of one point, or 0.6 percent.

There was an 0.1 percent overall average fall in 2017 crew costs, compared to the 2016 figure, which itself was 0.4 percent down on the previous year. By way of comparison, the 2008 report revealed a 21 percent increase in this category. Tankers overall experienced a fall in crew costs of 0.5 percent on average, compared to the 1.8 percent fall recorded in 2016. The most significant reduction in tanker crew costs was the 1.7 percent recorded by Aframax Tankers.

For bulkers, the overall average fall in crew costs in 2017 was 0.6 percent, the same as the figure recorded for the previous year. Panamax Bulkers and Handysize Bulkers each reported increases in crew costs, of 0.5 percent and 0.4 percent respectively, while for Capesize Bulkers and Handymax Bulkers there were reductions in spending compared to 2016 of 0.8 percent and 0.6 percent respectively.

There was no overall increase in expenditure on crew costs in the container ship sector in 2017, this compared to the 1.1 percent fall recorded for 2016.

Expenditure on stores was down by 3.5 percent overall, compared to the fall of 2.9 percent in 2016. All vessels in all categories recorded a fall in such costs for 2017. In the tanker sector, the most significant fall in such costs was the 5.5 percent posted by VLCCs. Handymax Bulkers led the way in the bulker sector with a 5.2 percent reduction in stores expenditure, while in the container ship sector vessels of between 6,000 and 10,000 teu spent 5.8 percent less on stores than they did in 2016.

There was an overall fall in repairs and maintenance costs of 1.7 percent, compared to the reduction of 0.8 percent in 2016. The only vessels to record increases in such costs were Capesize Bulkers and Panamax Bulkers (2.4 percent and 1.4 percent respectively), Tankers 5,000 to 10,000 dwt (2.6 percent), and container ships of between 1,000 and 2,000 teu (2.7 percent). The biggest fall in such costs was the 4.9% recorded by Chemical Tankers 40,000 to 50,000 dwt, followed by VLCCs (4.8 percent), and Handy size Product Tankers (4.5 percent).

The overall drop in costs of 4.1 percent recorded for insurance compares to the 3.0 percent fall recorded for 2016.