Drewry: Cargo Ship Operating Costs Expected to Rise

By Finance

Drewry Maritime Research (Drewry) Tuesday (Nov17) in an emailed press release said that its newly released report, Ship Operating Costs Annual Review and Forecast 2015/16, shows that cargo ship operating costs are expected to rise over the next two years, but there will be little that carriers can do to bring those higher operating costs down.

Drewry: Cargo Ship Operating Costs Expected to Rise

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"Operating costs are likely to rise in the future, as the scope for further cost cutting is in most cases quite limited," explained Nigel Gardiner, Managing Director at Drewry.

"However, the expected increases in 2016 and 2017 are likely to be modest in nature as we anticipate only small rises in the cost of lube oils and other commodities; with a relatively weak global economy inflation is also expected to remain low."

Drewry further notes that, while operating costs declined in 2015 and operators have been able to take advantage of falling commodity prices and lower insurance costs, weak freight markets have already required ship owners to trim costs.

Ship operating costs across the sectors covered within the report during 2015 are said to have fallen an average of 1.0 percent, reports Drewry, adding that for "ships that are big consumers of lube oils" these operating cost savings was closer to an average of 2 percent.

"Over the past few years of low economic growth, expenditure on repairs and maintenance (R&M) has for many owners been cut back and when markets improve we expect some 'catching up' to take place. Hence, the expectation is that expenditure on R&M will rise faster than inflation," added Gardiner.

In August, Drewry Shipping Consultants Ltd. asserted that China's economic slowdown would likewise affect the demand within the container freight market.

Source: shipandbunker.com