Ships Operating Costs

The shipping industry has always been a competitive market and while freight rates may fluctuate, it is usually in direct response to supply and demand. The operating costs for most shipping companies are generally the same with one exception: America. The operating costs of a US flag ship vessel has become so high that many companies, even though they have most of their commerce with businesses in the United States, will be using other countries as their flags.

In other countries there are not the stringent policies that need to be followed to allow the ship to move. Although they may have fewer rules, this usually does not mean they are unsafe. It just allows for companies to work within their means. Between the workers compensation packages and overall safety requirements, the US ships must charge a higher price for shipping containers in order to make up for the costs laid out. This is why so many container shipping companies may only have a few US flag ship vessels and the rest under another country’s flag. With having a few, they are able to bid for US government contracts, but the rest of their fleet can be under a less rigid policy for moving cargo.

In the more recent hard times for shipping companies, these policies can be a good way to set standards so that businesses cannot cut out too many safety measures. High operating costs however will be an ever increasing problem for shipping. Thankfully it is being combated with better technology and more efficient ships to keep companies moving forward.