The cost of operating cargo ships rose marginally in 2017 following two consecutive years of falls, but shipowners should prepare for higher costs led by a spike in insurance premiums, shipping consultancy Drewry said.
After two years of marked decline, average vessel operating costs stabilised in 2017 as pressure on owners was lifted by a nascent recovery across most cargo shipping markets.
The average daily operating cost across the 44 different ship types and sizes covered in Drewry’s Ship Operating Costs Annual Review and Forecast 2017/18 report rose 0.9% in 2017, following a 7.5% fall over the previous two years. Costs rose for most cargo sectors, with the exception of container shipping which achieved a third consecutive year of cost reductions.
“However, there are limits to how long cost cutting can be sustained,” Martin Dixon, Drewry’s director of research products, said.
Looking ahead, pressure to restrain costs will continue as many sectors remain overtonnaged and any recovery will rely on fragile fundamentals. Drewry said it expects costs under the immediate control of owners, such as manning, spares, repairs & maintenance and management & administration, to be tightly managed.
Large losses being booked by reinsurers for a series of natural disasters this year “will have the effect of driving up hull & machinery as well as P&I premiums in future years,” Dixon added.
“However, given the more benign outlook for the remaining cost heads, overall ship operating cost inflation is expected to remain moderate over the next few years,” according to Drewry.