Drewry Study Concludes Era Of Cheaply Acquired And Run Ships Has Ended
In a recent study titled "Ship Costs: Their Structure and Significance," by Drewry Shipping Consultants of London, Drewry argues that cost-cutting for shipowners has gone as far as it can go. As a result, "the outlook is for an end to cheaply acquired and cheaply run ships, as both the marketplace and environmental concerns exert potentially irresistible pressures." Indirect costs have been pruned by flagging out to new registers, hiring third-world crews and increasing the use of automated equipment to cut down on crew numbers. Although operators are still focusing on cheap labor, the focus will soon have to turn to labor per se. According to the report, "Staff shortages will increase the market muscle of the various manning agencies, and perhaps, create a new power base within the shipping industry. This, plus a need to cover the cost of training commitments, could fuel the pace of cost increases.
Transportation costs had already risen before the latest Persian Gulf crisis, predicting that repair and maintenance costs are likely to double by the year 2000. Insurance costs are also likely to rise as a result of higher repair and maintenance costs, pollution liabilities and increased hull values. Also, Bunker costs could increase by 50 percent over early 1990 levels.