How to Reduce the Operational Cost of Your High-Speed Vessel

The maritime industry is highly competitive. Consequently, there is constant pressure to reduce costs and increase efficiency. In this article we will discuss where most high-speed vessels can find the best opportunity for reducing operational costs.

What is Operational Cost?

There are two main economic categories: Capital Expenditure (CAPEX) and Operating Expenditure (OPEX). CAPEX refers to the funds used to acquire, upgrade and maintain your vessel, whilst OPEX are shorter-term expenses required to meet the ongoing operational costs. As you know, the OPEX will over time exceed the CAPEX several times during the life span of a vessel. Consequently, a high CAPEX can be justified if it can substantially decrease the OPEX.

For high-speed vessels there are four major components of OPEX (operational costs):

• Fuel
• Maintenance
• Salary
• Other ongoing finances such as insurance etc.

There are less opportunities of cost-savings related to salary and insurance. As such, this article will focus on how to lower costs related to fuel and maintenance. These two areas are strongly affected by the choice of propulsion system.

Fit-for-purpose

The vessel type and its operating profile is a good starting point when considering the optimal propulsion system. If your vessel is hired to do jobs that require several different operating profiles, it is crucial that your system is both adaptable and flexible, thus allowing you to spend as much time as possible on the actual job, and less time on supporting activities.

Choosing the wrong propulsion system can lead to lower speed, damage, noise and poor operating/fuel economy. Consequently, the propulsion system of any vessel is considered an important investment that can substantially reduce operational costs.

The goal of such an investment, should therefore be to get into a positive-design circle, by ensuring that you can operate in a way that reduces costs and are left with a vessel optimized for its specific purpose.

In the next section we will discuss the four main areas that you need to evaluate in order to reduce OPEX.

1. Fuel-Efficiency

One of the biggest components of the OPEX is fuel cost. In fact, it can cover as much as 50% of the total OPEX. Consequently, there is a huge potential for costs savings within this area alone – and the bigger the fleet, the more you can save. In addition, decreasing the fuel consumption also reduces the environmental footprint with the same percentage.

However, the key is not only to become as efficient as possible, but to also operate as smart as possible. When having a zero-emission engine you need electricity. That electricity must come from an energy source, for instance a battery. The challenge is to use as little energy as possible. If you can limit the energy consumption, you also lower the amount of energy you need to carry, hence the actual need for installed battery modules is reduced. In return, you are left with a lower payload.

2. Planned maintenance & service network

In order to avoid additional, unnecessary downtime it is crucial that your vessel always follows the manufacturers recommended maintenance plan. The frequency of maintenance required will vary from vessel to vessel, but there will be daily, weekly and yearly tasks. However, the maintenance should be performed according to a fit to purpose schedule that are aligned with the vessel operation.

To lower time spent on maintenance activities, invest in products/equipment that are easy to maintain and with easy access to key spare parts. Furthermore, In the event of unplanned downtime, it is essential to have access to an efficient and quick service network of skilled service engineers, both in the field and in the event of product breakdown access to repair in a specialised workshop.

3. Product maturity

Well proven and mature technology is an important factor to reduce the risk of unplanned downtime. New technology increases the risks for operation downtime. When selecting a manufacturer, make sure that the technology is both state of the art and has a long history of well proven installations.

4. Education and competence

The skills and knowledge of the captain and his crew is also an important part of the operational cost. How the vessel is operated can be the difference between failure and success. Make sure that the crew has up to date knowledge and skills needed to operate.

Next steps – the OPEX selection matrix

To summarize we have created an OPEX selection matrix, where you can use these key targets and related questions to support your quest for reduced operational costs.