Vessel operating costs

Vessel operating costs are the expenses for running ships or other assets. Three integral business processes to keep in mind when running a shipping company are costs estimation, costs optimisation and costs control.

It is important to categorise costs and to make sure that ship operating costs breakdown is understood the same way by all the stakeholders. Indeed, as normally fuel costs are not covered by OPEX, bunkering is included when the vessel is chartered for voyage trip. The other cost center which can create confusion is periodic maintenance costs. These expenses are incurred when the ship is dry-docked for the periodic survey. These costs are directly depending on the vessels age, and bring considerable uplift to the total expenditure for the older ships. Some shipping companies include an assumption for this cost category into operating expenses. But as this is a provision rather than a cash item it is recommended to keep periodic maintenance expenses separately from operating costs.

OPEX involve crew costs, repair and maintenance costs, marine insurance and P&I, stores, spares and lubrication oil costs, and sundry costs. Effective ship management system makes it easier to control those costs, therefore good ship and crew management software are the important elements of the management system.

However, when it comes to costs estimation, optimization, and control, the maritime industry desperately requires new digital solutions. The innovative systems which would assist in further costs reductions without compromising quality. Read more on "Why we need a new approach to OPEX management?"

OPEX index was reduced by 1.1% in 2016 in comparison to 2015’ results, and further reduction is predicted for 2017. But it is very modest decrease, in comparison of dropping of ClarkSeaIndex to 71% since 2008. To achieve performance improvement, the companies strategies vary. Some apply reactive cost-cutting measures putting safety and quality under the questions, but others understand that “old diet will not work” and the only way to “sail through the storm” is digitalization and smart opex management.

Shipcosts support the latter and working to provide expert advice on OPEX budgets estimation, costs optimization and digitalization of vessel management processes, in particular, crew management, and maintenance and repair, as well as costs benchmarking and industry-related costs comparison analysis.

 

 

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