The operating cost of cargo ships has decreased for two years in a row, but it is set to increase as from 2017 pursuant to the last annual report on 2016/17 operating costs and forecasts, published by global shipping consultancy Drewry.
According to the report, 2016 was a very tough year for the majority of shipowners and operators. Weak freight rates, deterioration in the values of assets, erosion of profitability and low cash balances have forced shipowners to reduce costs whenever possible, including the vessels’ operating expenses.
Drewry’s assessment of 2016 operating costs for 44 types and sizes of vessels shows that the shipowners reduced costs for the second year in a row. The average decrease in the total operating costs of vessels among the different categories covered was 4.4%. This after a 1.5% fall, in 2015.
“The reach of new significant reductions of costs is limited. It is our opinion that the costs will increase in 2017 and afterwards, but maybe at levels lower than estimated”, comments the report editor, Nikhil Jain. The consultancy anticipates moderate increases in the crew costs as a consequence of the international wage agreements. The insurers’ excessive capacity and the competition among the insurance providers will help to compensate the impact of the increase in the assets’ values in the market of hull and machine insurances.
“Notwithstanding the relative youth of the world fleet, the disbursements with hull and machine insurances are expected to increase. The recent legislation concerning the modernization of the ballast water management systems will lead to a raise in the expenses; therefore, it is safe to assume that the expenses with repairs and maintenance will increase at rates higher than the inflation rate”, Jain adds.