Ship Operating Costs to Escalate in 2016: Moore Stephens

The tanker sector is expected to experience the highest level of increases in 2016.

International shipping consultant Moore Stephens says vessel operating costs are expected to rise by 2.8 percent this year and 3.1 percent in 2016, with hull and machinery insurance rising by 1.8 percent and 1.9 percent in 2015 and 2016 respectively.

Moore Stephens bases its predictions on its latest survey, which solicited responses from European and Asian shipowners and managers.

Other costs are also expected to rise, including crew wages (by 2.4 percent in 2015 and 2.3 percent next year), and repairs and maintenance (2.3 percent in 2015 and 2.4 percent in 2016).

Moore Stephens says drydocking costs will climb by 2.6 percent and 2.3 percent in 2015 and 2016 respectively.

The tanker sector is expected to experience the highest level of increases in 2016: 3.4 percent compared to the survey average of 3.1 percent (the container ship sector closely follows at 3.3 percent).

Shipowners and managers cite finance costs and competition as the two biggest influences of vessel operating costs over the next year, and Moore Stephens says these costs will increase exponentially due to new regulations, the "low competence" of seafarers, the bargaining power of the oil majors, and stricter rules for maintenance and repairs performed in ports.

However, Richard Greiner, shipping partner for Moore Stephens, stated that "the level of increases anticipated for 2015 and 2016 are low in comparison with many we have witnessed in recent years.

"Shipping has seen much worse, and prevailed: for example, many of the companies which endured a 16 percent rise in operating costs in 2008 are still operating successfully today."

Moore Stephens' survey comes on the heels of its report released in early October showing that the shipping industry's total annual operating costs fell by an average of 0.8 percent during 2014.