Manning Costs Rise Below Inflation

Officer Supply Shortage Easing

Improvements in officer supply have helped limit cost increases for manning breakbulk vessels over the last 12 months, according to global shipping consultancy Drewry.

The firm reports that manning costs rose for a second successive year in 2019, but that the pace of growth “remains moderate” and “well below the prevailing rate” of price inflation.

“Certain ranks and experience levels continue to be in tighter supply than the manning market as a whole. These tend to be for experienced senior officers and in particular second engineers,” said Rhett Harris, senior manning analyst at Drewry.

Finely Balanced

As the market has equalized, the number of available officers has improved relative to demand and is expected to reach a small surplus by 2024, but Drewry notes that ratings remain in surplus and are expected to remain so.

“It remains a finely balanced position with the supply side easily tipped if wages for sea service do not remain competitive compared to shore-based work. The big social differences between working at sea and ashore are central to this consideration, as well as the fact that young people are now less willing to make compromises for work than previous generations,” Harris added.

Drewry estimates that aggregate manning costs rose by about 1 percent in 2019, with both ratings and officer pay rising by the same margin. This follows a similar rise the previous year and flat lining costs in 2017, as the depressed state of most cargo markets made wage increases almost unaffordable.

Continued Pressure

Data published as part of Drewry’s recent Manning Annual Review and Forecast 2019/20 suggest that the “increasingly uncertain” economic outlook is likely to ensure that the commercial environment remains challenging.

“Drewry expects seafarer wage inflation to remain well below the prevailing rate of consumer price inflation over the next five years. Continued pressure to reduce costs combined with improving officer supply conditions will negate incentives to raise salaries,” the report states.

“Costs for crewing dry and container vessels will likely rise at a slower pace, but in sectors such as LNG and chemicals, where there is competition for scarce officers certified to crew specialist ships higher cost inflation is anticipated,” Harris explained.