#5 Costs associated with Shipping Flashcards
3 types of cost related to shipping
Capital cost
Voyage cost (Vessel cost)
Running cost (Operating cost)
Capital Cost
clipt
**Fixed cost associated with acquisition of a vessel.
Including:
Pre-delivery expenses
Loan repayments and interest, leasing charges
Initial registration fees
Taxes
Charter hire for bareboat charter
ROI
Within the control of the owner
Voyage Cost (Vessel Cost)
are variable cost associated with a particular employment of the ship.
Applicable only to the voyage under consideration.
Includes charges at port of call namely:
canal charges
pilotage
harbour tug hire
port agency fees
loading and discharging charges
bunker cost
Extra insurance for breaching the Institute Warranty Limits
Within the control of ship’s commercial operator.
For time charter, the charterer is responsible for the voyage cost.
Running Cost (Operating Cost)
Consider as fixed costs.
Pertaining to cost incurring in operating the ship regardless of the voyage namely:
Crew cost
Store cost
Maintenance cost
Insurance
Administration
Drydock
Within the responsibility of the ship manager
Budget Estimate
5 Cost categories
Crew Cost
Storing Cost
Maintenance Cost
Insurance Cost
Administration Cost
Additionally plus dry-docking cost if any
Covers 12 months.
One of the most important parts of the ship manager’s job.
How to prepare an operating budget?
- To categories each cost into 1 of the 6 categories
(Maintenance, Crew, Store, Administration, Insurance
and Drydock - MCSAID) - To arrange (1) according to the 6 categories
- To convert each cost to 12 months
- To sum up all the costs in each category
- To sum up all the costs of all the 6 categories to get the total operating cost per year
- To divide the total operating cost by 365 days to get daily operating cost
Information for Estimation
caster
Size, type of the ships
Age of the ship - maintenance/crew cost
Type of main and auxillary engines
Port/ country of registry
Crewing
Trading pattern - maintenance/crew cost
CREW COST
Manning
Establishment
Nationalities of the crew.
Manning
Wages
Leave entitlement
Bonuses
Social cost
Insurance for the staff
CPF contributions
Overtime
establishment
Study leave
Stand-by
Sick pay, travel expenses and repatriation
Training cost
Medical expenses
Overlap time between sea staff
STORES
Includes equipment and virtualling or provision for the ships.
Provision is done on a man day basis
Simplifies the budgeting for provisions.
Provisions are supplied by Ship Chandlers.
Ship managers to exercise caution and supervise the supply of provisions to ships to ensure that it is not abused such as:
Ship to accept low quality food or
Less food and they get to share the money among themselves.
MAINTENANCE
Includes cost of spare parts
Repair cost for deck, engine and navigational equipment
Cost of shore labour to do maintenance in port
Riding crew
Survey fees
Dry-docking fees can be included here but is usually budgeted separately
INSURANCE
H&M
P&I
deductibles
ADMINISTRATION
Management fee
Communication cost
Subscriptions
Superintending expenses
Renewal dues
Software programme such as PMS, BIMCO
REASONS FOR LAY-UP OF SHIPS
When excess ships are unable to be deployed, chartered
out.
Charter rate too low.
Sudden drop in liftings and expect no demand for these
ships over a long period of time.
Type of ships not suitable for employment
TO LAY-UP A SHIP
Inform Classification Society.
Inform P & I club.
Get Classification Surveyors to inspect and approve the mooring arrangements, alarm systems and preservation procedures.
Key considerations before you lay-up a ship
Estimate the time in lay-up condition
Operational cost savings
Re-commissioning time and cost
Next intended destination after re-commissioning e.g.
normal trade, repair yard or scrap yard
Age of vessel and scrap value of the ship
Hot Lay-up
The machinery is kept in operation for the sake of fast re-
commissioning
Examples:
Hot lay-up up to 1 month – required 24 hrs re-
commissioning time
Hot lay-up up to 12 months – required 1 week re- commissioning time
Cold lay-up
The machinery is taken out of service and the vessel is kept
“electrically dead” with the exception of emergency power
May takes 3 weeks re-commissioning time or more depending on the level of preservation and maintenance during lay-up.
VOYAGE ESTIMATING
Objective:
To calculate the return a ship will make after deducting from THE income of all the expenses of the ship
Owner has an advantage, knows the actual cost
Charterer to find the cheapest, safe ship.
To select the most profitable and suitable business, voyage estimation is done
Golden Rules:
Save and file all voyage estimates in a filing system for future reference.
Use a standard form
BASIC EQUIPMENT & REFERENCES
Standard form
A pair of divider.
A ruler.
Atlas.
Map showing load-line zones.
Map showing the Institute Warranty Limits of the world.
Marine Distance Tables
Port Information
Information on Stowage
General Arrangement Plan
Capacity Plan
· Factors to consider when seeking employment for his ship:
Length of the voyage
Cost of each port of call
Loading and discharging speed
Freight rate
Amount of cargo the ship can carry - S.F.
Type of cargo - Bale, grain, broken stowage
Speed and bunker consumption
Price and quantity of bunker remaining onboard
Restriction at POL and POD
Voyage Estimating
Determine Voyage Cost
Determine freight earn
Freight - voyage cost = Gross surplus
Gross surplus ÷ number of days = Gross Daily Surplus
Gross Daily Surplus - Daily Running Cost = Nett Daily
Surplus
Starts from pilot station of discharge port to completion of
discharge in the current voyage
