Overall costs continue to rise for bulk carrier owners and operators

Bulk carrier owners bulk carrier operating costs continue to rise
in 2011 even as freight rates fall (see page 105), squeezing the
bottom lines of those without adequate charter coverage in
place.
A survey by chartered accountants Moore Stephens estimated
that bulk carrier operating costs rose faster than any other
shipping sector in 2010 (3.3%), and respondents also predicted a
3.6% rise in 2011, an inflationary hike only expected to be
surpassed by operators in the container sector.
In 2011 lubricants, stores, spares, P&I Insurance and
management costs will all increase by 2–3% according to
respondents contacted by Moore Stephens, almost half of which
were active in the dry bulk sector.
The devaluation of the dollar could also be a risk factor for
owners. “Costs will increase due to the devaluation of the US
dollar which inflates overall costs,” said one respondent
A recent report by SeaAxis also found that the rising oil price
in late 2010 was pushing up bunkers costs and most raw
materials were currently increasing in price, not least nickel and
chemicals and metals used in the production of paints and
lubricants.
According to the Moore Stephens survey, the biggest
anticipated inflationary cost this year will be crew wages, which
will rise 3.1% for bulker carriers, faster than any other shipping
sector, as it was in 2010. “It is all about crew; with fewer wellexperienced
crew available for a worldwide fleet expansion,
labour costs will rise,” said one respondent
The forecasts of Moore Stephens’ respondents were mirrored
by the findings of two recent studies on the forward supplydemand
balance for seafarers.
A Bimco and International Shipping Federation study
published in December into the world wide supply of and
demand for seafarers found that the supply of, and demand for,
ratings was balanced at some 747,000. However, officers
remained in short supply, running about 2% short of the
estimated demand figure of 637,000 officers in 2010.
“There is particular concern over the current and future
availability of senior management level officers, especially
engineers, in the Far East and the Indian Sub-Continent,” said the
report.
The recent Drewry Manning Report 2010 which uses the
Drewry/PAL Global Manpower Model to assess supply and
demand found that the overall officer shortfall in 2010 was
30,000, down from 33,000 in 2009. With the bulk carrier fleet
expected to reach 9,846 vessels in 2014, up from 7,135 in 2010,
the officer shortage is expected to remain steady, totalling some
30,964 in 2014.
James Langley, senior adviser at the International Shipping
Federation/International Chamber of Shipping and one of the
author’s of the BIMCO report, said that even with only
conservative fleet growth of 2.3% over the next ten years there
would still be a shortage of officers to man the global fleet which
could put additional pressure on wages.
“This would certainly have an impact on bulk carrier manning,
it might be particularly hard to find experienced senior officers,”
he told DCI. “Growth in the world fleet above this benchmark
figure could result in a significant shortage, this will affect all
sectors even more and all sectors of the industry need to recruit
and train to ensure there are no shortages suffered.
“Although now in 2010 we are faced with a modest shortfall,
shortages are still clearly visible for certain ship types and also
for certain ranks. For the industry to have experienced and well trained
senior officers there is a need to really focus on
retention both now and in the future, not just on recruitment.
“The whole industry needs to take advantage of this increase
in supply and ensure that these newly attracted officers are
retained and fill the void and ultimately help relieve the increasing
concern over the lack of senior officers to crew the increasing