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Vessel Operating Costs Expected to Rise

Vessel Operating Costs Expected to RiseVessel Operating Costs Expected to Rise

Vessel operating costs are expected to rise by almost three percent in both 2014 and 2015, the latest survey by international accountant and shipping consultant Moore Stephens reveals.

He said that owners with adequate funding are planning for the future by investing in eco-friendly ships and by weighing up the advantages of LNG propulsion.

The survey is based on responses from key players in the international shipping industry, predominantly shipowners and managers in Europe and Asia, World Maritime News reported.

Those responses revealed that vessel operating costs are expected to increase by 2.9 percent in both 2014 and 2015, with crew wages and repairs & maintenance the cost categories likely to increase most significantly.

Crew wages are expected to increase by 2.4 percent in 2014 and by 2.6 percent in 2015, with other crew costs thought likely to go up by 1.9 percent and 2.1 percent respectively for the years under review. The cost of repairs & maintenance, meanwhile, is expected to escalate by 2.3 percent in 2014 and by 2.4 percent in 2015, according to the survey.

  Rise Across the Board

Insurance costs are expected to go up by 2.0 percent in 2014 and by 2.2 percent in 2015, this compared to the increases of 1.6 and 1.8 percent respectively predicted in respect of the cost of hull & machinery insurance.

Drydocking costs are expected to rise by 2.1 percent in 2014 and by 2.2 percent in 2015, while expenditure on spares is expected to increase by 2.1 percent and by 2.2 percent over the same period.

Meanwhile, respondents anticipate increases of 1.7 percent and 2.0 percent respectively in the cost of lubricants in the two years under review.  The cost of stores is expected to increase by 1.7 percent and 1.9 percent respectively for 2014 and 2015.

Moore Stephens said that, management fees are deemed likely to produce the lowest level of increases in both 2014 and 2015, at 1.2 percent and 1.5 percent respectively.

Owners and operators will look at possibilities to reduce their cost base by looking at alternative ship management options, or whatever else will result in cost reductions, in order to remain competitive. Several respondents, meanwhile, noted that reductions in oil prices were likely to result in reduced operating and voyage expenses, respectively, in terms of lubes and fuel.

Financialtribune.com