Moore Stephens: Shipping Industry Costs Continue to Fall

Richard Greiner, partner at Moore Stephens, says this is third year in a row that the industry has seen a drop in operating costs.

A new report released by Moore Stephens LLP (Moore Stephens) shows that the shipping industry's total annual operating costs fell by an average of 0.8 percent during 2014.

Over the previous 12 months, all categories of operation expenditures are reported to be down, with Moore Stephens asserting that the results show that "ship owners and operators continued to manage costs sensibly and to watch their cash carefully in 2014."

Within the overall results, the tanker index is reported to have dropped 1.1 percent, the bulker index lost 0.6 percent, while the container ship index is down by 1.2 percent.

Richard Greiner, Partner at Moore Stephens, commenting on the results, said "by far the biggest reduction in operating costs, for example, was seen this time in the Stores category. This can be largely explained by the knock-on effect which the fall in oil prices has had on lube oil costs.

"Such 'benefits' do not come often to any industry, and are usually not without a downside, as has been the case in shipping."

Overall, Greiner notes that "this is the third successive year-on-year reduction in overall operating costs. This comes as something of a surprise, and is contrary to earlier forecasts."

"Shipping is clearly watching the pennies, and it may also be the case that more competitive pricing for goods and services has had a part to play in holding down expenditure," he added.

Greiner asserts that the challenge for the shipping industry moving into the future will be how to effectively work operation costs into freight rates, while still enabling "a reasonable profit margin in an industry which is driven by competition and characterised by overtonnaging."

In July, it was Moore Stephens who asserted that low bunker prices have brought mixed fortunes as shipping industry confidence crashed to an equal all time low.