Classification of ship running costs

 Capital costs.
 Operating costs
 Voyage costs.
 Cargo-handling costs.
 Periodic maintenance
1. Capital costs.
This is the cost as a result of the ship acquisition and dependent on the way the ship has been
financed. They may take the form of dividends to equity, which are discretionary, or interest
and capital payments on debt finance, which are non- discretionary. The cost repayment
amount is influenced by the amount of loan, the loan repayment period, Moratorium, bullet
and Currency. This cost element covers about 42% of the total ship running cost.

2. Operating costs
Operating costs constitute the expenses involved in the day-to-day running of the
ship incurred irrespective of the trade the ship is engaged in and whether the vessel
has business (cargo) or not. This includes such costs as manning, stores and
lubricants, repairs and maintenance, insurance and administrative/general costs.
This cost element accounts for about 14% of the total ship running cost.

OCtm = Mtm + STtm +MNtm +Itm +ADtm

Where M is manning cost, ST represents stores, MN is routine repair and

maintenance, I is insurance and AD administration.
Mtm = Crew cost covers, Crew wages, Travel, insurance and Victualling.
STtm = General stores and Lubricants
MNtm = Maintenance and Spares
Itm = Hull & machinery & war risks and P&I
ADtm = Registration Costs, Management Fees and Sundries.

3. Voyage costs
These are the variable costs incurred in undertaking a particular voyage, which
accounts for 40% of the total costs. The main items are fuel costs, port dues, tugs,
pilotage and canal charges:

VCtm = FCtm+ PDtm+ TPtm+ CDtm

Where VC represents voyage costs, FC is the fuel costs for main engines and
auxiliaries, PD port and light dues, TP tugs and pilotage, and CD is canal dues.

4.Cargo-handling costs
The fourth major cost item in ship operation. The cost of loading and discharging cargo
represents a significant component in the total cost equation, and one to which
considerable attention has been paid by shipowners, particularly in the liner business.
Cargo-handling costs are given by the sum of loading costs, discharging costs and an
allowance for the cost of any claims that may arise

CHCv = Lv+ DISv + CLv

where CHC is cargo-handling costs, L is cargo loading charges, DIS is cargo discharge
costs, and CL is cargo claims.