International accountant and shipping consultant expects shipping costs to rise 2.7% in 2018 and 3.1% in 2019. The cost of new regulations will be the leading factor.
Drydocking is likely to see the most significant increases in both years
GREINER: "ONE COULD ARGUE THAT THE LEVEL OF PREDICTED OPERATING COST INCREASES FOR 2018 AND 2019 OUGHT TO BE MANAGEABLE IN A COMPETITIVE, VIABLE INDUSTRY ENVIRONMENT."
COSTS in the shipping industry will increase by 2.7% in 2018 and 3.1% in 2019, according to a Moore Stephens' survey, ending a six-year streak of annual decreases in operating costs.
The increases were not spread evenly among sectors. At the high end, offshore is projected to increase by 4.1% in 2018 and 4.2% in 2019. Meanwhile at the other end of the scale, costs in the bulk carrier sector are projected to rise 1.8% and 2.6% respectively.
The cost of new regulations was the leading area of concern, with the cost of financing and competition rounding out the top three worries for the maritime industry.
Drydocking was deemed the cost category likely to increase most significantly, driven by the need to comply with new regulatory frameworks. The industry is also likely to spend more on repairs and maintenance work that has been delayed in recent months.
This was only the second time regulatory costs were included in the Moore Stephens survey, but the firm’s partner of shipping and transport, Richard Greiner, said he expects it to continue to play a role in rising operating costs.
"The Ballast Water Management Convention (BWM) and Sulphur 2020 are the major data-x-items on the list of incipient shipping legislation, but the industry is becoming more tightly regulated generally in terms of both safety and environmental responsibility, so compliance with evolving national and international regulation is likely to remain a significant item in operating cost analyses and projections for the foreseeable future," he wrote in the report.