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Why Is It More Expensive To Operate Ships During COVID?

Photographer: Luke Sharrett/Bloomberg

BLOOMBERG, OCTOBER 2, 2020

Crew costs rise 10% amid port restrictions, cancelled flights | 400,000 workers are stranded on ships past their contracts

By Krystal Chia (Bloomberg) — Shipowners are facing rising labor costs as widespread Covid-related restrictions limit movement of seafarers and make crew swaps more expensive.

Because relieving and replacing ship workers has become so difficult during the pandemic, daily crew costs have increased 10% from January to mid-July, up to $3,144 for capesize dry-bulk carriers, according to the Baltic Exchange, a publisher of benchmark shipping rates, which traces its history to 1744. That figure is the highest since the bourse began tracking the data on a quarterly basis in May last year.

Border and flight restrictions to fight the spread of Covid-19 have triggered a spiraling humanitarian crisis among the world’s seafarers, the often-unseen labor behind global trade who are increasingly stuck aboard ships beyond their employment contracts or even the limits allowed under maritime law.

Rising Crew Costs

The International Chamber of Shipping estimates there are now 400,000 seafarers stranded at sea despite repeated calls from the industry for governments to deem them “key workers” and facilitate their transfer. The situation could worsen before it improves.

“Whilst we have seen more crew transfers taking place in recent months, there is clearly still a long way to go,” the Baltic Exchange said in a written response to questions.

Some firms are diverting vessels to a narrow number of ports that facilitate changes, a process that can add hundreds of thousands of dollars in costs. Others have chartered flights to relieve and repatriate seafarers.

Higher crew and operational costs are usually borne by shipowners, according to Peter Sand, chief shipping analyst at industry group BIMCO. But if the global crew-change crisis persists, owners may push for the extra expenses to be shared by other parties including charterers, management firm Executive Ship Management said in an email.

–With assistance from Janet Paskin.

© 2020 Bloomberg L.P

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