Costs involved to operate a ship

Before purchasing a vessel, or forming a shipping company, it is important to gage an understanding of the costs involved with operating vessels. Whether you have a large scale cargo ship or small luxury yacht, the costs of operating it will be excessive. It is advised that ship owners and shipping companies enlist the advice and guidance of a professional consultancy firm to gain a comprehensive overview of the necessary and additional costs involved in operating a vessel.

Operational cost of a ship

There are many forms of costs involved when operating a shipping vessel. These costs are vast compared to operating other forms of transportation and as such, should be taken into serious consideration by the vessel owner to ensure that the intended ship’s use will pay for the overall operational costs involved.

The most common types of costs, or ‘over head costs’ as they are usually referred to, include: insurance, manning, repairs, management and administration.
Manning of the ship – These costs extend to paying the ship’s crew wages, feeding crew members while onboard and providing medical assistance in the event of an emergency is very costly however ships would not be able to operate with its crew. Depending on jurisdiction and the type of shipping operation you have, the wages for the ship’s crew will vary. The wages will also vary according to the level of risk working at sea.

Marine Insurance – Insuring your ship with the required level of insurance is essential particularly where the ship has crew members on board, or is carrying valuable goods across international waters. Insurance will be needed for ship and cargo damage and also for medical insurance.

Repairs & Maintenance
– Ships require regular maintenance and the cost of repairing expensive equipment on board the vessel can be high. Payment of raw materials and the cost of hiring mechanics and other service professionals to fix problems on a ship are necessary and should be taken into consideration when planning financial budgets.

Management & Administration – Depending on the systems used by the ship, and whether the shipping owner or company uses third parties for particular jobs, will determine the overall costs involved in the management and administration of the ship.