Total vessel operating costs in the shipping industry are expected to increase by 2.7 per cent this year and by 3.1 per cent in 2019, according to shipping consultant Moore Stephens' latest annual Future Operating Costs Survey.
The poll revealed that drydocking is the cost category likely to increase most significantly both this year and next, accompanied in the latter case by repairs and maintenance. The cost of drydocking is expected to rise by 2.1 per cent in 2018 and by 2.3 per cent in 2019, while expenditure on repairs and maintenance is forecast to go up two per cent in 2018 and by 2.3 per cent in 2019.
The survey also revealed that the outlay on crew wages is expected to increase by 1.3 per cent this year and by 1.9 per cent in 2019, with other crew costs are considered likely to rise by 1.5 per cent in 2018 and by 1.8 per cent in 2019, reported Fort Lauderdale's Maritime Executive.
The cost of hull and machinery insurance is predicted to go up by 1.3 per cent and 1.6 per cent in 2018 and 2019 respectively, while for protection and indemnity insurance the projected increases are 1.2 per cent and 1.4 per cent respectively. Management fees are expected to rise by one per cent in 2018 and by 1.2 per cent in 2019.
The predicted overall cost increases were again highest in the offshore sector, where they averaged 4.1 per cent and 4.2 per cent respectively for 2018 and 2019.
In contrast, predicted cost increases in the bulk carrier sector were 1.8 per cent and 2.6 per cent for the following year. Operating costs for tankers are expected to rise by 2.4 per cent in 2018 and by 2.9 per cent in 2019, while the corresponding figures for containerships are 4.2 per cent and 3.8 per cent.
Respondents to the survey highlighted various areas of concern likely to result in increased operating costs over the next two years.
Regulation was high on the list, with one respondent noting: "New regulations will lead to extra costs for all owners, for example the Ballast Water Management Convention and IMO's 0.5 per cent global limit on the sulphur content of fuel oil used on board ships."
Another respondent observed: "Maintenance in general has been somewhat on hold and we will see a correction in that in 2018 and 2019," while another predicted, "we will see an increase in costs for automation and communications, not least because electronics have a shelf life."
On a more general level, respondents voiced concerns about environmental issues, trade wars, the cost of securing finance and the global economic recession, all of which were perceived to have the potential to result in increased operating costs.
Overall, the cost of new regulation was identified as the most influential factor likely to affect operating costs over the next 12 months, at 23 per cent. Eighteen per cent of respondents identified finance costs in second place and competition ranked in third place at 15 per cent.
Old Dominion Q3 profit up 69.5pc to US$173.4 million as sales rise 21.2pc
NORTH CAROLINA trucker Old Dominion Freight Line, posted a third quarter 69.5 per cent net profit increase to US$173.4 million, drawn on revenues of $446.2 million, up 21.2 per cent year on year.
For the first nine months of the year, the NASDAQ-listed Thomasville-based company posted a 21.2 per cent increase in net profit to $879.2 million, drawn on revenues of $3.01 billion, up 22.3 per cent year on year.
"The 21.2 per cent growth in revenue over the same period of last year included a 12.5 per cent increase in LTL revenue per hundredweight and an 8.1 per cent increase in LTL tons," said CEO Greg Gantt.
"The increase in LTL tons resulted from an increase in LTL shipments of 9.7 per cent that was partially offset by a 1.4 per cent decrease in LTL weight per shipment." he said.
"Ongoing demand continues to be strong and we wanted to protect service and capacity for average-weighted LTL," Mr Gantt said. "We haven't seen anything at this point be it the macroeconomic numbers we look at or customer feedback that would suggest any kind of slowdown."
Old Dominion plans to continue taking market share (currently about 9.5 per cent of LTL) by adding more service centres to its network, which stood at 234 facilities at the end of the quarter.
CFO Adam Satterfield said that Old Dominion maintains a long-term, strategic focus on its plan to take more market share by acquiring real estate and building service centres in dense lanes. It may make sense to invest in the business and expend capital even if the short-term top line revenue trend is moving in the other direction, he said.
Sources:schednet
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