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What is the lifetime ownership / operating cost of a cargo containership (e.g. 1300ft Maersk)?
Hello! Thanks for your question, "What is the lifetime ownership / operating cost of a cargo containership (e.g. 1300ft Maersk)?"
The most useful sources I found to answer your question were ISM Shipowner's Costs Calculations and Moore Stephens 2016 survey.
The short version is that the lifetime ownership / operating costs of a cargo container ship like 1300ft Maersk, may range from $294/TEU carried, to $544.93/TEU carried, over a period of 25 years, assuming an annual 2.5% overall cost increase.
Below you will find a deep dive of my findings.
METHODOLOGY
An extensive online search was undertaken, which yielded several sources including corporate sites, industry sites, academic sites and news sites. Data was collected from the sources and was duly analysed. Thereafter, the analysis was organized in suitable paragraphs to enhance readability. This analysis begins with the paragraph, "Introduction" and ends with the paragraph, "Conclusion", which concludes this study.
INTRODUCTION
"Shipowners’ costs are calculated according to the market participants’ estimates, as well as permanent monitoring of port charges, prices for fuel, lubs, analysis of crewing, survey and other services." Several mathematical formulas are used to arrive at the exact costs, which depend on numerous factors like the type of ship, capital costs, voyage costs, voyage time calculation, running/operating costs, time-charter equivalent and profitability.
Thus, exact calculations without exact figures is not possible. Nevertheless, approximations can be arrived at.
THE LIFETIME OWNERSHIP/OPERATING COST OF A CARGO CONTAINER SHIP (E.G. 1300FT MAERSK)
A 1300ft Maersk is given as an example. A 2013 Virtual Poland article reports that a Maersk Line ship of the Triple-E class, which was "400 meters long and 59 meters wide and 73 meters long and can hold up to 18,000 TEU" was officially christened as "Mærsk Mc Kinney-Møller, a tribute to the son of the founder the AP Møller - Mærsk." The ship is in active service. One meter is approximately 3.28 feet, so 400m is 400 x 3.28 = 1,312 feet, or approximately 1,300 feet.
Hence, it may be said that the given example of a 1300ft Maersk can signify the cargo container ship Mærsk Mc Kinney-Møller.
A Marine Insight, Sept 2013 article provides an image from Drewry Maritime Research's Ship Operating Costs 2012-2013 report. This image shows the 2013 operating costs of a cargo container ship like Mærsk Mc Kinney-Møller, having 18,270 TEU at 20.0 knots WB and 14.6 knots EB, as $294/TEU carried. Thus, it may be said that in 2013, the Mærsk Mc Kinney-Møller had an operating cost of $294/TEU carried.
A ship has a life of 25-30 years. The Mærsk Mc Kinney-Møller ship was put into service in 2013 and should see its end of service after 25 years, sometime during the year 2038. Assuming an overall cost increase of 2.5% on an annual basis, the lifetime overall operating cost of Mærsk Mc Kinney-Møller ship may be, as follows:
- For year 2013, it may be $294/TEU carried
- For year 2014, it may be $301.35/TEU carried
- For year 2015, it may be $308.88/TEU carried
- For year 2016, it may be $316.60/TEU carried
- For year 2017, it may be $324.51/TEU carried
- For year 2018, it may be $332.62/TEU carried
- For year 2019, it may be $340.93/TEU carried
- For year 2020, it may be $349.45/TEU carried
- For year 2021, it may be $358.18/TEU carried
- For year 2022, it may be $367.13/TEU carried
- For year 2023, it may be $376.30/TEU carried
- For year 2024, it may be $385.70/TEU carried
- For year 2025, it may be $395.34/TEU carried
- For year 2026, it may be $405.22/TEU carried
- For year 2027, it may be $415.35/TEU carried
- For year 2028, it may be $425.73/TEU carried
- For year 2029, it may be $436.37/TEU carried
- For year 2030, it may be $447.27/TEU carried
- For year 2031, it may be $458.45/TEU carried
- For year 2032, it may be $469.91/TEU carried
- For year 2033, it may be $481.65/TEU carried
- For year 2034, it may be $493.69/TEU carried
- For year 2035, it may be $506.03/TEU carried
- For year 2036, it may be $518.68/TEU carried
- For year 2037, it may be $531.64/TEU carried
- For year 2038, it may be $544.93/TEU carried
Thus, it may be concluded that the lifetime ownership / operating costs of a cargo container ship like 1300ft Maersk, may range from $294/TEU carried, to $544.93/TEU carried, over a period of 25 years, assuming an annual 2.5% overall cost increase.
EXCEL SPREADSHEET WITH BREAKDOWN OF COSTS OVER TIME, INCLUDING CONSTRUCTION, MAINTENANCE, CREW, FUEL, PORT FEES, INSURANCE.
A Vessel Tracking 2017 article states the construction costs of the Mærsk Mc Kinney-Møller ship, the "first of the Maersk Triple-E class ships, and currently the biggest ship in the world in service", as US$190 million. The article also states, "Only 14 ports are capable of accommodating the biggest ship in the world and they are located only in Northern Europe (6 ports) and in Asia (8 ports)."
A MarineLink, 2013 article states that the Maersk Mc-Kinney Moller ship, "will burn 30,000-35,000 tons of fuel a year." A Seatrade Maritime News, 2014 article stated the fuel price in 2013 was $601.50. It may be calculated that the fuel cost in 2013 might have been 30,000 x $601.50 = $18,045,000. It is to be noted that fuel prices are extremely volatile and thus, no approximations can be made for subsequent years. However, a BunkerIndex, 2017 article states the fuel price as $524.57. Hence, it may be said that the fuel cost in 2017 would be 30,000 x 524.57 = $15,737,100.
An article by Dr. Jean-Paul Rodrigue, Dept. of Global Studies & Geography, Hofstra University, New York, USA, states that in case of post-panamax plus containership (10,000 TEU) "fuel and port charges account respectively for 50% and 21% of their annual operating costs, while manning costs remains constant." The article shows a graphical figure from Drewry Shipping Consultants Ltd. According to the graph the operating costs for post-panamax plus containerships (10,000 TEU) may be broken down visually to represent charges for Fuel (50%), Port (21%), Insurance (12.5%), Repair & Maintenance (8.5%), Manning (4%), Stores & Lubes (2.5%), and Administration (1.5%).
Earlier it was found that the fuel cost in 2013 was $18,045,000. If this figure represents 50%, then the total operating costs would be $36,090,000, where the breakdown would be as follows:
- port charges (21%) would amount to $7,578,900
- insurance charges (12.5%) would amount to $4,511,250
- repair & maintenance (8.5%) would amount to $3067,650
- manning (4%) would amount to $1,443,600
- stores & lubes (2.5%) would amount to $902,250
- administration (1.5%) would amount to $541,350
Thus, it may be stated that in the year 2013, a 1300ft cargo container ship like the Maersk Mc-Kinney Moller ship, might have costs as follows: construction cost ($190,000,000); operating cost ($36,090,000); fuel cost ($18,045,000); port charges ($7,578,900); insurance charges ($4,511,250); repair & maintenance cost ($3067,650); manning ($1,443,600); stores & lubes ($902,250); and administration ($541,350).
A Moore Stephens 2016 survey of "key players in the international shipping industry, predominantly shipowners and managers in Europe and Asia", revealed an increase in costs as follows:
"- vessel operating costs may increase by 1.9% (2016) and by 2.5% (2017)
- repairs and maintenance costs may increase by 1.7% (2016) and by 1.9% (2017)
- port charges (drydocking) may increase by 1.5% (2016) and by 1.8% (2017)
- manning (crew wages) costs may increase by 1.3% (2016) and by 1.8% (2017)
- stores & lubes costs may increase by 0.8% (2016) and by 1.4% (2017)
- administration (management fees) costs may increase by 1.0% (2016) and by 1.2% (2017)
- insurance costs for hull and machinery may increase by 0.9% (2016) and by 1.1% (2017)
- insurance costs for P&I insurance may increase by 1.1% (2016) and by 1.2% (2017)
- overall cost increase is averaged at 2.5%; however, container ships may have an overall cost increase of 3.3% (2016) and 3.4% (2017)
Considering an overall cost increase of 3.4%, a Google spreadsheet detailing the approximations of the breakdown of the costs over the lifetime (25 years) of a 1300ft cargo container ship like the Maersk Mc-Kinney Moller ship, is attached.
From the attached Google spreadsheet, it may be stated that in the year 2038, considering a constant annual overall cost increase of 3.4%, a 1300ft cargo container ship like the Maersk Mc-Kinney Moller ship, might have costs as follows: construction cost ($438,295,559); operating cost ($83,253,088); fuel cost ($41,626,544); port charges ($17,483,148); insurance charges ($10,406,636); repair & maintenance cost ($7,076,512); manning ($3,330,124); stores & lubes ($2,081,327); and administration ($1,248,796).
CONCLUSION
To wrap it up, this analysis concludes with the following insights:
1. The lifetime ownership / operating costs of a cargo container ship like 1300ft Maersk, may range from $294/TEU carried, to $544.93/TEU carried, over a period of 25 years, assuming an annual 2.5% overall cost increase.
2. In the year 2013, a 1300ft cargo container ship like the Maersk Mc-Kinney Moller ship, might have costs as follows: construction cost ($190,000,000); operating cost ($36,090,000); fuel cost ($18,045,000); port charges ($7,578,900); insurance charges ($4,511,250); repair & maintenance cost ($3067,650); manning ($1,443,600); stores & lubes ($902,250); and administration ($541,350).
3. In the year 2038, considering a constant annual overall cost increase of 3.4%, a 1300ft cargo container ship like the Maersk Mc-Kinney Moller ship, might have costs as follows: construction cost ($438,295,559); operating cost ($83,253,088); fuel cost ($41,626,544); port charges ($17,483,148); insurance charges ($10,406,636); repair & maintenance cost ($7,076,512); manning ($3,330,124); stores & lubes ($2,081,327); and administration ($1,248,796).
4. Fuel costs and Port charges are two variable costs that significantly impacts a cargo container ship's operating costs.
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