Dr. Konstantinos Galanis Operations & Technical Senior Manager Seanergy Maritime Holdings Corp.

Transcription

1 Dr. Konstantinos Galanis Operations & Technical Senior Manager Seanergy Maritime Holdings Corp.

2 Practical shipmanager s approach General description of accounting in shipping Address the way in which shipmanagers are accountable for their work & how the ship management function relates to the overall picture of ship finance

3 Capital or Fixed costs Acquisition of the vessel, (pre-delivery expenses, loan repayments & interest, leasing charges, initial registration fees, taxes, etc.) Vessel is taken on bareboat or demise charter, the charter hire is the equivalent of capital costs If purchase out of company s own financial resources, an annual depreciation rate to apply together with an appropriate return on capital employed If the purchase is by means of a mortgage, loan repayment & interest will form the principal fixed cost Operating costs Semi-variable Relate closely with the employment of the ship Daily Operating or Running Cost (DOC or DRC) Crewing, storing, maintenance, insurance, administration, etc. Voyage costs Variable costs associated with the particular employment Bunkers, port & canal charges, pilotage, harbor tug hire, port agency fees, loading/discharging expenses, etc.

4 In-house or independent entity under management agreement Assumption: SM is a separate entity on a full management package basis Accounting issues Budgeting Processing Reporting Cash flow forecasting

5 Ship characteristics (size, type & age of the vessel, type of Main Engine & Aux. Engines, intended registry, crew, trading pattern, etc.) Part of a managed fleet New or newly-acquired ship Technical inspection Examination of Class records

6 Budget Proposal Next is a budget proposal for a N/B 58,000 dwt Supramax Bulk carrier. For budget purposes, costs are on the basis of - Marshall Island registry - Full Indian crew Sheet - 1: Monthly Operating cost for 1st year of management; Sheet - 2: Assumptions for 1st year operating costs; Sheet - 3: Crew wages breakdown; Sheet 4-5: Crew expenses Breakdown with ITF cover; Sheet - 6: Lube oil expenses; The crew wages include good service bonus for senior staff and hold cleaning / scavenge space cleaning allowance for crew. Singapore has been assumed for purpose of Lube Oil supply and Crew change. Cost of forthcoming regulations, such as ECDIS, etc. are excluded from the budget. Docking and pre-delivery estimates are excluded.

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10 Number of crew members and nationalities Budget the main elements of crew costs Owners are looking for general figures, i.e. annual salary Leaves, overlapping Due allowance: crew bonuses, social costs, insurance contributions, pension funds, etc. Training Travel and repatriation Sundry medical expenses

11 Include victualing or provisioning of the ship Per person per day in USD Properly supervise the ship chandlers Quality of food, invoicing Stores vs. Spares: Consumables Wires & ropes for mooring or cargo handling gear, lashing material, packing material and gases or chemicals used for refrigerating plant, boiler or tank cleaning treatments, paints, cabin stores, ship s stationary, laundry and fresh water supplies Lubricants & greases (consumption)

12 Spare parts Repairs (shore labour or riding teams) Survey and classification fees Dry-dockings (spread the cost over a period of years on an accrual basis or as a special item)

13 Insurance premiums and estimated P&I calls (quotations & renewal negotiations) Slight variance with the actual cash position Deductibles to be decided

14 Superintending expenses, renewable dues, subscriptions and fees (including agency costs where applicable for owner s items) and communication costs Management fees

15 Cash flow forecast to be prepared based on budget Monthly periods Monthly funding requirement

16 Budget versus Actual analysis statement Monthly or quarterly as a record of management performance (Appendix)-percentage variance Monthly statements containing cumulative analysis Reasonably detailed documentary on all significant variances

17 Cyclical nature of international trade ad the shipping market Depression leads to vessels withdrawn from service (laid up) Maintaining the asset value Cost associated with proper care and preservation Crew, Class, Salvage Association Daily cost Reactivation expenses (involving drydocking and extra survey) Slow steaming as an alternative

18 Assumption for independent shipmanager with full package Contract Crew Commercial operations and chartering

19 Case Study I You have been asked to advise the costs associated with ship ownership. (a) Explain what costs would be incurred in acquiring a vessel. (b) Explain the difference between voyage costs and daily operating costs providing as fully as possible a list of each of these. (c) How would you allocate the following costs for a vessel under your management? Crew travel and repatriation Pilotage costs Light dues Repair of boiler War risk insurance Additional war risk premium Canal dues Tugs going into drydock Registration fees Supply of fresh vegetables

20 Case Study II You have been asked to brief potential investors on the various types of costs associated with ship-owning. a) Using examples, explain the difference in detail between voyage costs and daily operating costs. b) Explain all the costs an owner would probably incur with the acquisition of a vessel. c) The following invoices have been presented to you. Under which headings would you allocate the following costs? Pilotage fees Crew travel and repatriation Port dues Supply of Provisions Draft survey Supplementary P & I Call Initial registration fees Repair of Radio equipment

21 Case Study III You have been asked to prepare a budget for a client with a fleet of five Capesize bulkers. a) Describe in detail the typical costs included in a budget estimate of the daily operating costs. b) Explain how you would monitor all these costs during the management of the vessel and what circumstances might arise that could make significant variations to the figures.

22 Case Study III Examiners report: Another popular question which generally was well-answered, with some candidates giving quite detailed costs to be included in a budget. Merely listing the costs with only a brief explanation is not sufficient. Some candidates included bunkers in the daily operating cost (DOC) and while a small amount of hotel bunkers would be used for the vessel this is generally allowed for in the voyage cost estimate, as are port costs. The second part of the question was less well covered with some candidates focussing on controlling and reducing costs which, while admirable, was not what was required. You were asked to monitor the cost which means checking regularly through cash flow forecasts, monthly statements and noting and explaining variances. Significant variations might arise due to an accident to the vessel, a point made by some candidates, but so would a change to the trading pattern of the vessel, particularly if embarking on shorter voyages in a more expensive region. You would also be affected by changes in the exchange rates. The UK pound has strengthened against the US$ in the last few months before the exam which could make a significant difference to the purchasing value of your earnings.

23 Attempt the following and check your answers from the text: Prepare a budget estimate showing also daily cost and a cash flow forecast from the following information. Crew Officers and ratings pay, leave pay and overtime $25,000 per month Crew insurance and pensions $1,500 per month Crew establishment and travel $48,000 per year Crew sundries $5,000 per year The main crew change is expected in March at a cost of $21,000 the remaining costs will accrue evenly over the year. Storing Provisions allowance $4.00 per day for 20 crew plus 5% allowance for extra meals All deck and engine stores $52,000 per year Lubricants $56,000 per year assuming 295 days at sea Others $15,000 per year Main storing takes place quarterly commencing January. Maintenance All maintenance $165,000 per year accrued evenly each month Insurance Hull & machinery $90,000 per year paid quarterly commencing January P&I $40,000 per year advance call paid April, supplementary call of 20% payable October. LOE/War risk $20,000 paid February. Administration All admin costs total $108,000 accrued in equal monthly installments. No dry-docking or special surveys need to be budgeted.