Supplementary memorandum by the Chamber
of Shipping (TT 05A)
At the Tonnage Tax hearing on 23 June, the Chamber
of Shipping was asked to provide clarification regarding the proportion
that crewing costs represent of operating costs, and to elaborate
on their relationship with capital costs. We were also asked to
present further information regarding the ability to perform marriages
on board UK-registered ships. These and supplementary comments
in regard to other figures on employment and training numbers
quoted during the evidence session are given below.
CREW COSTS
The Select Committee asked how important crew
costs were as a proportion of operating costs. Maurice Storey
suggested that, in some sectors, they could represent as much
as 70% of operating costs. Michael Hassing said that the figure
was somewhat less in the container sector.
The proportion clearly varies considerably from
sector to sector and by size of ship. It is also dependent on
the specific elements which are included in the term "operating
costs".
Annex 1 shows a number of practical examples
(a modern roll-on/roll-off ship, a deep-sea tanker trading world-wide,
and a passenger ferry) taken from the Chamber membership.
Annex 2 reproduces two tables issued in a report
by Drewry Shipping Consultants entitled "Ship Operating
Costs—Annual Review and Forecast—2004-05".
This was published in June 2004 and is an authoritative source
which illustrates the varying proportions well. In these tables,
which are produced by Precious Associates:
— Table 1.2 considers a wide range
of bulk carriers and tanker sizes. It is clear from this that
the crewing costs of these vessels increase from 30-35% of total
operating costs for the largest ships to around 45-52% for the
smaller sizes. For operators of the sizes more typically used
in the UK coastal and short-sea trades, the proportion is likely
to be around 50%.
— Figure 1.6 shows a schematic presentation
of a sample of other ship types, including LNG (including liquefied
natural gas, container, refrigerated, and multi-purpose vessels).
These show variations in the range of 40-50%.
(These comparisons do include insurances; if
they were excluded, the proportions would increase correspondingly.)
It is important to note that all the crews in
question in Table 1.2 use as their reference point crew costs
at standard international rates (ie not including high-cost European
crews). Figure 1.6 is more varied, but the one ship cited as employing
European officers is based on a British Master with the remainder
of the officers and ratings Polish.
The cost premium represented by the employment
of British crews would be likely to represent an additional 15-20%.
This is evidenced by the attached table (again
from Precious Associates) which shows comparative wage costs for
British seafarers and a range of other nationalities (it should
be noted that, even in the British case here, the ratings are
Filipino).
COMPARATIVE WAGE COSTS (US$ PER MONTH)
| Complement | US$ per month
|
| British Officers/Filipino Ratings | 9/10
| 78,000 |
| Chinese Officers/Ratings | 9/10
| 37,000 |
| Indian Officers/Ratings | 9/9
| 47,000 |
| Filipino Officers/Ratings | 9/9
| 47,000 |
| Polish Officers/Ratings | 9/9
| 48,000 |
| | |
EMPLOYMENT AND
TRAINING FIGURES
Numbers of UK Certificated Officers
The most recent source for these is the United Kingdom Seafarers'
Analysis 2003 produced by London Metropolitan University in March
this year. This presents data using retirement ages of 65 and
57. The Government's Shipping Task Force sub-group on seafarer
and training numbers has decided that future publications should
focus on a single retirement age of 61 (although figures will
continue to be produced for 65 and 57). The following table uses
an interpolation of the report data for certificated officers.
It should be noted that it excludes "non-certificated officers"
(a survey of Chamber members in 2003 showed that these included
at least 900 technical officers and 1,230 catering/hotel/other
uncertificated officers).
ESTIMATES UK SEAFARER NUMBERS
AS AT 30 JUNE 2003
| Retirement Age | 61 |
| Certificated Officers at Sea | 14,305
|
| Cadets | 1,045 |
| Ratings | |
| Deck/Engine | 4,393 |
| Catering/Other | 5,644 |
| Total Active Seafarers at Sea | 25,387
|
| |
Source: London Metropolitan University.
There has been a certain volatility in the time-series for
certificated officers over the reports for recent years, largely
owing to the bedding-in of the system for re-validating certificates
issued under the IMO Standards of Training, Certification and
Watch-keeping Convention 1995.
It is additionally difficult to make a true estimate of change
since 1997, as the criteria for inclusion in the re-validation
process have altered over the period. There was an apparent decline
of 14% up to 2002 (the actual figure was under 12% when some 500
Irish officers are stripped out of the earlier figure); whereas
the same calculation for the period to 2003 indicates virtually
no change since 1997.
CADET NUMBERS
The suggestion was made also that the cadet numbers had increased
only from 560 to the current 627. The Chamber stands by the table
contained on page 3 of its earlier memorandum that the 1999-2000
figure for British new officer entrants was 446. This compares
with similar figures as at April 2003 of 606 and the current provisional
figure for April 2004 of 627.
As indicated in our earlier memorandum, this information
is derived from returns to a Merchant Navy Training Board enquiry,
which are subsequently adjusted in the light of Government information
from the Support for Maritime Training (SMarT) Scheme. They do
not include other EU/Irish nationals, nor trainees undertaking
rating-to-officer conversion courses.
The figure of 560 appears to have been taken from an estimate
in evidence given by the Chamber to an earlier Select Committee
enquiry, report issued on 26 May 1999; the final figure showed
that this had been substantially over-estimated.
ASSISTANCE FOR
RATINGS
A number of questions were raised during the hearing on the
impact of the tonnage tax regime on ratings, in the light of the
fact that there are no formal training or numerical commitments
in regard to ratings. It may be of interest to the Committee to
know that, despite this, monies arising from the tonnage tax commitment
have been allocated by the Maritime Training Trust to encourage
the training of ratings on rating-to-officer conversion courses.
The Trust has to date allocated a total of £600,000 to the
John Slater Fund, which is dedicated precisely to this purpose.
MARRIAGES
A separate note is attached at Annex 3 to this memorandum
of the subject of marriages and UK-flag ships.
7 July 2004
Annex 1
COST COMPARISONS
A. MODERN ROLL-ON/ROLL-OFF
SHIP
| % excl capital
costs
| % incl capital
costs |
| Crewing (All UK Crew) | 71 |
39 |
| Fixed Operating Costs | 29 |
16 |
| Total Operating Costs | 100
| 55 |
| Capital/Lease Cost | | 45
|
| Total, incl Capital Costs |
| 100 |
| | |
B. DEEP-SEA
TANKER—30,000 DWT
| UK Officers Filipino Ratings
| All Indian Crew |
| |
|
| % excl capital
cost
| % incl capital
cost | % excl capital
cost
| % incl capital
cost |
| Crewing— | 70 | 34
| 53 | 20 |
| Fixed Operating Costs | 30 |
15 | 47 | 18 |
| Total Operating Costs | 100
| 49 | 100 | 38
|
| Capital/Lease Cost | | 51
| | 62 |
| Total, incl Capital Costs |
| 100 | | 100
|
| | |
| |
C. DEEP-SEA
TANKER—100,000 DWT
| UK Officers Filipino Ratings
| All Indian Crew |
| |
|
| % excl capital
cost
| % incl capital
cost | % excl capital
cost
| % incl capital
cost |
| Crewing— | 70 | 29
| 53 | 17 |
| Fixed Operating Costs | 30 |
13 | 47 | 15 |
| Total Operating Costs | 100
| 42 | 100 | 32
|
| Capital/Lease Cost | | 58
| | 68 |
| Total, incl Capital Costs |
| 100 | | 100
|
| | |
| |
D. PASSENGER FERRY
| % excl capital
costs
| % incl capital
costs |
| Crewing (All UK Crew) | 67 |
29 |
| Fixed Operating Costs | 133
| 15 |
| Total Operating Costs | 100
| 44 |
| Capital/Lease Cost | | 56
|
| Total, incl Capital Costs |
| 100 |
| | |
Notes:
1. Fixed operating costs include provisions, stores, lubricating
oils, spares, repairs and maintenance, communications and management
fees, etc.
2. Operating costs here do not include voyage costs such as
bunker fuel or port costs (both of which are normally borne by
the charterer); or insurances.
3. Capital costs will vary depending on ship size, price paid,
ability to obtain low-cost finance, etc.
Annex 2
EXTRACTS FROM REPORT BY DREWRY SHIPPING CONSULTANTS ENTITLED
"SHIP OPERATING COSTS—ANNUAL REVIEW AND
FORECAST—2004-05"
Table 1.2
BULK CARRIER AND TANKER OPERATING COSTS: 2003-07 (US$
per day)
(a) Bulk Carriers
| | Manning
| H&M Insurance | P&I Insurance
| Repairs and Maintenance | Stores/Supplies/Spares
| Admin | Total |
| Handy: | 2003 | 1,625
| 190 | 150 | 490
| 525 | 525 | 3,505
|
| 26-28,000 dwt | 2004 | 1,690
| 245 | 190 | 525
| 530 | 570 | 3,750
|
| 2005 | 1,725
| 260 | 210 | 535
| 545 | 575 | 3,850
|
| 2006 | 1,775
| 250 | 220 | 515
| 550 | 575 | 3,885
|
| 2007 | 1,830
| 250 | 220 | 510
| 565 | 590 | 3,965
|
| Handymax: | 2003 | 1,625
| 240 | 190 | 650
| 615 | 530 | 3,850
|
| 40-45,000 dwt | 2004 | 1,690
| 340 | 245 | 685
| 625 | 570 | 4,155
|
| 2005 | 1,725
| 360 | 270 | 700
| 635 | 575 | 4,265
|
| 2006 | 1,775
| 350 | 280 | 680
| 645 | 580 | 4,310
|
| 2007 | 1,830
| 350 | 280 | 675
| 660 | 590 | 4,385
|
| Panamax: | 2003 | 1,725
| 280 | 220 | 820
| 645 | 590 | 4,280
|
| 65-73,000 dwt | 2004 | 1,790
| 380 | 270 | 865
| 655 | 630 | 4,590
|
| 2005 | 1,825
| 400 | 300 | 885
| 670 | 635 | 4,715
|
| 2006 | 1,880
| 380 | 310 | 865
| 680 | 640 | 4,755
|
| 2007 | 1,935
| 380 | 310 | 855
| 695 | 650 | 4,825
|
| Cape: | 2003 | 1,725
| 325 | 280 | 1,005
| 825 | 690 | 4,850
|
| 140-160,000 dwt | 2004 | 1,790
| 450 | 325 | 1,060
| 835 | 735 | 5,195
|
| 2005 | 1,825
| 470 | 350 | 1,085
| 855 | 740 | 5,325
|
| 2006 | 1,880
| 450 | 365 | 1,060
| 870 | 745 | 5,370
|
| 2007 | 1,935
| 450 | 365 | 1,050
| 885 | 760 | 5,445
|
| | |
| | | |
| |
(b) Tankers
| | Manning
| H&M Insurance | P&I Insurance
| Repairs and Maintenance | Stores/Supplies/Spares
| Admin | Total |
| Products: | 2003 | 2,290
| 230 | 200 | 965
| 865 | 575 | 5,125
|
| 35-45,000 dwt | 2004 | 2,380
| 340 | 220 | 1,020
| 880 | 615 | 5,455
|
| 2005 | 2,425
| 355 | 240 | 1,045
| 895 | 620 | 5,580
|
| 2006 | 2,495
| 350 | 260 | 1,020
| 910 | 625 | 5,660
|
| 2007 | 2,570
| 350 | 260 | 1,015
| 930 | 635 | 5,760
|
| Aframax: | 2003 | 2,350
| 330 | 260 | 1,230
| 910 | 705 | 5,785
|
| 80-110,000 dwt | 2004 | 2,440
| 490 | 325 | 1,285
| 925 | 745 | 6,210
|
| 2005 | 2,485
| 510 | 355 | 1,315
| 945 | 755 | 6,365
|
| 2006 | 2,560
| 500 | 375 | 1,290
| 960 | 760 | 6,445
|
| 2007 | 2,635
| 500 | 375 | 1,275
| 980 | 775 | 6,540
|
| Suezmax: | 2003 | 2,350
| 420 | 330 | 1,405
| 955 | 745 | 6,205
|
| 140,000 dwt | 2004 | 2,440
| 550 | 410 | 1,470
| 975 | 790 | 6,635
|
| 2005 | 2,485
| 575 | 450 | 1,505
| 995 | 795 | 6,805
|
| 2006 | 2,560
| 550 | 475 | 1,475
| 1,010 | 800 | 6,870
|
| 2007 | 2,635
| 550 | 475 | 1,460
| 1,030 | 815 | 6,965
|
| VIcc: | 2003 | 2,400
| 490 | 440 | 1,935
| 1,465 | 920 | 7,650
|
| 280,000 dwt | 2004 | 2,490
| 765 | 550 | 2,020
| 1,490 | 960 | 8,275
|
| 2005 | 2,535
| 800 | 605 | 2,070
| 1,520 | 970 | 8,500
|
| 2006 | 2,610
| 760 | 630 | 2,035
| 1,545 | 975 | 8,555
|
| 2007 | 2,690
| 760 | 630 | 2,015
| 1,575 | 995 | 8,665
|
| | |
| | | |
| |
Note: Stores/Spares/Supplies includes lubricating
oils (lubes).
Note: Data estimates for 2003 are provisional.
Sources: Drewry Shipping Consultants Ltd, Ensign Marine
Consulting Ltd, Precious Associates Ltd, D M Jupe Consulting.
Annex 3
MARRIAGES
English law does not recognise marriages performed on board
ship. Scottish law does, but only if the marriage is performed
when the ship is tied up in a Scottish port. There is however
a strong demand from couples to get married on board ships, especially
in the spectacular setting of a cruise vessel mid-ocean, which
supports a lucrative weddings business on ships registered in
jurisdictions that do recognise onboard ceremonies.
Experience gained by P&O Princess Cruises with cruise
vessels registered in Bermuda shows clearly that the option of
getting married on a Red Ensign ship, with all the attendant trappings
of a traditional wedding, has wide appeal. Their Grand class ships
were built with "wedding chapels" and the need for the
facility was a significant consideration in their decision to
place these ships on the Bermudan rather than UK register. (Purpose-built
chapels are ideal from a customer perspective, but for ships-in-service
public rooms can readily be adapted to provide the right setting.)
The ability to offer the same weddings service onboard ships
registered in the UK would enable cruise ship operators to place
their ships on the UK register without losing valuable weddings
business. It would also enable the owners of the 20 or so cruise
vessels and cruise-ferries already registered in the UK to match
the services already offered by competitors under foreign flags.
It is likely that the ability to offer onboard weddings would
also be of value to operators of shorter-haul ferries and locally-operating
cruise boats, with couples attracted to the option of getting
married against a pleasing backdrop of Britain's coastal scenery.
This would be an entirely new area of business, to which the current
ability to host weddings on ships tied up in Scottish ports is
of little guidance, and its value is therefore difficult to assess.
The Chamber has therefore advocated the introduction of legislation
that would confer legal recognition on civil marriages performed
on British ships. The marriage law of Bermuda, which recognises
any marriage performed on board Bermudan-registered ships by a
celebrant (typically the ship's captain) authorised by the Bermudan
authorities to conduct marriages at sea, could serve as a model.
In view of the separate legal bases for civil marriage in
England and Wales and in Scotland, the Chamber has recommended
that legal recognition for marriages performed on British ships
be conferred through a piece of Merchant Shipping legislation
so that all British ships were covered.
The Chamber understands that the Department for Transport
is currently preparing the specification for such a piece of legislation,
with the intention of securing its promotion as a Private Member's
Bill.
|
