Drewry sees ship operating costs rising in 2016

New report from shipping consultancy forecasts rising insurance, fuel, repair and maintenance costs in 2016 and 2017, after costs fell in 2015 amid a weak commodities market.    The cost of operating cargo ships is forecast to rise over the next two years after falling in 2015, according to the latest Ship Operating Costs Annual Review and Forecast 2015/16 report from the global shipping consultancy Drewry.
   Ship-operating costs declined by an average of 1 percent in 2015, Drewry said, but those costs are likely to rise in the future “as the scope for further cost cutting is in most cases quite limited.” The report noted “weak freight markets have forced ship owners to trim costs,” but owners have “been able to take advantage of falling commodity prices and lower insurance costs.”
   Drewry said it expects increases in costs in 2016 and 2017 to be modest.
   “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,” said Drewry Managing Director Nigel Gardiner.
   Owners will also grapple with modest increases in manning costs, while if freight markets improve, hull values for modern vessels will rise, which would likely lead to higher vessel insurance premiums.
   “Over the past few years of low economic growth, expenditure on repairs and maintenance has for many owners been cut back and when markets improve we expect some ‘catching up’ to take place,” Gardiner added.