Operating costs fall for a third year in a row

 Total annual operating costs in the shipping industry fell by an average of 0.8 per cent in 2014, according to Moore Stephens’ OpCost 2015.  This compares with the 0.3 per cent average fall in costs recorded for 2013.

All categories of expenditure in 2014 were down on those for the previous 12-month period.
Total operating costs for the tanker, bulker and container ship sectors were all down in 2014, the financial year covered by the study.

On a year-on-year basis, the tanker index was down by 2 points, or 1.1 per cent, while the bulker index fell by one point, or 0.6 per cent.

The container ship index, meanwhile, was down by 2 points, or 1.2 per cent. The corresponding figures in last year’s OpCost study showed a rise of 2 points in the tanker index, and falls of 2 points in the bulker and container ship indices.
There was an 0.1 per cent overall average fall in 2014 crew costs, compared to the 2013 figure.
Tankers overall experienced a fall in crew costs of 0.4 per cent on average, compared to the 1.8 per cent increase recorded in 2013. For bulkers, and for container ships, crew costs were unchanged from 2013.
Expenditure on stores was down by 2.4 per cent overall, compared to the fall of 1.9 per cent in 2013, while there was an overall fall in repair and maintenance costs of 0.6 per cent, compared to the 0.4 per cent reduction recorded for 2013.
 Insurance costs went down by 0.4 per cent compared to the 0.3 per cent fall recorded for 2013.
A third successive annual fall in operating costs must be good news for an industry already facing serious financial issues and preparing to meet still more.

The challenge for shipping is how to build the cost of operation into freight rates in a way which allows for a reasonable profit margin in an industry which is driven by competition and characterised by over-tonnaging.

Two things are certain. Firstly, the business of operating ships will remain a costly undertaking. Secondly, the impetus for higher freight rates will not come from the shipping industry’s customers.
Credit: Baird Maritime