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Ship Operating Costs Annual Review and Forecast
2011-2012

Market:
Type / Frequency:: Annuals / Single Issue
Current Release:: Jul 2011

Shipping between a rock and a hard place

Recovery across the major economies seems to have stalled over the last few months and so shipping markets are not doing well. So it hardly helps that operating costs remain under pressure as commodity prices - oil, steel, chemicals, even food - have been on the rise.

Once again, Drewry's latest Annual Report into Ship Operating Costs provides in-depth assessments of costs across the major cost headings. The Report contains vital trend data and analyses.

Key cost heads covered:

• Manning

• Insurance

• Repairs and Maintenance

• Stores and Lubes

• Drydocking

• Administration

PLUS FREE GUIDE

All the background information on each cost head removed from the main Report has been placed in a separate document entitled Components of Operating Costs Explained. Particularly useful for non-specialists.

Drewry's Annual Report on Ship Operating Costs is a comprehensive shipping intelligence resource and keeps you up to date with changing cost dynamics.

Key issues for owners and managers

2011-2012 - cost heads in summary:

Manning - flat markets have helped to close the gap significantly between supply and demand for experienced seafarers. Newbuilds due to come on stream over the next few years may well upset the supply/demand balance. However, for 2011, wage increases have been minimal but the rise in commodity prices has meant higher costs for crew travel and victualing.

With the next STWC round as well as ILO MLC regulations cutting in next year, owners and managers will come under wage and staff cost pressure - particularly in the areas of training and victualing.

Insurance - not much change in the insurance sector over the last 12 months. For H&M, vessel values have become more stable so premiums have roughly stayed put although predicted to rise soon.

P&I surcharges have fallen to an average 3.5%. The relative buoyancy in stock markets had a positive effect on P&I rates. The exception is the offshore sector which has seen P&I rate rises of 40%. Deepwater Horizon has been the main cause and the problems this year in Japan will no doubt feed into next year's reporting. Excess loss reinsurance rates, on the other hand, were reduced for all vessel categories. In addition, operating budgets depending on vessel trading areas may now need to accommodate Kidnap & Ransom cover.

Repair, Maintenance and Dry-Docking - rising commodity prices have had a significant impact on R&M budgets. Steel has affected repair costs while oil has meant more expensive lubes.

For yard owners and ship managers, we have included data showing the percentage number of vessels due for dry-docking.

Stores and lubes - once again there is a concern that lube prices could become disconnected from oil prices and so a significant increase in lube prices could be on its way. Those owners and managers that had pinned down lube prices with forward contracts may find those agreements run out this year and so the cost benefit will likely disappear.

Management and Administration - regulatory issues dominate with SOLAS Chapter V making ECDIS systems obligatory. BNWAS systems must also now be fitted to all new vessels and others in time. Tighter sulphur emission controls also came into effect in 2010. Safety, emissions and manning regulations are all set to become tighter and so increase costs.

The data presents detailed operating cost budgets by shipping sector.

All relevant metrics in one place. Operating costs with examples of vessel budgets from 2009 - 2011 as well as docking budget costs for:

Oil Tankers - ship types covered: MR1, LR1, LR2, Aframax, Suezmax, VLCC and ULCC vessels.

Chemical Tankers - ship types covered: 5-6,000 dwt, 8-9,000 dwt, 10-12,000 dwt, 18-20,000 dwt, 22-24,000 dwt, 35-37,000 dwt and 40-45,000 dwt.

Gas Carriers - LPG and LNG sector. Ship types covered: LPG vessels of 3-5,000 cbm, 6-8,000 cbm, 12-15,000 cbm, 30-35,000 cbm, 50-55,000 cbm, 75-80,000 cbm and a 140-150,000 cbm LNG carrier.

Dry Bulk - ship types covered: Handysize, Handymax, Supramax, Panamax, Post Panamax, Capesize, and VLOC.

Container - ship types covered: 500-750 teu 1-2,000 teu, 2-3,000 teu, 3-4,000 teu, 5-6,000 teu, 8-9,000 teu, and 10-12,000 teu.

General Cargo, Reefer and Ro-Ro - plus a 2010 manning budget. Ship types covered: General Cargo: 5-10,000 dwt, 15-20,000 dwt, Reefer 550,000 cft and Ro- Ro 10,000 dwt.

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Drewry Publication - Ship Operating Costs Annual Review and Forecast <br/>2011-2012

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