Assalamualaikum, and welcome back to Orange Shots.
A ship is a very expensive thing.
It's not only expensive but it's quite big as well.
I've mentioned plenty of times in my previous videos that a ship
is like a small city floating on water.
And since it's a small city floating on water,
of course, it has the same fundamental needs a regular city does.
And if you take a small piece of iron, i.e., a ship, and get it to float on water
offer all kinds of facilities on it,
it will definitely cost a lot.
You've asked this question three times.
How expensive is a ship?
I believe the question should be, "How expensive is it to run a ship?"
I'm sure you've heard the saying: If you keep an elephant
the doors have to be big.
In the same way when you run a ship,
you have to make your doors bigger.
In my research about it over the last two days, I gathered all these documents.
Now I'll tell you how big your doors have to be to run a ship.
Keep one thing in mind. It's that
when running one ship and managing another ship is
the costs can vary a little bit.
Ships come in different types,
and they come in different sizes as well.
Different sizes of ships require different types of manning.
Their engine sizes will be different,
so the costs definitely vary.
The ship I want to talk about today
is a Suezmax ship.
Suezmax ships weigh around 150K to 160K tonnes,
i.e., the dead weight they carry.
Basically types of ships I've sailed on the most.
The ones I've captained the most.
Since I'm quite well-acquainted with these sorts of ships,
I can really conversate and tell you guys
how much it costs to run such ships.
The first shocker is when you buy a ship. They don't come cheap.
If we talk about the Suezmax Oil Tanker,
in today's economic climate, it will cost you
around 70 to 80 million dollars.
It can be more expensive, too.
It depends on the type of ship you want built.
We're talking about a brand new ship here.
The catch here is
you don't necessarily have to pay all $80 million out of your pocket.
If you have good ties with a bank and your credit ratings are good,
usually what owners do is that they
take out loans from their banks to buy a ship.
Ships can be leased too, there are many different ways but
you don't have to pay the full capital cost all at once.
It can be split.
But even after splitting it, it's still a lot.
You still have to pay 30-40% for it.
Even after 30-40% it's a lot of money.
By the way, if you want to convert,
it's pretty simple.
If you want to convert $1 to PKR,
multiply any given amount by 164.
If you want to convert an amount to INR,
multiply by 74.
And iff you want to convert $1 to Bangladesh Taka,
multiply by 85.
I'm telling you this because
I'll be mentioning all the costs in this video in US dollars
because international trading, buying, selling, etc.,
is calculated in American dollars.
Let's suppose you've bought a ship,
you already have a ship.
Now comes the next part,
and that's running a ship.
A ship's running costs are a lot.
But at the same time, if you can manage the ship properly,
if you're able to run it properly,
you can get most of your initial expenditures back.
The capital costs I just mentioned are usually around $80 million.
Then come the next three big costs: lubricating oil costs, fuel oil costs,
and then the third one, crew costs.
You need lubricating oil immediately
a new ship doesn't have sufficient lubricating oils
so you end up having to buy lubricating oils.
Again, that depends on the ship.
Depends on the machinery, the ship's deck equipment,
the ship's cargo pumps and everything,
your lubricating oil grades may vary.
I just check the most recently updated costs of lubricating oil,
and it's somwhere between $500 to $1000.
Let's assume an average of $750.
But this isn't $750 per tonne,
it's $750 per 200 liters.
The 200 liter drum costs around $750,
which is one lakh twenty-three thousand PKR.
So you get a 200 liter tonne for one lakh twenty-three thousand PKR.
The amount you have to use.
Third come the fuel costs.
You need fuel oil to run a ship.
You need it to run the generators, the main engine,
the machinery.
You need to burn all that in a boiler,
because again, you have to run many other things.
You need fuel oil no matter what.
The most commonly used fuel oils today are LSNGO or VLSFO.
VLSFO means very Low Sulfer Fuel Oil.
LSNGO means Low Sulfer Marine Gas Oil.
It's basically diesel oil but low on the sulfer.
Okay, if we talk about these,
let's assume an average cost again.
VLSFO costs $500 per tonne.
LSNGO is $600 per tonne.
These are the latest estimates.
My last ship would consume around 40 tonnes
40 tonne oil.
Whether it was diesel oil or VLSFO.
Estimating the price of this oil
your ship consumes thirty-six lakh PKR or eighteen lakh INR, or nearly
or twenty lakh Bangladeshi Taka worth of fuel oil in a day.
If you're running your ship at full speed, that is.
So, again, that is a humongous cost
you have to bear when you're running your ship.
The third biggest cost is
manning costs, i.e., the amount of crew you want to hire.
A ship the size of a Suezmax like my previous ship
usually has 25 to 27 crewmembers.
Their salaries are the first check,
because there are other costs included.
So if we just talk about their salaries;
I was just checking my previous ship's portage bill.
Every month, we'd have to pay our crew
one lakh six hundred, seven hundred seventy-one USD
That makes one crore, seventy-five lakh, ten thousand four hundred forty-four PKR
or sixty-four lakh eight thousand INR.
So these crew salaries are a given
whether your ship is running or not.
Then comes the victualing, i.e., the provision of food.
Of course, as an owner, you have to provide food to your crew.
All the crew present on your ship needs sustenance.
To check its costs, I was checking my previous ship's.
So every month on average,
we'd get twenty-five thousand USD worth of food on our ship.
That makes 41 lakh in PKR,
that you have to spend on the crew no matter what.
So you have to give the crew their salary,
and provide them with food.
Then come the crew's travel expenses,
for when they join your ship and leave it.
I've mentioned this many times before
and whenever a crew joins a ship,
the actual ship doesn't go to get them,
they come by air.
They come and go by air.
Again, I was looking at the last figures,
and the cost every month was
around $17K.
The amount we were spending on the crew's travel expenses,
their hotels, food, etc.
That makes twenty-seven lakh eighty-eight thousand
that you have to spend on your crew no matter what.
Now, these are all the main costs, you get me?
Now, let me remind you of one more thing,
I have a Facebook, Instagram, and Twitter.
You can follow me there if you'd like,
in fact, I'd love if you guys did that.
I often share off-topic comments and things there,
I'm slowly increasing the frequency too.
You'll find the links to my Instagram, Twitter, Facebook in the description.
I'll try to have them appear in my videos too.
For Facebook, it's Orange Shots,
on Instagram, it's raozahidnisar
and on Twitter it's NisarZed78.
I know they're weird. They're all different, but they're there.
Anyway, moving on to the costs.
The next major costs
for running a ship are insurance costs.
In insurance costs, we consider hull and machinery costs.
They're usually make up 0.02% to 2.5% of the ship's value,
that you have to pay every month.
Then comes the protection and indemnity costs,
against any incident that happens.
Then there's the war risk cost,
FD$D cost, or Freight Demurrage and Defence costs.
Then COFR, or the Certificate of Financial Responsibility.
You need these in the US and Canada against oil spills.
All these insurance costs are mandatory
whether your ship is running or not.
Then there are stores.
When there are people present on a ship, they need stores.
Stores like cabin stores, where they store their towels, sheets, pillows.
Their dishware, bowls, and spoons, etc.
It's important for you to provide these.
Safety items: like jackets, lifebuoys, whistles,
all the safety items you can imagine,
you have to provide them to your crew.
Then there are chemicals and gases,
There's cutting involved on a ship, welding too,
we need different gases to calibrate different pieces of equipment.
You have to bear all these costs
whether your ship is running or not.
Medical costs:
crewmembers on a ship rarely have to go outside for their medical checkups,
you still have to provide medicines, though.
You have to maintain a whole inventory of medicines.
Again, you have to bear that cost whether the ship's running or not.
Mooring ropes, to tie the ship to berths.
We have to provide those things too.
Paint. You have to keep the skip spotless,
of course, you're going to need paint for that.
Tools and hardware,
wood, nails, hammers, etc. You have to provide these, too.
These come with costs too, and these costs are there regardless
of whether the ship runs or not. A ship has to be maintained
so these costs are inevitable.
Then the costs of acquiring spares.
The main engine has to have spare parts. The boiler and generator, too.
The air conditioner, cargo and ballast system,
electrical repairs and parts, LSAs or Life Saving Appliances,
firefighting appliances or firefighting equipment
if you want to call it FFE.
You have to bear all of these costs.
You have to provide all these things,
angain you have to provide spares whether the ship runs or not.
It's important for a ship to hold spares.
If something needs repairing, it cannot be repaired without spares.
Then we have various costs. Management fee: you're managing a ship
via an agency. There's a fee for that, too.
Whichever port you stop at, you have to have an agent there.
Agency fees, launchers for different stores and spares have fees too.
Flag state expenses. You have to have your ship registered somewhere,
similar to how we get cars registered.
Similar to how you pay car registration fees,
plus annual road taxes.
Just like that, whichever flag, or country your ship is registered with,
you have to pay those expenses too, since your ship's registered there.
Classification fees, whatever class your ship is built under.
it's built under a certain standard.
You have to pay that standardization fee the first time,
and then again to prove that your ship meets that standardization.
Then there are third-party fees.
Vetting inspections, PSC inspections,
there can be so many things
that count for various costs.
We also have owner's costs. Owners disbursement,
master's entertainment. You go to different ports,
you get Marlboro cigarrettes distributed among the crew,
these costs cover all that.
Then you have the anvil and periodic servicing and inspection.
Every year, you call on the Classification Society,
and you call on the Flag State.
Then your superintendants visit the ship too.
All of these costs, again, are on you.
Then we have crew training costs.
The crew you want on board, you make sure they're certified to do so.
So for that, you have them trained,
so that they are well-trained when they get on board.
You get them trained to use the ship's ECDIS,
then there is other equipment that requires its own training.
SSO, or Ship Security Officer, has its own training.
Even if we talk about the minimum training required,
it still costs a lot of money.
Next we have surveys.
You have intermediate surveys, held every 2.5 years,
annual services, which are held annually,
then there are full surveys that can be held after every 2.5 to 5 years.
It all depends. Since we're not talking about surveys today, I'm not going to
go into those details.
Again, the owner is responsible for handling the costs of these surveys.
The ship's dry docking,
every 5 years, you get the ship out of the water,
on land. You have the ship checked and fixed for maintenance,
get its hull inspected.
You get all the hull fouling removed.
Dry docking also costs a lot of money.
Then we have our port operations.
This depends on the
terms and conditions established between you and your charter.
A ship stops at a port,
hires tug boats, pilots, it keeps the berth occupied.
Again, depending on the conditions of the charter party,
the cost could be shared, or fully be on the ship owner,
if you understand what I mean.
Running a ship isn't easy.
You've bought the elephant, now you have to take care of it, feed it, etc.
The main part, you have to build bigger doors so it comes and goes easily.
Now I'm going to give you a rough figure.
To run a Suezmax ship for a day,
what are the approximate costs?
Again, this all depends. There can be fluctuations.
But according to a rough estimation,
running a ship the size of a Suezmax,
with a properly trained crew,
it will take you around $16K everyday.
This amounts to nearly twenty-six lakh PKR,
for INR, multiply this figure by 75.
To convert to Bangladesh Taka, multiply by 85.
Now on to the next story.
Is a ship able to offer returns on its expenditures?
Again, it's seasonal. It depends.
I've seen cases where a company
had to face numerous losses for 1.5 years.
The company's ship suffered around $180
to $190 million, $70 to $80 million in losses annually.
But when business started booming,
it not only recovered all of its losses,
but its owner profited a lot, too.
As I told you, running a ship the size of a Suezmax could cost you
$16K per day.
But if your ship is loaded and running,
a Suezmax ship usually earns a minimum of $30K to $35K a day.
Subtract $16K from that
and you earn around $17K to $18K per day.
And if business starts booming,
I've seen these same ships yield $60K per day.
That's when these companies get filthy rich.
So it's all subjective.
You can have a ship if you can manage one.
If you run a ship successfully, it may be profitable for you,
but if you're a bad manager,
I've seen great companies go bust.
So this was today's video. If you enjoyed it,
or learned anything new,
don't forget to like, share, and subscribe.
I have a variety of different videos on my channel,
some I'll link here, and here.
You'll see some in the end cards too, be sure to watch them.
Take good care of yourselves,
remember me in your prayers.
With tons of love to my Orange Shots family,
and to-be Orange Shots family.
This is me Zahid Nisar.
You're watching Orange Shots.
And until my next video,
ALLAH Hafiz.