In its latest “Ship Operating Costs Annual Review and Forecast” report, the research company said shipping lines were able to keep increases in operating costs in 2013 quite low, typically ranging between 1 percent and 2.5 percent.
“[The year] 2013 was another difficult year for most ship operators, and with weak freight earnings there was pressure to keep any increase in ship operating costs to a minimum,” the report added.
“Poor freight markets have forced ship operators to keep any increases in ship operating costs to a minimum and our provisional data for 2013 suggests some success in this area,” Nigel Gardiner, managing director, stated.
“But looking ahead and given the expected outlook for the world economy and international shipping markets, we expect to see operating costs rise by 2 percent to 3 percent per annum in the next couple of years.”
New international maritime conventions on safety, manning, and the environment are seen to continue placing upward pressure on cost.
For manning, cost increases are forecast to be much higher than the 1 percent to 2 percent recorded in 2013, as the world comes out of recession and shipping markets improve.
Insurance premiums were kept low last year by weak assets values. But with some markets showing signs of revival in late 2013, and with a general recovery in assets values underway, insurance costs are predicted to rise in 2014.
Expenditure on items such as lubricating oils has been held in check by weak or static commodity prices, but if the world economy picks up in 2014 and commodity prices rise, expect costs in this sector to rise as well.
New regulations and catching up in repairs due after four years of weak freight markets will see carriers’ repair and maintenance expenditures rising by some 2.5 percent to 3 percent per annum over the next couple of years.
Meanwhile, increases in management and administration expenditures were typically less than 1 percent in 2013, and Drewry expects that “operators will do their best to keep increases to a similar figure in the short term.”
Photo: Official U.S. Navy Imagery