Moore Stephens: Operating Costs Drop for Fifth Successive Year

Total operating costs for the tanker, bulker and container ship sectors were all down in 2016, shipping adviser Moore Stephens said in its ship operating costs benchmarking tool OpCost 2017.

On a year-on-year basis, the tanker index was down by 3 points, or 1.7%, while the bulker index also fell by 3 points, or 1.9%. The container ship index, meanwhile, was down by 1 point, or 0.6%. The corresponding figures in last year’s OpCost study showed falls of 6 points in both the bulker and container ship index, and of 4 points in the tanker index.

There was a 0.4% overall average fall in 2016 crew costs, compared to the 2015 figure, which itself was 1.2% down on 2015. By way of comparison, the 2008 report revealed a 21% increase in this category.

Tankers overall experienced a fall in crew costs of 1.8% on average, compared to the 1.3% fall recorded in 2015. For bulkers, the overall average fall in crew costs in 2016 was 0.6%, compared to 1.1% recorded 12 months ago.

Expenditure on crew costs in the container ship sector, meanwhile, was up by 1.1% compared to the fall of 3.3% recorded for 2015.

“This is the fifth successive year-on-year reduction in overall ship operating costs, although the reduction this time is less than half the figure recorded 12 months ago for 2015,” Richard Greiner, Shipping & Transport Partner, said.

“The biggest cost reductions were those in the Insurance category,” Greiner said, adding that the fact that such costs continue to fall may be due in part to a reduction in the incidence of major casualties.

“Most of the larger reductions in insurance costs tracked by OpCost, however, were recorded by bulk carriers, which are no strangers to the pages of the casualty reports. So cheaper insurance must also say much about the fierce competition for business which exists throughout marine underwriting markets worldwide.”

Although 2016 was another difficult period for shipping, the year closed on a note of rising confidence, according to the Moore Stephens Shipping Confidence Survey. Owners and charterers were more confident, than for some time previously, of making new investments, and there were improved expectations of higher freight rates in all three main tonnage categories.

That increased confidence, which has carried over into 2017, “should logically lead to greater activity, which will mean higher operating costs.”

At present, however, owners and operators are not earning what they should be, or would like to be, from most of the markets in which they operate.

“Shipping can certainly find encouragement in a fifth successive annual fall in operating costs. But nothing is for ever, and nothing is more certain than that the shipping industry will continue to be characterised by uncertainty, which can be both its strength and its weakness.”

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