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Handysize Bulkers paid considerably less (5.7%) as did Pana- in the container ship sector, where they averaged 3.3% against max Bulkers (5.3%). Product Tankers and Tankers of 5,000 the overall survey increase of 1.9%. By way of contrast, pre- to10,000 dwt were the only vessels in the tanker category to dicted cost increases for 2016 in the offshore sector were just pay more for their insurance in 2015 than in the previous year, 0.2%. Container ships also headed the expected cost increases to the tune of 1.3% and 0.6% respectively. The biggest in- for 2017, at 3.4% compared to the overall survey average of crease in insurance costs, however, was the 2.6% recorded by 2.5%. Tankers featured in second place for both years at 2.5%

LPG carriers in the 10,000 to 40,000 cbm range. for 2016 and 2.9% for 2017.

The biggest cost reductions were predictably those in the Meanwhile, 20% of respondents (compared to 22% in last

Stores and Repairs and Maintenance categories. Falling world year’s survey) identi? ed ? nance costs as the most signi? cant oil prices continued to have a knock-on effect on lube oil costs factor likely to affect operating costs over the next 12 months, in 2015, while increasing numbers of owners were looking to followed by competition at 19% (down from 22% last time), strategic short-term lay-up rather than spending on mainte- and crew supply (18%).

nance and repair.

The fall in crew costs arguably came as more of a surprise Wild Cards & Warning Signs to an industry which has over the years absorbed increases of While the level of predicted increases for this year and next this type in excess of 20%. will undoubtedly be the cause of some concern, it is instruc- tive to note by way of example that the average operating cost

Taking Stock and a Look Ahead increase absorbed by the industry in 2008 was no less than

Last year, operators were not overly optimistic about making 16%. Meanwhile, one year ago, expectations of operating cost new investments in the short-term, while ? nance costs were increases in 2016 were 2.8% on average. predicted to rise. Nobody was expecting good news on dry The fact that repairs and maintenance costs headed the list bulk freight rates, and the outlook for tanker and container ship of predicted cost increases in both 2016 and 2017 may be due earnings was little better. The Baltic Dry Index, meanwhile, to a number of factors, including the need to commit to repairs was getting ready to plumb the depths. It was not an auspicious and maintenance deferred in earlier years, and the opportunity time to be planning new ventures; rather, it was a time for tak- to do so at a time when the alternative could be to struggle to ing stock and for keeping operating costs to a minimum. compete in a dif? cult economic and industry climate.

Shipping can draw comfort from a fourth successive annual fall One highly in? uential factor behind the anticipated rise in in operating costs. But it should remember that costs can move drydocking costs, most notably in 2017, is the entry into force both ways. OpCost records that, at year-end 2001, for example, of the Ballast Water Management Convention in September the average daily operating cost for a Handymax Bulk Carrier 2017, before which date some owners may choose to put their was US$3,578. In 2015, it was US$ 5,604. For a Suezmax Tank- ships into drydock to ready them for the new legislation.

er, the comparable ? gures are US$4,916 and US$9,170. The anticipated rise in crew wages and other crew costs,

Looking further ahead, vessel operating costs are expected to meanwhile, is arguably lower than anticipated, and there was rise by 1.9% in 2016 and by 2.5% in 2017. A Moore Stephens indeed a feeling on the part of some respondents that wages survey of future operating costs has revealed that the cost of could stabilize this year or even go down. repairs and maintenance is expected to increase by 1.7% in Shipping faces a number of potentially costly compliance 2016 and by 1.9% in 2017, while expenditure on spares is pre- responsibilities, including the imposition of a 0.5% global cap dicted to rise by 1.7% in 2016 and by 1.8% in 2017. The cost on sulphur emissions with effect from 2020. Other operating of drydocking expenditure, meanwhile, is predicted to increase issues include predicted increases in the price of fuel, which by 1.5% and 1.8% in 2016 and 2017 respectively. will have a knock-on effect on lube oil costs.

The survey revealed that the outlay on crew wages is expect- Shipping is an industry with a guaranteed future, but just ed to increase by 1.3% in 2016, rising to 1.8% in 2017, with how healthy that future will be depends on its ability to gen- other crew costs thought likely to go up by 1.2% and 1.4% erate sustainable pro? ts after operating costs have been met.

respectively for the years under review. The increase in outlay for lubricants is predicted to be 0.8% and 1.4% in 2016 and

Richard Greiner 2017 respectively, and that for stores 1.3% and 1.7%. Mean- is a Moore Stephens Partner, in their Shipping & while, projected increases in management fees are 1.0% and

Transport group. He Richard has over 30 years expe- 1.2% in the two years under review.

rience in providing assurance and advisory services to the shipping and offshore maritime industries. A

The cost of hull and machinery insurance is predicted to frequent speaker at shipping events, he is a council member of rise by 0.9% and 1.1% in 2016 and 2017 respectively, while the Ports and Terminals Group, Maritime London and a trustee for P&I insurance the projected increases are 1.1% and 1.2%.

of the Maritime London Of? cer Cadet Scholarship.

The predicted overall cost increases for 2016 were highest www.maritimelogisticsprofessional.com 49I 34-49 Q4 MP2016.indd 49 11/9/2016 12:28:03 PM