[220811.EN.SEA] Drewry Sees 4-6pc More Ship Operating Costs With High Oil, Pirates And Regulators

DREWRY's latest annual report predicts big increases in vessel operating costs with oil prices remaining high, pirates driving up insurance premiums and the environmental regulators imposing costly unfunded mandates.

"In 2010, vessel operating costs remained static," said the Drewry report. "However, in 2011 commodity price increases will push up lube, repair and maintenance costs. With some owners having to take additional insurance cover for kidnap and ransom, overall costs are forecast to rise by four to six per cent, depending upon vessel sector."

Tighter sulphur emission controls for vessels sailing within some areas came into effect last year. This raises fuel costs and has made record keeping on ozone depleting substances on board mandatory, said Drewry.

"Fleet operators know that the many conventions that abound on safety, emissions and manning will result in increased costs. Like low demand and high commodity prices, regulation is a brutal fact of maritime life," said the report.

The news comes at a bad time for ocean carriers, with many in the container sector now losing money and vessel charter rates falling, said London's Containerisation International. Since the end of May, the average charter rate for a 4,250 TEU vessel has fallen from US$26,800 per day to 20,250 per day, according to the New ConTex index.

To put this in perspective, Drewry estimates that shipowners would have had to pay $8,586 per day out of this in vessel operating costs alone last year.

Although low market demand has kept crew wage levels down, the large number of new vessels now entering service, some of them delayed from last year, is reopening the gap between supply and demand, forcing wages up.

"With the next STWC [Standards of Training, Certification and Watchkeeping] round as well as ILO MLC [the UN's International Labour Organisation's Maritime Labour Convention] regulations cutting in next year, owners and managers will come under wage and staff cost pressure - particularly in the areas of travel, training and food.

Source : HKSG.