Voyage Estimating Flashcards
What is the difference between voyage costs and running costs?
Voyage costs are those applicable to the voyage in question; port charges, bunkers, specalised cleaning requirements, additional insurance if required (e.g. war risk premium, premium for breaking international navigating limits)
Running (or operating) costs include crew wages and other crew costs, stores/provisions, minor repairs, H&M insurance and possibly drydock/special survey costs
Most shipping companies will have an accounts department responsible for calculating a daily running cost (DRC) which can be used in voyage estimates
What is the breakeven rate?
gross expenses over ws 100 freight minus commision
How do you calculate total freight for a voyage?
Cargo qty multiplied by WS flat multiplied by the WS rate plus any freight differential
What costs should be included in a normal voyage calculation?
- Load port costs
- Discharge port costs
- Bunkering port costs
- Total bunkers (including laden leg, ballast leg, and those used in load and discharge port)
- Canal transit
Why might lumpsums be preferable to WS rates for backhaul routes?
WSc rates are calculated on a round voyage (note that this means total miles must be divided by 2 to get nm per leg). This causes wide rate differentials when the voyage is partly a backhaul (a voyage that would usually be whole or part of a ballast leg). In these situations a lump sum will be simpler to agree upon and calculate.
Always be clear what a lump sum freight rate actually includes/excludes.
What factors should be considered when estimating voyage duration?
- Speed and nm
- Weather (poor weather delays in some areas, or favourable currents/winds in others)
- Time at bunker ports as needed
How do you calculate voyage duration in days?
Distance in nautical miles divided by speed in knots = time in hours
Time in hours divided by 24 = time in days
Time (days) = Distance (nm) ÷ Speed (knots) ÷ 24
How is port time calculated?
Usually the laytime for tankers is 72 hours plus 6hrs NOR at each port, resulting in a port time of 3.25 days
Despite this, WSc’s estimate allows for four days plus 12 hours (4.5 days) - this allows for certain delays, such as the inability to move from ancorage to berth due to weather conditions/tide/daylight
The ultimate duration of port time used in a voyage estimate depends on the liklihood of the vessel completing its operations within a certain timeframe
What factors besides a vessel’s cubic capacity will influence the maximum cargo lift?
- The draft restriction of any ports/berths used
- Loadline zones
Where draft limits apply, how is the maximum cargo lift calculated?
- The difference between the vessel’s summer draft and avalible draft in centimetres
- This difference in centimetres is multiplied by tonnes per centimetre immersion (TPC)
- Deduct this from summer deadweight to find total avalible deadweight
- Subtract bunkers, fresh water and constants
- This leaves the avalible DWCC
Describe FWA
Fresh water allowance
Salt water is more dense than freshwater, meaning that a vessel’s draft increases when moving from salt water to fresh water
The amount that any ship’s draft changes when moving from saltwater to freshwater or vice versa is the fresh water allowance
What is gross voyage surplus and how does it differ from TCE?
- Gross voyage surplus is the total profit from a voyage before deducting vessel running (/operating) costs
- It includes bunkers, port charges, canal dues, agency fees etc
- It is expressed in total USD
- TCE = time charter equivalent
- Expressed as a daily rate, not lump sum
Describe sulphur limits for bunkers
In sulphur emission control areas (SECAs) the limit is 0.01%; this includes the Baltic Sea, the North Sea, the English Channel, and the coastal waters of the US and Canada
Following the 2020 IMO rule change, the limit in other areas was reduced from 3.5% to 0.5%
Vessel operators must either use lower sulphur fuel or fit scrbbers to clean their emissions
What is a scrubber, and what different types are there?
A scrubber works by cleaning the exhaust gas of a ship, usually via water in a washing system. These then require onshore processing to process the resulting particulate matter.
* Open Loop Scrubber system
* Closed loop scrubber system
* Hybrids
Explain an open loop scrubber system
An open loop scrubber uses seawater to remove SOx (sulphur oxide) from the exhaust; as the exhaust gas enters the scrubber, it is sprayed with seawater, where any SOx reacts with the water to produce sulphuric acid. The acidity of this is somewhat neutralised by the alkiline seawater. The washwater is then treated. Once it’s confirmed that it meets MEPC 184(59) discharge criteria, it is discharged into the sea.
This discharge is banned in the territorial waters of Singapore, Malaysia, India, the UAE, Europe, Russia, the US and in the Suez and Panama canals. One solution for this is to dedicate a tank to store this water to be released in other areas, or to simply buy lower sulphur fuel in when operating in these areas and not to use the scrubber (although this fuel is more expensive)
Explain a closed loop scrubber system
A closed loop scrubber system uses washwater that is circulated within the scrubber. Exhaust gas enters the scrubber and is sprayed with fresh water that has been mixed with caustic soda. The SOx reacts with water to create sulphuric acid, which is neutralised by this caustic soda, meaning it can be recirculated.
Small bleed-offs are taken from the closed loop, and once treated to meet IMO requirements can be discharged overboard or stored in a holding tank for periodic removal
What is a hybrid scrubber system?
A combination of closed and open loop scrubber systems, whereby open loop piping is added to a closed loop system to allow for periodic discharge/use of seawater as neccesary
Where can port costs be found for estimation purposes?
- Most shipowners will know the costs associated with frequently visited ports
- Bimco and Intertanko provide some estimates (but check they are up to date)
- If time permits, reach out to a port agent. For an accurate estimate, the agent will need the vessel’s name, flag, deadweight, draft, LOA, gt and nt.
What port costs are considered voyage costs vs running/operating costs?
Voyage costs: the usual port fees, plus pilotage, towage, line handling, light dues, and agency costs
Operating costs: crew expenses/repatriation, air fares, cash to the master, spare parts and repairs/servicing
Note that some port agents will include these together on port disbursement documents
What types of additional insurance premium may be incurred in a voyage?
These are voyage costs, not operating costs
- Breaking International Navigational Limits (INL)
- Additional war risk premium (AWRP) - *note that the ship’s usual H&M insurance covers war risk in most areas, additional insurance is only needed in exclusion areas *
- Ships that are considered over age by the cargo underwriters - this extra insurance premium falls to the charterers as the insurer of the cargo, but in weak markets may try to impose this on the shipowner
What are INL?
International navigational limits - areas considered too dangerous to transit under normal conditions at certain times of year (usually winter due to ice risk) These are:
* The Arctic
* Northern seas such as the White Sea
* The Baltic
* Greenland
* East North America; Hudson’s Bay, Great Lakes, St Lawrence River
* West North America; Alask
* Southern Ocean
* Kerguelen and Crozet Islands
* East Asia; Sea of Okhotsk, Kamchatka
* The Bering Sea
What crew related expenses might be considered voyage expenses rather than running costs?
- Crew war bonus
- Cold weather clothing for icebound areas
An advantage of WSc is that there is an agreed rate to a range of ports, and the ship owner will make around the same returns regardless of which ports are nominated. With this in mind, how should ranges of ports be handled when giving lump sum rates?
Take the load and discharge ports that are furthest apart within the agreed range
Find out if multiple load or discharge ports are required
