☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
August 2011 | Adam Leach
costs in the shipping industry will rise by up to 6 per cent this year, but
these extra costs should not end up being passed on to buyers.
steel prices and increased insurance premiums will force costs up, according to
Ship operating costs 2011/12,
published by Drewry Shipping Consultants. Steel
increases will raise the cost of carrying out maintenance and repairs. Some
companies though have been able to limit the impact of this by carrying out maintenance
in China and taking advantage of its lower prices.
due to an influx of new ships, especially in China, buyers should still be able
to take advantage of competitive pricing thanks to excess capacity.
Smedegaard Andersen, chief executive at A.P Moller-Maersk, said this week: "Our
competitors are very nervous. They've bought a lot of new ships at a time where
it was expensive, and now they are nervous that they won't be able to fill
them. That means they are very aggressive with their pricing on the Asia to
Europe and Asia to US routes."
oil prices will also push up costs for fuel and lubricants that are a big
expense for ship operators. The report also said a number of forward contracts,
which had been signed to reduce risk against rising oil prices, will run out
this year leaving operators more exposed to the volatile market.
Puszet, managing editor at Drewry, said in a statement: “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 between 4 per cent and 6 per cent, depending upon
addition to having to take out kidnap and ransom insurance, it is also forecast
shipping companies will face increased premiums as a result of the hit taken by
insurance companies after the earthquakes in Japan and New Zealand.