Tuesday, 24 January 2012

What does a Cape cost to run?

At the moment, charter rates for bulk carriers are in the toilet. Chinese New Year is always a quiet time, daily hire rates for a Pacific round voyage (China-Australia-China) are $4,709 a day and Ship Owners are choosing to anchor ships rather than trade at loss-making freight rates.

Charterers (shippers of cargo) and Owners (carriers of cargo) think in US dollars per day. Ships are essentially 'day labourers' and for comparative purposes this is how the market self-evaluates who has the upper hand and where rates are trending.

So what does it cost to operate a Capesize bulk carrier for a day? The three major cost groups are the mortgage, operating costs and insurance. Ships are typically financed on 80% of their purchase price for periods of up to 15 years. For the purposes of this posting, a modern Cape will be paying the bank about US$13,000 a day in cost of capital.

Operating costs are all the all the cost to keep the ship crewed, maintained and available to trade. Crew wages, food and stores, maintenance, spares and management fee are about US$5,500 per day.

The ship has to be insured for total loss, damage and liability - another US$1,000 a day. The Owner also has to accrue for 5-yearly drydocking - another US$500 a day to be squirrelled away for the two weeks in dock. Generators consume about 2.5 tonnes per day of bunkers of essential services, US$1,750.

So far, $21,750 a day required just to cover the idle cost and with less than $5,000 a day on offer for a coal or iron ore cargo. Before readers get too misty-eyed for the plight of the Shipowner, these same vessel saw peaks of $300,000 a day before the 2008 global recession. More an illustration of the high stakes and deep pockets needed to stake a seat at the table.

The Antipodean Mariner


  1. wow - read this out to the office and got lots of droppwd jaws. Ship owners must have understanding bank managers or creative accountants or both. Question: whats behind the name RTM COOK?

  2. Hi Tobi, deep pockets required to carry ships and crews through prolonged downturns. The naming convention for these eight ships is navigators. There is a posting (2011) on Zheng He (the fourth ship). Sister ships will include Cartier, Dampier, Cabot, Drake, Columbus and Tasman.


  3. AM, fantastic blog, only discovering it now. I work as a market and strategy analyst for a large atlantic basin thermal coal producer so was digging around for some information to do some asian economics when I found your blog, which has been a great find. I have a couple of questions with regard to efficiency? How many tonnes of bunker would a <5 year old pmax, cape and vmax use daily, fully laden? Many thanks Ray

  4. G'day Ray, a Panamax will consume about 32 tonnes of HFO a day, a Cape about 65t and a ValeMax about 80t. saying that, there is scope to reduce fuel consumption by about 1/3rd by slow steaming. Additionally, generators will consume about 3 tonnes per day at sea and in port. Hope this answers your question, AM