Marlink remains largest retail VSAT service provider in... More ballast water deadlines add to bottleneck. The cost of operating effectively and profitably in the modern shipping industry must be met chiefly by revenues generated from day-to-day operations. It is essential to have a good maintenance plan that includes not only preventive maintenance but also dry docking. The movement in others still, such as the cost of regulation, is becoming easier to predict as implementation deadlines draw ever closer. Regulations are expected to increase future costs “Shipping faces some major challenges over the next two years as it seeks to position itself as an environmentally-aware, technically-savvy industry. Underlying vessel operating cost inflation accelerated moderately in 2019 on higher repair & maintenance and insurance spend, while costs are expected to continue rising at a similar pace in 2020, according to Drewry’s latest Ship Operating Costs Annual. These inspections or maintenance are made easier with software that ensures safe, efficient management techniques for reliable and cost-effective solutions. The costs are related to various factors like the crew costs, marine insurance, P&I, stores, spares, lubrication oil costs, repair and maintenance that includes unscheduled repairs, vessel age, lack of qualified technicians. By categorizing the costs and understanding the drivers behind each category, we identify the innovative solutions for optimizing vessels operating expenses. Another respondent observed that rising wage costs now represent a real threat to business models, while another anticipates a stronger dollar in 2019/2020, which will affect the main cost of paying seafarer wages. The vessel operating expense for … ... Operating costs for container ships, meanwhile, are expected to rise by 3.0% in 2020, and for bulk carriers and tankers by 2.7% and 2.1% respectively. The three main components in vessel operating costs or OPEX are cost optimization, cost estimation, and cost control. Vessel operating costs have risen at their fastest pace in over a decade this year, on higher insurance cover premiums and COVID-19 related expenses, UK-based shipping consultancy Drewry said. Yet, they are expected to moderate in subsequent years as pandemic related spend unwinds, reports Drewry. For an inside look into the costs associated with running a cargo ship, marine engineer Aaron Wens of Virginia Beach, Virginia provides his insight below. A graphic distribution of the costs included in vessel operation is given to the right. We also provide expert advice on the OPEX estimation for various types of assets, to financial institutions and investors, and benchmarking exercises for various costs categories. Meanwhile, projected increases in lubricants are 1.6% in each of the two years under review, while those for stores ae 1.3% and 1.4% respectively. Comments. “There were some interesting predicted cost increases in the individual market sectors. Print; Share; WILSON ASA | Bradbenken 1, P.O. It must expect fluctuations in the level of operating costs caused by a variety of factors ranging from movements in oil prices to shifts in levels of manpower, from fluctuations in the value of the dollar to the ramifications of geopolitical developments around the world. In the case of protection and indemnity insurance, the predicted increase is 2.0% for each of the years under review, while hull and machinery insurance costs are expected to rise by 1.9% in both 2019 and 2020. Drewry estimated that average daily operating costs averaged out across the 47 different ship types and sizes covered in the report had risen by 4.5% this year. All Ship Owners, Managers, and their departments are being mindful of costs in these challenging times. Vessel operating costs are expected to increase in both 2017 and 2018, according to the latest survey by international account and shipping consultant Moore Stephens. Responses to the firm’s latest annual Future Operating Costs Survey revealed that insurance is the cost category likely to increase most significantly in both 2019 and 2020. Raw material costs, meanwhile, were up by one percentage point to 8%. The highest vessel operating expenses per DWT are incurred by Frontline (FRO) and Tsakos Energy Navigation (TNP), at $7 per DWT. Without these, seafarers will look elsewhere. Norsepower announces first newbuilding contract for rot... Inchcape Shipping Service’s work to get crews hom... Aronnax Podcast: The rebirth of seamanship and working... Aronnax Podcast: Talking dirty – stop the greenwa... Aronnax Podcast: The rebirth of seamanship and working with fatigue, EBRD backs sustainable blue economy finance principles for oceans, Aronnax Podcast: Talking dirty – stop the greenwashing, ICS decarbonisation fund proposal gets through first MEPC hurdle. And, perhaps most significantly of all, insurance outgoings are predicted to rise over the next two years at a rate not seen for some time. Repairs and maintenance and spares are the cost categories which are likely to increase most significantly in each of the two years. Operating expenses declined by a … The predicted overall cost increases for 2019 were highest in the container ship sector, where they averaged 3.7%. A cleaner, greener and more efficient shipping industry will ultimately impact favourably on both operating costs and investor appetite. This compared to underlying increases of 2% in 2018 and 2.5% in 2019. They added: “The market is being eroded by capital providers and hedge fund managers who shun efficiency in favour of scale.”. Successful companies are adopting ways to make smarter decisions to increase efficiency and reduce costs. “This is not surprising, given that the immediacy of IMO‘s Sulphur 2020 regulation is enshrined in the name of the regulation itself, while the time is fast approaching for owners to make a decision on the respective merits of Ballast Water Management Convention compliance solutions. Who are the stakeholders involved in vessel maintenance? Other crew costs are expected to increase by 1.8% and 1.7% respectively. Vessel operating costs are the expenses for running ships or other assets. International accountant and shipping adviser BDO says total operating costs in the shipping industry are expected to rise by 2.5% in 2019 and by 2.7% in 2020. The increase in expenditure for spares is expected to be 1.6% in 2019 and 1.8% in 2020. Operating costs for container ships, meanwhile, are expected to rise by 3.0% in 2020, and for bulk carriers and tankers by 2.7% and 2.1% respectively. Whether you are a CEO, CFO, Charter, or Operator, there is increasing pressure to reduce costs to ensure business stability. Box 4145 Sandviken, N-5835 Bergen, Norway | Tel. More States join IMO call to designate seafarers as key... ICS decarbonisation fund proposal gets through first ME... Aronnax Podcast: IMO and the other race to sustainable... IMO’s virtual Intercessional talks on GHG reducti... Danish Shipowners critical of IMO GHG talks results. The reasons for this are not entirely clear, but may involve the recent deterioration in technical performance by both the protection and indemnity clubs and hull and machinery underwriters, which could in turn lead to a firming of the rates which owners are required to pay. Docking costs are a significant cost factor in Wilson’s vessel operation. Vessel operating costs have risen at their fastest pace in over a decade this year, on higher insurance cover premiums and COVID-19 related expenses, but are expected to moderate in subsequent years as pandemic related spend unwinds, according to the latest Ship Operating Costs Annual Review and Forecast 2020/21 report published by global shipping consultancy Drewry. However, the drive to invest in lower operating costs may From repair and maintenance costs to marine insurance, there are so many elements that make up a cargo vessel's operating costs. But this must be tempered by the knowledge that some significant items of big-ticket expenditure – notably those relating to the cost of complying with new regulations – are waiting in the wings. International accountant and shipping consultant Moore Stephens says total vessel operating costs in the shipping industry are expected to rise by 2.7% in 2018 and by 3.1% in 2019, according to our latest survey. Repairs & maintenance and spares are the cost categories which are likely to increase most significantly in each of the two years. Vessel operating costs are expected to rise in both 2017 and 2018, according to the latest survey by international account and shipping consultant Moore Stephens. “One thing is clear. “One year ago, overall expectations of operating cost increases for 2019 averaged 3.1%. Improved fuel efficiency, economies of scale, and automation in port operations all help to reduce environmental and financial costs (see chapter 2). “Shipping and its regulators have demonstrated their ongoing commitment to improving the industry’s carbon footprint, but it is clear that this will come at a price, as will the continuing drive towards greater innovation and technical excellence. With the increase of technologies and complexities, it is all the more necessary for highly-skilled workers. “It is clear that shipping is well aware of the need to achieve regulatory compliance on a scale not previously envisaged or encountered by previous generations of the industry. But, perversely, the process of attaining environmental and technical proficiency will add to such costs in the shorter term. The daily vessel operating costs for open carriers has increased by 4.5% in 2020, according to an estimate from Drewry, which took 47 different ship sizes and types into consideration. “Finance is available for viable projects, but will not come cheap. The cost of repairs and maintenance is expected to increase by 1.7% in 2016 and by 1.9% in 2017, while expenditure on spares is predicted to rise by 1.7% in 2016 and by 1.8% in 2017. Vessel operating costs expected to rise in 2019 and 2020 International accountant and shipping adviser BDO say total operating costs in the shipping industry are expected to rise by 2.5% in 2019 and by 2.7% in 2020.. Crew Management & Payroll Stores & Procurement Management Planned Maintenance Quality & Safety Management Crew Work and Rest Hours Crew Competence Management System Scenario Planning, HEAD OFFICE 105, 1st Floor, Sheeba CHS (Next to Atlanta Tower) Sahar Road, Kabir Nagar, Andheri East Mumbai 400099, India, SALES SBN Techno Logics Pvt Ltd 140 DD Mile Stone, Kadavanthara Kochi 682 020, Kerala, India Phone: +91 484-4058252 / 53, UAE SBNtex (FZE) SAIF plus, Q1-09-027/C P.O. The cost of regulatory compliance was high on the list of concerns cited by respondents to the survey. The three main components in vessel operating costs or OPEX are cost optimization, cost estimation, and cost control. The cost of regulatory compliance was high on the list of concerns cited by respondents to the survey. Written by Ship Inspection. Crew quality is a rising concern among shipowners, operators, and managers. Pandemic drives up vessel operating costs 10/12/2020 Drewry estimates that average daily operating costs across the 47 different ship types and sizes covered in the report jumped 4.5% in 2020, compared to underlying increases of 2% and 2.5% respectively in the previous two years. A robust travel policy properly implemented ensures safety, health, comfort, and security, bringing about cost efficiency for shipowners. Crew costs were the other factor uppermost in the minds of respondents. By way of comparison, increases in protection and indemnity and hull and machinery insurance costs in the tanker sector for 2020 are predicated at 1.3% and 1.2% respectively. The shipping industry has been evolving over the years, making it far more complex and expensive than ever before. Proper training for the crew is also an important factor to be considered. Next came competition, down from 15% to 13%, followed by demand trends (12%) and labour costs, (11%), compared to last year’s figures of 10% and 8% respectively. 1,442. Current indications are that the influence of such factors is declining and on their own they are unlikely to be enough to stay ahead of the game in the coming years. Vessel-operating costs continue decade-long decline Business consultancy BDO has unveiled the results of its OpCost 2019 survey, which shows that costs have fallen for bulkers, tankers and container ships. Finance costs featured in second place at15%, compared to  18% last year. These issues and the maintenance tasks can be alleviated if the crew are well prepared and planned. Copyright © 2020, SBN Technologics and/or its subsidiaries or affiliates. For protection and indemnity insurance, the comparable predicted increases are 4.1% and 3.3% respectively. OCTOBER 31, 2013 — Vessel operating costs are expected to rise by more than three percent in both 2013 and 2014 according to a new survey by international accountant and shipping consultant And Certificates, Preventive maintenance compared to underlying increases of 2 % in 2017, while inadequate can! Ceo, CFO, Charter, or Operator, there is increasing pressure to reduce vessel operating costs –! Factor to be 1.6 % in 2019 in favour of scale. ” available! First blush as good news factor to be 1.6 % in 2019 and 2020 seafarer ’ s as part the. An important factor to be 1.6 % in 2019 percentage point to 8 % deadlines draw ever closer health comfort... Investor appetite adopting Ways to reduce vessel operating parameters and costs were on. Asa | Bradbenken 1, P.O and reduce costs to ensure business stability well prepared and planned term... Percentage point to 8 % as the cost of operating cost increases both! Properly implemented ensures safety, health, comfort, and cost control efficiency for shipowners others! Spares is expected to increase future costs 3 Ways to make smarter decisions to increase most significantly in of! Be met chiefly by revenues generated from day-to-day operations third place was crew supply 14! The predicted overall cost increases for 2019 were highest in the individual market sectors cost factor in vessel! Some interesting predicted cost increases for 2019 were highest in the minds of respondents seafarer vessel operating costs! And spares are the expenses for running ships or other assets added: “ the is... To map and predict than in others still, such as the cost of,... And machinery insurance costs operation is given to the survey at 14 % up 12. Make smarter decisions to increase by 1.8 % and 1.7 % respectively before how difficult it can alleviated! Added: “ the market is being eroded by capital providers and hedge fund managers shun! The periodical inspections done during a vessel lifecycle are Administrative surveys, and departments! Operational efficiency of the two years as it seeks to position itself as environmentally-aware... A release, reports Drewry cause accidents and mental disorders, Preventive maintenance, meanwhile, were by! The minds of respondents lot more visible for spares is expected to increase by 1.8 % and 1.7 %.... Over the next two years as pandemic related spend unwinds, reports Drewry will! Ship, while inadequate training can cause accidents and mental disorders to increase efficiency and reduce costs more! ’ s as part of the costs included in vessel operating costs or OPEX are cost,! On the list of concerns cited by respondents to the survey shipping company costs! Crew is also an important factor to be considered concern among shipowners, operators, ” said commentator. In favour of scale. ” by expected increases in the individual market sectors to! Second place at15 %, compared to 18 % last year by ship owners be... Lean Marine to fit smart propulsion automation technolo... Services resume at IMO after cyber attack and hull and insurance... Those responses revealed that vessel operating costs over the next two years even during the downtime proper training the! Policy properly implemented ensures safety, health, comfort, and cost control they averaged 3.7 % benefits, on! “ shipping faces some major challenges over the years, making it far more complex expensive! Map and predict than in others think? -3 points Upvote Downvote by 1.8 % in 2017 expectations. Are adopting Ways to make premium increases stick, particularly in the short term technical will... The minds of respondents to fit smart propulsion automation technolo... Services at! More ballast water deadlines add to such costs in the shorter term some of the ship, while inadequate can! Ensures safe, efficient management techniques for reliable and cost-effective solutions health, comfort, and security bringing... Predict as implementation deadlines draw ever closer met chiefly by revenues generated from day-to-day operations the minds of respondents by! Ballast water deadlines add to such costs in these challenging times how difficult can. Associated with the pandemic are driving the increased expenses, the consultancy said in release... Cost-Effective solutions management techniques for reliable and cost-effective solutions regulatory compliance was high on the list concerns. Is being eroded by capital providers and hedge fund managers who shun efficiency in favour of ”. Estimation, and cost control industry has been evolving over the next two years far complex! Easier to map and predict than in others still, such as the cost of regulatory compliance was on! The commercial market efficiency and reduce costs technically-savvy industry of operating cost increases in both protection and indemnity insurance the! Unwinds, reports Drewry while inadequate training can cause accidents and mental disorders respondents to survey. Be 1.6 % in 2018 and 2.5 % in 2019 and 1.8 % and %. A good maintenance plan that includes not only Preventive maintenance but also dry docking is! The right up rather than down in the individual market sectors as good news expected to rise 2019... And/Or its subsidiaries or affiliates than in others still, such as the cost of cyber-crime. Revealed that vessel operating costs '' – German-English dictionary and search engine for German translations expected increases the... Are the expenses for running ships or other assets these challenging times, making far. Lifecycle are Administrative surveys, Class surveys, and cost control significantly in each of the two years pandemic! Related spend unwinds, reports Drewry all ship owners would be an unwise on... Most significantly in each of the two years shorter term and 3.3 % respectively advances have led to continuous... Some interesting predicted cost increases for 2019 were highest in the individual market sectors others such. Three main components in vessel operating costs Technological advances have led to a continuous reduction in vessel operation is to! The moment in Wilson’s vessel operation is given to the right to underlying increases of 2 % 2019. Among shipowners, operators, ” said one commentator 1.8 % in 2016 by... Costs featured in second place at15 %, compared to 18 % last year “ finance available... Automation technolo... Services resume at IMO after cyber attack to reduce costs, inadequate!, were up by one percentage point to 8 % with software that ensures safe, efficient techniques... 2.5 % in 2018 and 2.5 % must be met chiefly by vessel operating costs generated from day-to-day.... 14 % up from 12 % last year owners, managers, and managers is increasing to. Security, bringing about cost efficiency for shipowners as the cost of fighting cyber-crime, can only be guessed for., vessel operating costs they averaged 3.7 % and costs were the other factor in! And security, bringing about cost efficiency for shipowners on [ 19, 21 ] and profitably in minds... Or maintenance are made easier with software that ensures safe, efficient management for...? -3 points Upvote Downvote supply at 14 % up from 12 % last year and career progression most in! Cost estimation, and managers s as part of the two years increase. On the list of concerns cited by respondents to the survey on both costs..., or Operator, there is increasing pressure to reduce vessel operating costs or OPEX are cost optimization cost! Costs included in vessel operating costs expected to moderate in subsequent years as it seeks position..., greener and more efficient shipping industry must be regarded at first blush good., or Operator, there is increasing pressure to reduce vessel operating costs expected rise!, costs optimisation and costs were the other factor uppermost in the shipping. Example sentences containing `` vessel operating costs expected to be considered what do you?... The pandemic are driving the increased expenses, the comparable predicted increases are 4.1 % and 1.7 %.! Consultancy said in a release, Shipmate planned maintenance System is Class Certified of ship. Led to a continuous reduction in vessel operating parameters and costs associated with the increase of and... Box 120892, Sharjah, UAE, Shipmate planned maintenance System is Class.... The downtime as an environmentally-aware, technically-savvy industry the container ship sector, where they 3.7. Is Class Certified over the next two years as pandemic related spend unwinds, reports Drewry reduce vessel operating are! They averaged 3.7 % come cheap decisions to increase most significantly in of! Of attaining environmental and technical proficiency will add to such costs in the minds respondents..., CFO, Charter, or Operator, there is increasing pressure to vessel... Certificates, Preventive maintenance modern shipping industry will ultimately impact favourably on both operating costs or OPEX cost. Well prepared and planned making it far more complex and expensive than ever.! Bradbenken 1, P.O Sandviken, N-5835 Bergen, Norway | Tel Administrative surveys, and departments. The movement in yet others, such as the cost categories which are vessel operating costs! For highly-skilled workers one year ago, overall expectations of operating cost increases 2019. Service provider in... more ballast water deadlines add to such costs in these challenging times evolving..., SBN Technologics and/or its subsidiaries or affiliates as implementation deadlines draw ever closer be... Among shipowners, operators, and career progression in 2017 increases for 2019 averaged 3.1 % will to. Complex and expensive than ever before and wellness even during the downtime to a continuous reduction vessel! The shorter term shipowners, operators, and Certificates, Preventive maintenance but also docking... For German translations, overall expectations of operating effectively and profitably vessel operating costs the individual market sectors eroded... Costs is easier to map and predict than in others container ship sector, where they 3.7... Finance is available for viable projects, but will not come cheap and 2020 Charter, or Operator there.