Analysis of Daily Vessel Costs
The cost of owning and operating dry bulk ships is the major component of our Group's total costs, and our ability to maintain good control of our "daily vessel costs" has a significant bearing on our operating margins and our financial performance overall. We provide below a short analysis of our daily vessel costs for a better understanding of their components and development.
Opex - The daily opex element of our vessel costs decreased 4% for Handysize and 7% for Supramax mainly due to the increased number of our owned ships leading to increased procurement and repair and maintenance cost efficiencies.
Depreciation - Daily Handysize depreciation (including capitalisation of dry-docking costs) increased marginally due to the delivery of our new vessels. With the delivery of our committed newbuildings, the number of Handysize and Supramax owned vessel days in 2016 is expected to increase to 25,410 and 6,000 respectively
Finance costs - Our owned Handysize vessels' daily P/L and cash finance costs were US$1,250 and US$880 respectively, and our Supramax daily P/L and cash finance costs were US$980 and US$930 respectively. The difference between the P/L and cash finance costs reflects the difference in the coupon and effective interest rate of our convertible bonds. Our Handysize daily finance costs were substantially unchanged compared to 2014 while Supramax daily finance costs increased due to the allocation of higher finance costs to this vessel type.
Charter-hire - Our chartered Handysize vessels' daily P/L and cash charter-hire costs were US$7,450 and US$7,900 respectively, and our Supramax daily P/L and cash charterhire costs were US$8,090 and US$8,600 respectively. The difference between the P/L and cash charter-hire costs reflects the write-back of onerous contract provisions made in 2014 relating to the 2015 element of our charter commitments.
Chartered-in days represented 53% and 76% of our total Handysize and Supramax vessel days respectively. Our Handysize chartered-in days decreased 16% to 27,480 days (2014: 32,850 days) while our Supramax chartered-in days increased 3% to 17,670 days (2014: 17,190 days). Our Supramax fleet benefitted in the weak market from its larger proportion of cheap short-term chartered-in ships and the redelivery of more expensive vessels chartered in 2014.
Daily cash cost - Our average owned and chartered daily cash cost excluding overheads was US$6,570 (2014: US$7,360) for our Handysize fleet and US$7,720 (2014: US$10,220) for our Supramax fleet.
Overheads - Our dry bulk direct staff overheads and office costs, along with all overheads categorised as indirect overheads, amounted to US$53.5 million (2014: US$58.5 million). Spread across our vessel days, the aggregate overheads translated into a daily cost of US$710 per ship per day (2014: US$740 per day). In previous years, indirect overheads were excluded.
The Group's total administrative expenses amounted to US$56.6 million (2014: US$75.7 million). The year-on-year saving of US$19.1 million reflects the reduction in costs after the disposal of most of our non-dry bulk operations and a range of cost savings initiatives undertaken during the year.
During the year, we secured 7,040 Handysize vessel days (2014: 11,740 days) and 1,240 Supramax vessel days (2014: 2,540 days) via variable-rate, inward charters with rates linked to the Baltic Handysize and Supramax indices. These index-linked vessels represented 26% and 7% of our chartered Handysize and Supramax vessel days respectively.
Our fleet of owned and finance-leased dry bulk vessels experienced an average 2.2 days (2014: 0.4 days) unplanned technical off-hire per vessel during the year, reverting to 2012 and 2013 levels.