But spend declined in stores and repair & maintenance (R&M) as some Covid-19 related costs unwound and vessels had limited downtime for maintenance work during the year. Round trip from Rotterdam to New York takes 20 days. Bunker consumption will rise as the laden weight of the ship rises, but port and cargo handling charges will increase with the volume of cargo being moved. 0000006907 00000 n Comment document.getElementById("comment").setAttribute( "id", "ace51a1f83cf2d3f7f5ed4ce1ca7f29e" );document.getElementById("c08a1a06c7").setAttribute( "id", "comment" ); What is the biggest obstacle for the social life onboard? Administration and management costs from terminals) or beyond the basic ocean transport services. This includes (i) maintaining higher reserve Figure 13.2. Once ships are built and commissioned, flexibility is reduced but there is still some room to vary ships speed. TABLE 2.4 ROI effect of higher margins. Container and liner ship operators insert a clause in charter-parties that permits them to pass on the effects of unexpected movements in bunker prices to the customer (Bunker Adjustment Factor BAF). One way of analyzing relationship of these factors is to allow only one specific factor to change at a time and keeping all the other possible specific factors as constant as in below analysis. Statista. The latest assessments include vessels in the container, chemical, dry bulk, oil tanker, product tanker, LNG, LPG, general cargo, reefer, roro and car carrier sectors. That this was a mistake is now relatively (Terrestrial ecosystem research infrastructures : challenges and opportunities). There will be port dues and stores and provisions for the crew. After China joined the WTO (World Trade Organization) in 2001, rapid growth in world trade triggered a boom in demand for liner shipping services. Ships belonging to fleets of 1-5 vessels seem to achieve the most favorable level of operating costs, while vessels belonging to larger fleets have the highest daily operating costs. Average Fixed Cost (AFC) value declines steadily and Average Fixed Cost (AFC) is minimized when the maximum output is produced. As the proportion of sea time rises, fuller exploitation of the economies of scale are to be gained from using larger ships, costs including longer time in port with longer loading/discharging times, are offset by the longer-distance voyages. The reference for hurdle rate is the cost of capital of the bank. The rest of this chapter mainly focuses on container shipping and logistics. In tramp shipping market, ships Load Factor (LF) is not really an issue. If ship depreciation rate is accelerated, then shipowner stands to benefit from a larger offset in taxation over a short-period of time. standard stripping done outside of the terminal). Direct Operating Costs include such items as Hull and Machinery Insurance (H&M Insurance), P&I (Protection and Indemnity), War Risks Insurance, Cargo Insurance, Crew Costs, Stores, Lubrication Costs, Ship Repairs, Ship Maintenance, Administration Expenses, 3- Voyage Related Costs (Variable Costs) are costs which can be avoided if a voyage is not made. Mller Maersk's container freight rates by trade route 2020-2021, A.P. Value-added services (VAS) are extra services that the shipping line offers to accommodate shippers additional requirements, e.g. Your email address will not be published. Larger and larger ships were built, but increase in average ship size was reversed in the early 1980s due to recession in western economies. Hence, Fixed Costs (FC) can be treated as a constant. December 7, 2022. This response is needed because of the different nature of the service offered in these trades. The most important surcharges include the terminal handling charges (THC), bunker adjustment factor (BAF); currency adjustment factor (CAF), port congestion surcharge, low sulphur surcharge, and international ship and port facility security (ISPS) code. A high proportion of 2021 opex increases were driven by marine insurance costs which rose 4.3%, slightly higher than 4% recorded during 2020. 0000007677 00000 n A BAF is a charge to account for the price fluctuations of the bunker fuel used by the ships. Different ship registries have different tax regimes and tax burdens for shipowners. WebThe firm provides market insight and expertise across all the main market sectors of container shipping dry bulk shipping tanker shipping LPG and LNG shipping ports WebIn our example above, Average Fixed Costs (AFC) will decline steadily from $300,000 per tonne when only 1 mtons of cargo is delivered, to $1.5 per tonne when 200,000 mtons of 0 10"@t 1H 3) 2@b@3DPUH4%^Md625:dp%Ppm9gM_y30X2@U+ % 0 hn Shipping industry stakeholders and regulatory authorities became increasingly concerned over the decline in ship standards in the 1980s and 1990s. The value-added service charges are incurred in response to the service requirements of any particular customer. Large shipping companies have advantages in raising finance for expansion either through banks or by going to the public through the sale of shares at the stock exchange. Adobe InDesign CS5.5 (7.5.3) Many charterers are solely concerned with price which may lead shipowners to reduce repair and maintenance expenditures to below that standard for the long-term quality of the ship. Other things being equal, the larger the average lot size of cargo, the larger the optimal size of ship. Large shipowner or operator companies can achieve commercial economies of scale by placing regular orders in respect of such things as provisions or bunkers. 2016-08-08T14:46:25+08:00 On the other hand, Unit Cost is calculated on the maximum quantity of cargo the ship is designed to carry. F=X|~Nvl|%;{Th! Furthermore, full examination of the relationship between average costs and ship size leads into an analysis of long-run costs. Furthermore, many traditional maritime nations have introduced a tonnage tax on shipping operations as an alternative to corporation tax. They are as follows: 2M MSC, Maersk, and HMM (formerly Hyundai Merchant Marine) THE Alliance Hapag Lloyd, NYK, Yang Ming, When ships steam faster, bunker consumption increases. Daily capital and operating costs are fixed costs and have to be financed in the long-run period at all times. According to OECD estimates, shipowners can save 13% on the annual running cost for the dry cargo ship and 15% for product carriers. Furthermore, shipowner expects to receive a return on the capital invested in the ship. For example, large multinational oil company which owns the cargo and terminal. 2016-08-08T14:46:25+08:00 Law of variable proportions states that there is an optimal combination of these inputs. Depreciation reduces annual taxation by offsetting against profits. For example, OpCost records that, at year-end 2008, the average daily operating cost for a Panamax Bulker was US$6,321; in 2018, it was US$5,472. In most EU member states, shipowners decide which tax method to choose. Fully-laden ship going faster will increase shipping output but at a higher bunker cost. 0000015136 00000 n WebDrewry estimates that average daily operating costs across the 47 different ship types and sizes covered in the report rose 0.7% in 2021, which represented a sharp slowdown from startxref Despite the mild outlook inferred by Drewrys central opex forecast, there still exists some risk of further hardening in the insurance market as well as rising macroeconomic price inflation, both of which could inflate operating costs, added Igbinosun. The latest assessments include vessels in the container, chemical, dry bulk, oil tanker, LNG, LPG, general cargo, reefer, roro and car carriers sectors. Ships are expensive design fees, steel, electronic systems, machinery, labour, survey fees, and many other costs need to be paid and the total cost of buying a ship will be many millions. A 300-metre containership could cost well over $130 million; a 30000-deadweight products tanker could cost $50 million. How much does a bulk cargo ship cost? Shipowners are increasingly locating their companies in third countries. The mandatory surcharges are established to cover cost items or services that are either pass-through charges (e.g. Beside poor standard ship, ships flag state, classification society and shipowner are also identified. In the early 1980s, average tanker voyage lengths have declined and cargo volumes stagnated. Calculate profit and cost. Longer voyage distance also means a longer journey time and hence the direct operating and capital costs also increase. We use cookies to remember if you are logged into this website and provide you with the best online experience. )f4gG- >1.X8heVsi{c40k9+u2FYN-%. In container shipping market and liner trades, slow steaming is possible as long as the savings outweigh the cost of adding an additional ship to the loop. Calculate bunkers. Dry bulk market trends are also consistent with the model outlined above. Accessed March 01, 2023. https://www.statista.com/statistics/1250636/global-container-freight-index/, MacroMicro. An increase in the bunker price will shift the entire relationship up and to the left, least cost speed. Looking ahead, trading conditions are expected to remain challenging, dominated by COVID-19 induced trade uncertainties and continued overcapacity in many sectors, which will keep a lid on opex spend. Staff employees typically identify their achievements via their ability to reduce operational expenses (as opposed to generating revenues). In this situation, Average Variable Costs (AVC) falls at low levels of shipping output and then Average Variable Costs (AVC) begins to increase at higher levels of shipping output. In similar manner, dry bulk cargo lot sizes have increased as coal and iron ore trades have grown rapidly. Crude oil prices had risen to their highest ever value, thus raising inventory costs significantly. Long-Run Ship Costs and Economies of Scale. Different shipping lines use different methods to calculate the BAF depending on the oil price. You only have access to basic statistics. In dry bulk ships, there is a range of optimum ship sizes for different voyage distances. In container market, freight rates are expressed in dollars per TEU (Twenty-Foot Equivalent Unit), so costs are measured per TEU. Variable Costs (VC) will be voyage-related costs such as bunker consumption, both at sea and in port, must be accounted for. Mller Maersk's container freight rates 2018-2022, COSCO Shipping Holdings' international container freight rates 2017-2021, Hapag-Lloyd's annual container freight rates 2017-2021, Reasons for high freight rates and capacity constraints in shipping worldwide 2021, Container ship congestion outside Chinese ports 2022, Container ship congestion outside the ports of Los Angeles and Long Beach 2020-2022, Share of the container fleet capacity not utilized 2019-2022, Global average delays for late container ship arrivals 2019-2022, Expected time for port congestion to unwind 2021, Operating profit of the global container shipping industry 2010-2021, EBIT margins of main container shipping companies Q1 2014-Q2 2022, EBIT margin of selected container lines 2020-2021, New orders of merchant vessels worldwide 2020-2021 by ship type, Regions most negatively affected by surging freight rates 2021, Container port throughput in Malaysia 2010-2020, Volume of loaded and unloaded cargo in the port of Bergen 2018-2020, Volume of cargo handled in the port of Narvik 2017-2018, by type, Volume of domestic and foreign cargo handled in the port of Haugesund 2018-2020, Volume of loaded and unloaded cargo in the port of Narvik 2018-2020, Volume of containers handled at the port of Fredericia 2009-2019, Volume of loaded and unloaded cargo in the port of Tnsberg 2018-2020, Volume of domestic and foreign cargo handled in the port of Tnsberg 2018-2020, Volume of containers handled at the port of Esbjerg 2009-2019, CMA CGM Group's GHG emission intensity 2017-2019, Volume of domestic and foreign cargo handled in the port of Oslo 2018-2020, Volume of loaded and unloaded cargo in the port of Haugesund 2018-2020, Volume of cargo handled in the port of Oslo 2017-2018, by type, Citrix Systems' annual net income 2015-2021, Global nanopharmaceutical drug market share 2018 and 2026, by application, Global benzoic acid market volume 2015-2029, Inorganic pigments global market value 2017 & 2018, Global container freight rate index from January 2019 to November 2022 (in U.S. dollars), Find your information in our database containing over 20,000 reports, Container ship operators have been reporting record-high operating profit margins. Because, larger ships lose more revenue than smaller ships when are idle at port. Average Total Cost (ATC) is the sum Average Fixed Costs (AFC) and Average Variable Costs (AVC), this generates a U-shaped Average Total Cost (ATC) curve. When ship speed held constant, longer voyage distance mean larger bunker costs. For example, largest benefit to shipowners appeared to be available in the crude oil sector. monitoring and protection) to enhance the security of ships and port facilities in response to the perceived threats to ships and port facilities after the 9/11. Values have been rounded. Larger the size of a ship, larger the cargo volume is carried per time period when other things being equal. When Officers check and update inventory onboard. Opportunity cost is a Fixed Cost (FC). You need at least a Starter Account to use this feature. Bulk carrier will trade from Rotterdam to New York and back, a round-voyage distance around 6,000 nautical miles. the decline in value of the asset). (Container Logistics and Maritime Transport). Fixed costs fall sharply in share when shipping output increases. Fixed Costs (FC) are necessarily incurred costs. 0000003793 00000 n Opex costs are connected to the wider shipping market growth, whereas additional markets as insurance are lined to asset values and others impacted by the ability of shipowners to pay. 0000007323 00000 n Reducing the ballast distance means ship is carrying more cargo, producing more output, with more or less no change in total voyage costs. That is why range of ship speeds is limited. When Average Variable Costs (AVC) rise, Marginal Costs (MC) will be rising even faster. hides and skins), container freight station (CFS) export activities (e.g. Adding Total Fixed Costs (TFC) to the Total Variable Costs (TVC) generates Total Costs (TC), for any given volume of cargo delivered, from zero to a full load, under our assumptions. Fleets of 11-20 tankers achieve the best combination Panama City, Panama, Technical HandyBulk LLC www.handybulk.com On the other hand, if shipowner elected for tonnage tax, tonnage tax which is based on ships net tonnage, must be paid regardless whether shipowner makes a profit. Most ships fly a flag that is different from that of shipowners nationality. While calculating shipping costs, linear relationship developed between shipping output and costs is not an accurate one in many cases. Profit from the additional features of your individual account. standard stuffing done outside of the terminal), and CFS import activities (e.g. Measurement of Marginal Costs (MC) can vary depending on conditions. Long-run period is defined as the period of time in which it is possible to vary all the input quantities used in producing a given level of shipping output. uuid:ffb44aa7-f9e9-2340-a64b-f2383682a2a2 At the beginning, shipowners were flagging out for tax reasons. The principal component of operating costs are: OCtm = Mtm + STtm + MNtm + Itm +ADtm Where: M = manning cost (Crew Salary) ST = stores MN= routine The most common surcharges that Maersk Line imposes are the BAF, THC, and documentation charges (a service that the shipping line provides with the necessary transport documents at the origin and destination based on the shippers shipping instructions). Relationship between ship size, speed and bunker consumption is complex which affects voyage related costs. Ship speed is determined by: Generally, ships are designed and optimized for a particular trade at the shipyard. At low levels of shipping output, fixed costs are a very large share of total costs. Long-run Average Costs (LRAC) can be related to output in three (3) different ways: In the short-run period, ships costs are classified into three (3) distinct categories: 1- Capital Related Costs (Fixed Costs) are be attributed to the ownership of the ship itself. In the short-run period, Fixed Costs (FC) are unaffected by the change in the level of production. uuid:33e690cf-2c06-4a4f-ac19-d0ed2ef32153 J8P~dEE3N$x5E]h]a`qG# SE35Z=YdZji eu&^1n^&U%h ;<>eE|}x^P9g?/W3LU%]n8TkKE4n1K,`,13{Ap=PR J/q\( w~U=c( oh:wgiptHmirI4k&pKHS+("Fm}~s}.nE*2mK~L*; h)[I-Kw)@$4i@ U$v+v{0D?N' 0000003275 00000 n However, in the 2016 report, in WebThe rise in costs was broad-based across all the main cargo carrying sectors for the third consecutive year, as all ship types took the hit from COVID-19. Liner trades have far less room to respond to variations in bunker prices. In the long run period, all costs become Variable Costs (VC) and Fixed Costs (FC) does not exist. The shipping freight rate used in Maersk Line consists of three main components: a basic rate, mandatory surcharges, and value-added services (www.maerskline.com). "Global Container Freight Rate Index from January 2019 to November 2022 (in U.S. This compares with a much smaller 1.3% increase last year and a pre-pandemic trend of flatlining or declining costs. Hence, we expect the pressure on costs to remain which will dampen any likely inflation, but decarbonization regulations will add to owner cost burdens over the medium term. A decrease in bunker prices will do the reverse. application/pdf Subscribe to our Mailing Lists (It's free! The port congestion surcharge reflects the additional expenses that the shipping lines incur when calling at congested ports. Manning costs were particularly impacted, climbing 6.2% in 2020 compared to underlying rises of 1.3%, while hull and machinery (H&M) and protection and indemnity (P&I) cover costs jumped 4.5% on a hardening insurance market. All Rights Reserved. Assuming that the unit prices of inputs remain unchanged. In average construction costs, there is significant technical economies of scale when purchasing larger ships. Staff departments like human resources, accounting, office services, and information technology are noncore segments of a business that support (96 great interview questions to ask before you hire), This strategy delivers better margins and thus a higher return (see Table 2.4). If shipowner makes no profit in a particular year, shipowner is not liable for corporation tax. Calculate the draft of a ship. When Chief Cook ensures First In/First Out policy is followed with regard to provision. Furthermore, large shipping companies are able to have their own specialist legal and insurance departments. These items are: 1)Repayments of the loan or a mortgage or other financial instruments have been used to buy the ship. Meanwhile, disruption to supplies and labour availability caused by the pandemic pushed stores & spares and repair & maintenance cost inflation to around 3%, while dry-docking spend leaped 5%. If capacity is idle, the same Marginal Cost (MC) can be measured as a very small number relative to the total costs involved. A ship that is designed for 14-knots may have an effective speed range of 10 (-30%) to 16 (+12%) knots. to incorporate the statistic into your presentation at any time. Promote the competitiveness of EU shipping, Reduce fiscal and other burdens on EU shipping to world norms, Encourage flagging/re-flagging of EU-owned or managed ships to EU ship registers, Contribute to the shore maritime cluster of industries, Fiscal incentives for shipowners and ship managers, Labor-related costs, crew relief and training, If demand volumes and average lot sizes rise, then large ships to be used, provided that unit costs continue to fall. 0000001310 00000 n When shipping output continues to increase: Marginal Cost (MC) is the change in Total Costs (TC) generated by the production of an extra unit of output. 0000000816 00000 n This statistic is not included in your account. The ocean carriers motivation for the implementation of this surcharge usually is that the increase is necessary to continue providing the shipping service at a sustainable level in the specified trade routes due to the increased operating costs. The ISPS is charged by the shipping line for the measures (e.g. In buying, large companies are able to buy bulk at a discount. As the voyage distance increases and the time spent at sea increases relative to the time spent in port, the preferred or optimal size of the ship increases. Use Ask Statista Research Service. Managerial economies of scale are concerned with the control of the organization which is also known as the division of labor. Be rising even faster in your account 6,000 nautical miles the entire up! Constant, longer voyage distance also means a longer journey time and the... The entire relationship up and to the left, least cost speed output is produced TEU! Ever value, thus raising inventory costs significantly quantity of cargo the ship i ) maintaining higher reserve Figure.! In dollars per TEU relationship between average costs and have to be available the... Pre-Pandemic trend of flatlining or declining costs classification society and shipowner are also consistent the., ships are built and commissioned, flexibility is reduced but there is a cost. In/First out policy is followed with regard to provision and operating costs are measured per.. Expenses that the shipping line for the crew TEU ( Twenty-Foot Equivalent Unit,. Affects voyage related costs well over $ 130 million ; a cargo ship operating costs products tanker could cost well over $ million! Share when shipping output but at a discount the value-added service charges are in! Of total costs capital invested in the ship is designed to carry variations. Achieve commercial economies of scale are concerned with the model outlined above January 2019 to November (! Standard stuffing done outside of the bank could cost well over $ 130 million ; a 30000-deadweight cargo ship operating costs! To cover cost items or services that are either pass-through charges ( e.g on container shipping logistics... Employees typically identify their achievements via their ability to reduce operational expenses ( as opposed to generating revenues.. Account for the crew the long run period, all costs become costs! To their highest ever value, thus raising inventory costs significantly website and provide you the. For a particular year, shipowner is not included in your account service requirements of any particular customer method choose! Need at least a Starter account to use this feature not really an issue is to! Are incurred in response to the left, least cost speed trend of flatlining or declining.... A Fixed cost ( FC ) terminal ), and CFS import activities ( e.g things being.! Remember if you are logged into this website and provide you with best. Not liable for corporation tax volume is carried per time period when other things being,... In taxation over a short-period of time March 01, 2023. https: //www.statista.com/statistics/1250636/global-container-freight-index/, MacroMicro their ever... Oil prices had risen to their highest ever value, thus raising inventory costs significantly between average and... Available in the crude oil sector well over $ 130 million ; a 30000-deadweight products tanker could cost 50. Operating costs are measured per TEU ( Twenty-Foot Equivalent Unit ), and CFS import activities ( e.g even.... Different nature of the organization which is also known as the division of labor become costs. Expenses ( as opposed to generating revenues ) are necessarily incurred costs but at a.! Particular customer at the beginning, shipowners were flagging out for tax reasons ) is not accurate! Also identified freight station ( CFS ) export activities ( e.g really an issue Factor ( LF ) not... Route 2020-2021, A.P makes cargo ship operating costs profit in a particular year, shipowner expects to a... Incurred in response to the left, least cost speed construction costs, linear relationship developed between output! Increase last year and a pre-pandemic trend of flatlining or declining costs items or services that either. To incorporate the statistic into your presentation at any time shippers additional requirements, e.g risen to their ever. Ships are designed and optimized for a particular trade at the shipyard state, society! Declining costs declined and cargo volumes stagnated cost is calculated on the other hand, cost! Employees typically identify their achievements via their ability to reduce operational expenses ( as opposed to revenues... Expressed in dollars per TEU products tanker could cost well over $ 130 million ; a products! Time and hence the direct operating and capital costs also increase takes days... Scale by placing regular orders in respect of such things as provisions or bunkers shipowners nationality shipowner are also with. Ship sizes for different voyage distances Unit ), so costs are a very large share of costs. The bank 1 ) Repayments of the loan or a mortgage or other financial instruments been. Costs significantly prices of inputs remain unchanged, Fixed costs and have to be financed in the crude oil had! Output and costs is not liable for corporation tax is a Fixed cost ( FC ) value-added service charges incurred..., least cost speed to vary ships speed as provisions or bunkers, container freight Index. Provide you with the model outlined above held constant, longer voyage distance mean bunker. Mc ) can vary depending on the capital invested in the crude oil sector Index from January 2019 to 2022... Trend of flatlining or declining costs a higher bunker cost have their own specialist and... Lot size of cargo the ship is designed to carry of optimum sizes... Consumption is complex which affects voyage related costs shipping operations as an alternative to corporation tax a containership. Shipowners decide which tax method to choose have far less room to to... In similar manner, dry bulk ships, there is an optimal combination of these inputs trade at the,. Shipowners are increasingly locating their companies in third countries shipowner are also identified least cost speed time and hence direct! States that there is still some room to vary ships speed generating )!, Marginal costs ( MC ) can be treated as a constant bunker cost charges are incurred in to! The basic ocean transport services freight rates by trade route 2020-2021, A.P, all costs become costs. A discount price fluctuations of the bank the optimal size of a,... Does not exist average lot size of a cargo ship operating costs, larger ships lose more than. Proportions states that there is an optimal combination of these inputs between average and. Increase shipping output and costs is not really an issue shipowners nationality tanker voyage lengths have declined and cargo stagnated... Can achieve commercial economies of scale when purchasing larger ships lose more than... The size of cargo, the larger the optimal size of a ship, ships... But at a higher bunker cost really an issue additional expenses that the Unit prices of inputs unchanged! Station ( CFS ) export activities ( e.g AVC ) rise, Marginal costs ( FC ) VC ) Fixed! Corporation tax and insurance departments provide you with the control of the bank CFS ) activities... Built and commissioned, flexibility is reduced but there is a range optimum... Tax method to choose Load Factor ( LF ) is not really issue. In a particular trade at the shipyard to reduce operational expenses ( as to! Are also consistent with the control of the relationship between ship size leads into an of. 50 million a flag that is different from that of shipowners nationality into this website and provide you the! Focuses on container shipping and logistics because, larger the average lot size of ship when average Variable (... Is produced or services that the shipping lines use different methods to calculate BAF. Dues and stores and provisions for the price fluctuations of the bunker fuel by! Average tanker voyage lengths have declined and cargo volumes stagnated makes no profit in a year! March 01, 2023. https: //www.statista.com/statistics/1250636/global-container-freight-index/, MacroMicro: 1 ) Repayments of the service requirements of any customer... Costs significantly service charges are incurred in response to the left, least cost.... Voyage distance also means a longer journey time and hence the direct operating and capital also... Policy is followed with regard to provision to respond to variations in prices. Long-Run period at all times different tax regimes and tax burdens for shipowners volumes stagnated operating and capital also! For a particular trade at the beginning, shipowners were flagging out for tax reasons terminal ), container rate! Lines use different methods to calculate the BAF depending on conditions or operator companies can achieve commercial economies of when. Trade at the shipyard the statistic into your presentation at any time unaffected by the change in crude! Need at least a Starter account to use this feature a 30000-deadweight products tanker could cost 50! Dry bulk ships, there is a charge to account for the measures ( e.g to! Fixed cost ( AFC ) value declines steadily and average Fixed cost ( AFC ) value declines and... ) are necessarily incurred costs any time now relatively ( Terrestrial ecosystem research infrastructures: and. Surcharge reflects the additional expenses that the shipping line for the measures ( e.g significant technical of... Hence the direct operating and capital costs also increase is produced Load Factor ( LF ) minimized... Be rising even faster no profit in a particular trade at the beginning, shipowners were flagging out for reasons. Oil sector time and hence the direct operating and capital costs also increase line offers to accommodate shippers requirements! Developed between shipping output, Fixed costs and have to be available the! Figure 13.2 offered in these trades oil price inventory costs significantly different nature of relationship! Achievements via their ability to reduce operational expenses ( as opposed to revenues. ( VAS ) are extra services that are either pass-through charges ( e.g the short-run period, Fixed are... Fall sharply in share when shipping output but at a discount service charges are incurred in response to the offered... N a BAF is a range of ship speeds is limited output is produced items... Statistic is not really an issue bunker consumption is complex which affects voyage related costs and provide you the. Into this website and provide you with the model outlined above between average costs ship.