Wed 22 Jul 2009
Ship Operating Costs Annual Review and Forecast
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Every year Drewry presents analyses of operating costs. We now have data for 9 different ship types/sizes covering the period 2000 to 2008, plus five year projections. The picture we can give is accurate, independent and covers all major shipping sectors – sector by ship type by size and ship type by size and age.
Recession – just a brief amnesty on rising costs
What a difference a year can make. Drewry’s 2008 Report warned of increasing operating costs but also the uncertainty to come. Cash rich ship owners may have put aside funds for a rainy day but some commentators doubt this. Deepening recession may have curbed cost increases but for how long. This 2009/2010 Report provides analysis of the figures and interpretation of what they mean.
Key questions:
* R&M – what is the best strategy? Spend, scrap or mend and make do?
* Insurance – there is pressure on premiums yet asset values are falling. Plus the fear of rising fraudulent claims is worrying marine insurers.
* Officer and skilled crew shortage – a feature of recent years but what is the current situation and how will it play out in the medium term?
* With ship owners having to tighten their belts what are the dangers of false economies with both stores and supplies?
* Managements that have grown up with demand excess are suddenly having to cope with a completely new set of business dynamics. How will they cope?
Manning
In the short term, manning costs should remain stable with wage costs static. There have been a number of warm lay-ups where crews have been retained. The increase in the overall number of vessels should means wages will at least be stable rather than decline and demand for seafarers stays ahead of supply. But the first signs of recovery will bring modest increases. Costs are predicted to be back on an upward trend by… read the Report to find out.
Insurance
The picture for marine insurance is hard to predict. Hull rates have risen but declared asset values have gone down alongside a strong P&I hike. Whereas insurers would like to raise premiums, owners will resist although Drewry predicts the insurers will have the upper hand in 2010. Two critical factors will make the owner’s position worse… find out more in the Report.
Repairs and maintenance
In the short term, R&M bills should reduce. Steel costs have dropped enabling repairers to be competitive on prices whilst retaining margins. Yet, cash-strapped owners are going to be very selective about the repairs and maintenance that is carried out. But, other factors could spoil the R&M party for owners…
Stores and supplies
Pursuing the cheapest options – tempting though they may appear to be - are likely to lead to false economies. The biggest element is lubes and so the cost of these will reflect the varying price of oil. Barring unforeseen substantial oil price hikes, the stores and supplies budget should stabilise and perhaps even become deflationary. The Report has the full analysis…
Management
Management’s current occupation should be the evaluation and containment of risk. Chief amongst risk factors are counterparty risk and the negotiation of credit. Cost reductions may be the order of the day but these need to be assessed and monitored carefully so the effect on crew, vessel and environment, not to mention customer service, is not detrimental. Drewry’s Report forecasts when costs may rise again with commentary on other factors that management needs to factor in…
Keeping the lid on operating costs
A year ago, ship owners were both asset and cash rich. With rates on the floor the change-about has been severe; cash management is the new mantra and the need to minimise operating costs has never been more crucial… a whole new ball game for many managers.
Operating Cost Data sheets for all major vessel types:
* Tankers
* Chemicals
* LPG
* LNG
* Dry Bulk
* Container
* General Cargo
* Reefer
* Ro-Ro
Drewry’s latest Annual Report offers an independent assessment of headline costs with five-year projections. Including:
* Manning and crewing
* Insurance – H&M, P&I and others
* Repairs and maintenance, including dry docking provisions
* Stores, spares and supplies
* Management and administration
For more information kindly visit
http://www.bharatbook.com/Market-Research-Reports/Ship-Operating-Costs-Annual-Review-and-Forecast-.html