voyageestimating

VOYAGE ESTIMATING

By Venchislav Karchev on December 25,2006

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» VOYAGE ESTIMATING

by infomar posted on Dec 25,2006

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» LAYTIME


Lesson 5 discussed the importance of accurate forecasting of outgoings or costs; every bit as vital is forecasting income. Inevitably this will involve comparing

one course of action with another to see which produces the best yield.

Whether the management department or company becomes closely involved in

such calculations or whether this problem is left entirely to the shipowner's

chartering department, it is important the Ship Manager is fully aware of the

process of voyage estimating. If for no other reason, it is vital to understand

how various pieces of data, supplied by the ship manager, fit into the process of evaluating the profitability of a

proposed voyage.

The first essential is to examine the subject heading itself. "Voyage Estimating" includes both voyage and time

charter trips, the latter are rarely as straightforward as they seem and the pitfalls will be explained in due

course. The word "estimate" speaks for itself and it is necessary to point out that ships do not run like

clockwork; it is, therefore, impossible to calculate to perfection. That is not to suggest that the aim should be less than total accuracy and it is essential to seek to achieve this and to test the accuracy of the estimates

against the final voyage results.

For voyage estimating it is also essential to have knowledge of maritime geography, with particular regard to

distances and load line zones. There are several sets of distance tables commercially available which can be

used, but to avoid absurd mistakes one should have a fairly accurate idea of the major world distances. A useful

method is to divide the world into areas, naturally this mainly falls into oceans, and then learn a number of

strategic mileages across each area. Alternatively, instead of actual distance one can think in terms of days

steamed, and as a useful guide, a speed of 14 knots works out at almost exactly 3 days per 1,000 nautical

miles. On this basis, it is easy to remember that a transatlantic voyage from US Gulf to Rotterdam is 15 days

whilst that from Hampton Roads to the same destination lasts for 11 days. Under this simple system

representative voyages can be calculated and memorised. Provided you remember to correct the time for vessels

of differing speeds, this should make the task considerably easier.

Having worked out the length of the sea voyage, a skeleton can be produced on which to hang the flesh of the

estimate and to consider the basic requirements.

The Length of the Voyage

Perhaps the first essential is to define the word "voyage" since this can mean different things to different people.

The main point is to ensure that you always work in the same way to avoid confusion and it is recommended that

the commencement of the voyage should always be from the time and the place where the ship completes

discharge of the previous cargo. In this manner, the first part of the voyage will be a ballast leg unless you are

lucky enough to find a cargo out of the port in which you have just discharged. Some people, including

Worldscale, commence the voyage at the loading port and follow the laden passage with a theoretical ballast

back to the loading port again. However while this might at times be realistic for tankers, dry cargo tramp

vessels rarely proceed on the same voyage twice so this is hardly a practical solution.

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With distances to hand, it is not difficult to estimate the length of the sea passage including the ballast leg.

Working out the time spent in port can be a greater problem. Tankers are relatively simple as most tanker

charters include a standard 72 hours all purposes laytime but dry cargo voyages vary enormously in their port

time content.

The snag is that you cannot usually calculate the port time until you know the cargo quantity; you cannot

calculate the cargo lift until you know the bunkers which you cannot work out until you know the port time, which

you cannot........ and so on and so on. Fortunately, dry cargo vessels do not consume much fuel in port and this

can be safely ignored for the purposes of initial cargo calculations.

Be very careful over the route selected. Sometimes there are alternatives and only a marginal difference will tilt

the pendulum in favour of one or the other. Bad weather at certain times of the year; high canal tolls on one

route; cheaper bunkers on another. Alternative routing of a voyage is considered in an example later in this

Lesson.

Speed is another important factor. In some cases it might be better to proceed more slowly and economise on

bunkers. Particularly this is the case in coastal estimating, where voyages are dependent on tides. There may

be little point in steaming full speed only to await a suitable tide for some hours following arrival off a port.

Cargo Quantity

Initially one needs to know the vessel's total deadweight, this on the assumption that there are no draft

limitations anywhere on the voyage. From this figure one must first deduct the constants, which consist of

stores, water, lubricants, spares and even the weight of the crew. This tonnage is rarely critical, and is in the

region of 400 to 500 tons for most deep sea vessels of 30,000 tonnes dwt and above. The other deductible,

before arriving at the true cargo capacity, is the amount of bunkers on board. This can be a complex calculation and is best explained by examples which are given later in this lesson. For the meantime, assuming a suitable

figure for deadweight cargo capacity is reached this is not the end of the problem. The vessel may be able to lift

a particular tonnage of cargo but has it the space to carry it? This is where the importance of the stowage factor

(SF) enters into our consideration and, although there are fewer very light cargoes around than there used to be,

the SF is still a relevant factor. In theory, by dividing the grain or bale cubic of the vessel by the SF we reach her

volume capacity but, if there are several types of grades of cargo to be separated, it may be impossible even to

fill the vessel, whilst trim and stability must also be watched.

Knowledge of loadline zones is essential. All zones transited between loading and discharging ports must be

considered; as a vessel cannot enter a winter zone, for example, when loaded to summer marks. The restricting

load line must be considered and the cargo calculated accordingly.

Time in Port

Throughout this lesson there are examples of calculations used in voyage estimating. Students are

recommended to work these examples out on paper as they study them to ensure a grasp of the principles

involved.

Once the cargo quantity and the loading/discharging rates per day being offered by the charterers are known the port time can be estimated with some accuracy. As always, there are pitfalls because it is rare for weekends and

holidays to count in dry cargo fixtures and these, coupled with notice time and weather delays, extend the port

time before demurrage is likely to start. Let us take an example:-

A vessel is to load 35,000 tonnes of cargo and the charter loading rate is 2,500 tonnes per weather working day

of 24 consecutive hours, Sundays and Holidays excepted.

If one divides 35,000 by 2,500 it will be seen that the loading time allowed to the charterers is 14 days. This,

however, excludes weekends and if you consider the working week to be 5 days, the time permitted approaches

3 weeks. If allowances are also made for notice time and some weather delays, it will become realistic to allow

20 days in port for loading. If loading is to take place over a period of extensive Public Holidays - e.g. Christmas

and New Year, or Ramadam - even more port time should be allowed. Needless to say, if the time allowed

includes Sundays and Holidays (SHINC) less allowance will be needed, perhaps 15 days. Even with SHINC, there

are inevitable delays in arrival, shifting, notice time, waiting for tides, etc.


This system is quite adequate for most charters and, in general, the full time allowance should be put in the

estimate and demurrage/despatch ignored. Unfortunately, nothing in shipping is ever simple and different

criteria have to be used for what are commonly called "despatch" charters. In certain trades, it is well known

that vessels habitually load and discharge well within their laytime and, indeed, shippers and receivers expect to

earn considerable despatch. It is likely, therefore, that comparing two voyages where one is a charter of this

nature will show an unnatural disparity. Regrettably, there is no short cut to knowledge in a case like this and a

voyage estimator must be aware of the trades where fast turn-rounds are to be found. Only in such cases is it

correct to estimate a lesser port time than allowed but, in that event, a suitable addition to the expenses must be

made to cover the inevitable despatch bill.

If more than one port of loading and/or discharging is used, extra hours must be allocated for the time involved

in the actual process of entering and leaving.

Other Delays

Under this heading one has calls for bunkering which can, on occasion, be lengthy. For estimating purposes,

however, it is sufficient to allocate one day for each call.

Canal transit inevitably lengthens the voyage and it is safer to allow 2 days each for passage through Suez and

Panama because time can be lost waiting, as well as during the transit itself.

It is not normal to allow additional steaming time for possible bad weather, unless it is certain from the nature of

the voyage that delay will be experienced.

COMMENCING THE VOYAGE ESTIMATE

Once the main essentials are available the calculations can begin; these broadly consist of income minus

expenditure. The form and procedure used is a matter of personal opinion but they can all be classified under

one heading – method. Most companies will have their own layout depending, to some extent, on the type of

ship they work but the example below is as good as any.

It is very easy to reduce an estimate to ‘the back of an envelope’ and, indeed, there are times when speed of

negotiating will make this imperative. Before that stage is reached, considerable experience will have to be

gained at a more leisurely pace and this is where a set format is so essential. If all the various items of income

and expenditure are set out it is far more difficult to forget the odd item, which can make the difference between

profit and loss. So, if one is likely to be involved in regular voyage estimating , d raft out a suitable form and use

it constantly. There are, of course, computer programmes for voyage estimating but mastering the manual

method is vital in order to avoid stupid mistakes with the computer.

The estimate can, of course, be made quite adequately on plain paper; the vital thing is to acquire method. In

this Lesson the following method is suggested and the later examples are based on this system:

1. Plan out the voyage, duration and bunker consumption. This will enable you to see at a glance just what is

intended. Call this the itinerary.

2. Next calculate what cargo can be loaded. Sometimes this section needs to be completed in conjunction with

the itinerary - for example when port time is assessed against a daily loading or discharging rate.

3. Tabulate all expenses. Bunkers; Port and Canal costs; stevedoring; despatch; extra insurance premium are

prominent examples.

4. Assess Income and Profit and Loss.

In each of these four stages there are important points that need considering but first concentrate on Section 3

above - expenses; of these fuel consumption is probably the hardest to calculate.

Bunkering a vessel is an art and no two voyages are likely to be exactly the same, due to seasonal changes, price

fluctuation and the need to balance fuel prices against freight income.

When transiting a canal or a narrow waterway a ship may run on diesel oil in the main engine although this is

becoming less common with modern engine designs. This is of a higher quality than other fuel and, although


more expensive, will result in more immediate engine response to navigation movements and a tonne of diesel oil

will take the vessel further than a tonne of fuel oil. Accordingly ordinary daily speeds and consumptions will not

apply. The vessel will be proceeding slowly and will burn fuel or diesel more economically. Thus it may be

necessary to estimate normal speed and consumption to and from either end of the canal, adjusting time and

consumption appropriately. (See example which follows later in this Lesson).

Port charges cannot easily be assessed without experience and most companies will keep records of previous

calls to assist them. Organisations such as BIMCO and INTERTANKO provide valuable information on many ports

but probably the most accurate method, if time permits, is to telex an agent at the port in question with basic

details of the vessel asking them to give you a proforma disbursement account. Of course, ethics demand that

you should appoint the same agent should the ship be fixed for the voyage in question. In the same vein, canal

dues are usually fixed on the basis of the vessel's Canal Tonnage as the canal authorities in question tend to add

in more cubic earning spaces when they grant the vessel her canal certificate. Remember that mere calculation

of the canal dues payable will not be enough, as extras will mount up for such items as agency and towage -

actual or for escort purposes.

As already mentioned, there is the possible expense of despatch payable if the trade is such that the ship is

turned round much faster than the laytime allows. If in any doubt, it is better to allow full time in the estimate

because a calculation thus arranged will show the most pessimistic result and it is better, psychologically, to

underestimate if there is any uncertainty.

Other incidentals which must be thought of may include cargo-handling expenses and extra insurance premium -

e.g. for breaching Institute Navigating Limits or for trading to an area beset by the risk of warlike action.

The method of calculating the cargo intake has been explained earlier and it is, therefore, only necessary to

multiply this quantity by the rate of freight thought to be obtainable. The amount thus achieved is known as the

gross freight, from which have to be deducted any commissions due. In addition, it is usual to deduct any freight

tax at this stage, both these items being almost invariably a percentage of the freight. This also applies to such

charges as 1% in lieu of weighing. The resultant figure after these items have been removed is the nett freight.

Now provided with all the figures, the estimate result required can be produced by deducting expenses from

income and dividing the result by the number of days taken for the voyage. The result is the gross daily profit

and this will give us an easily comparable figure for any selection of different voyages. To calculate the nett daily

profit it will be necessary to incorporate the Daily Running Costs which were discussed in Lesson Six. The

estimator will not be concerned as to how that daily figure is made up but will simply want a lumpsum per day.

It is a decision of the ship owner whether or not the capital costs are included in this figure but, whether included

or not, it is vital to be consistent. To make the process clearer, there are worked examples based on the form

provided at the end of this lesson.

TANKERS

There are only a few differences between voyage estimates for dry cargo ships and tankers. For those charters

based upon Worldscale, the laytime calculation is easier as the scale allows for 72 running hours in aggregate for

loading and discharging ('all purposes') and 96 hours total in port.

An expense in tankers which does not occur in dry cargo involves the consumption of bunkers for ancillary

purposes such as cargo heating, pumping cargo and tank cleaning.

It is extremely difficult to assess bunker consumption for heating cargo depending, as it does, on the

temperature at which the cargo is loaded, whether in wing or centre tanks and on the ambient temperature of

the sea and air during the voyage. Only the technical department can give an accurate assessment for this

purpose as, without their available statistics, it can only be sheer guesswork. Pumping and tank cleaning are

easier, although again the technicians must be asked for an average consumption based on past experience.

TIMECHARTER

As the practice of charterers taking vessels on time charter for trips has become widespread, it is obvious that we

need to estimate the daily profit on this type of fixture in the same way as a voyage charter in order to compare

the two results. Merchants often prefer to take a vessel on time charter, either for a trip or period, as it gives

them flexibility and also the possibility of reducing their costs. Fortunately this is a much simpler exercise if the

ship is taken on delivery at the previous discharge port and redelivered on completion of the voyage in question,

it is only necessary to deduct the Daily Running Cost from the hire earned per day to achieve the daily profit. Of

course, commission must be allowed for and, should there be any difference between the charter price of bunkers


paid by charterers on delivery and the actual price paid by owners, this must similarly be taken into account in

the calculations.

Problems arise on time charter when the vessel is not taken on hire immediately after the previous employment

and allowance has then to be made, not only for the time lost to owners whilst the vessel is unemployed, but also

for the bunkers consumed during that period. Even here, the resultant calculation is not difficult if the income

and expenditure and the number of days for the entire voyage is considered. By grossing up the daily hire

receivable for every day the ship is likely to be on charter and deducting the Daily Running Cost we obtain the

profit for the entire exercise. Daily running cost must be charged not only for the trip period but also for the

ballast or waiting time before hire commences plus any bunkers, port charges, canal dues, etc. which are

incurred by the owners prior to coming on hire. To obtain the daily profit it is then necessary to divide by the

number of days involved which will include those days ballasting or waiting prior to delivery, NOT just the days

she is on hire. In that way we achieve a comparable figure to be set against our other voyage estimates. An

example is given later in this Lesson.

In conclusion, it is perhaps necessary to point out that, should several estimates show similar results, it is up to

the principal to decide whether he prefers a short or long voyage. This may depend on the his view of the future

rise or fall of the market and also depending on which area he prefers to finish the voyage for the purposes of

future trading. Owners may sometimes prefer a voyage with a lower return if it positions the ship ideally for a

following commitment, such as a contract voyage or drydocking.

PRACTICAL CALCULATIONS

Now look closely at a voyage estimate question. This concerns a choice of voyages for an owner of a vessel

called m.v. "TUTOR PILOT" and involves two voyage estimates, necessary in order to discover which of the two

alternatives is the most profitable. The question is set out in detail below giving all the information required in

order to do the calculations. This is, of course, simplifying the problem that would normally arise in practice,

where one would have to look up all the information oneself, including the calculation of distances and also to

search for the cheapest bunkers available. However, this is the type of voyage estimate one is likely to meet in

the examinations and it is, therefore, better to take this stage by stage. It is suggested that you copy the blank

voyage estimate form in Appendix 29 and complete the details as they are worked out in the examples. Put the

information regarding the ship and the voyage at the top of the form in order that one can easily check the

details of the voyage at a later stage.

When finished compare the completed form to the examples in Appendices 30 and 31.

VOYAGE ESTIMATE

A shipowner has the following vessel available in April at TOAMASINA (TAMATAVE), MADAGASCAR, following

discharge of a cargo of bagged rice:

m.v. "TUTOR PILOT"

1985-built Tweendecker

Panamanian Flag

Highest Class Bureau Veritas

15240 m tonnes SDWT on 8.86 metres Summer Saltwater Draft

5 Holds/5 Weatherdeck Hatches

Flush Tweendecks in Nos. 1,2,3 & 4

Bridge & Engines 4/5ths aft.

No. 5 a single hold, floored over

Derricks: 1 x 50, 4 x 10, 6 x 5 tonnes SWL

19520 cubic metres (689,350 cubic feet) Bale

21295 cubic metres (752,030 cubic feet) Grain

141 metres LOA 20.45 metres Beam

150 tonnes Constant Weights

13 knots on 18 tonnes F/O (180 c/s) + 1.5 tonnes D/O daily use @ sea

1.5 tonnes D/O daily in port idle

2.5 tonnes D/O daily in port working

Bunkers Remaining on Board: 300 tonnes F/O and 40 tonnes D/O

Vessel carries Safety Surplus of 50 tonnes F/O and 15 tonnes D/O at all times. These quantities to be allowed for

in any cargo quantity calculation but not to be costed in voyage results.


The Shipowner is considering offering for the following cargo:

A/C Mauritius Sugar Syndicate

Full cargo bulk sugar

Loading 1 sb 1 sp Mauritius

Discharging 1 sb Silvertown Refinery, London

1500 tonnes L/750 tonnes D SHEX Bends

Freight GBP(£)14.00 per mtonne F10

Demurrage GBP (£) 2150 /Half Despatch Laytime Saved Bends

MSS Sugar C/P

5½% Total Commission

From your experience you know:

1. Actual loading takes about 2 days - so allow for payment of despatch in the estimate.

2. Silvertown is frequently beset by congestion - so allow full laytime for discharge.

3. The current Exchange Rate is US$1.50 = £1.00. (Note: By far the greatest majority of all charter party

fixtures are negotiated in US Dollars. There are however exceptions in a few trades and a currency change has

been included in this estimate to demonstrate how it is dealt with. Port disbursements will often be quoted in

local currency. Generally speaking any figures in other currencies are converted into USD as they are

incorporated into the estimate.)

You are required to estimate the financial return the voyage would show basis:

(a) Mauritius/London via Suez Canal, or

(b) Mauritius/London via Durban (for bunkers) and the Cape of Good Hope.

You will require the following information:

1) Distances miles

Toamasina/Port Louis (Mauritius) Toamasina/Port Louis 475

Port Louis/Durban Port Louis/Durban 1550

Port Louis/Suez Port Louis/Suez 3650

Durban/London Durban/London 6850

Port Said/London Suez/London 3200

2) Suez Canal Transit

Allow 2 days to bunker and to transit the Suez Canal consuming 7 tonnes F/O and 7 tonnes D/O.

3) Bunker Prices F/O D/O

$ per tonne

Remaining on board: 70 145

Suez 85 180

Durban 85 325

4) Disbursements $

Port Louis 17500

Durban Durban 2500

Suez Canal 35000

London 45000

Start with the routing via the Suez Canal.

Remember: 1) Itinerary; 2) Cargo; 3) Expenses; 4) Income and Analysis.

1+2 Distances are provided in the question. You are told the speed and consumption of the vessel (based on 13

knots) and this is to be taken for both loaded and ballasted spells at sea. Thus the ship can be expected to travel

approximately 312 miles per day at sea (13 x 24 hours) weather permitting.

Normally, percentages of days at sea are best rounded up to whole days for the sake of simplicity of calculation

and to allow for any unforseen delays. But where short voyages are involved this is not realistic. Thus, for the

475 miles between Toasmasina and Port Louis (Mauritius) 1½ days should be allowed (475/312 = 1.522)

although this percentage can be disposed of in the final voyage days analysis by allowing a compensating 2½

days to load in Mauritius. (The question emphasises that load port despatch will be incurred so don't forget it

later on!)


Mauritius to the Suez Canal is 3650 miles which, divided by 312 miles per day, equates to approximately 12

days. You are told to allow 2 days for the canal transit and a canal bunker consumption of 7 tonnes each of fuel

and diesel oil, so these details can be entered. The final leg of 3200 miles from the Suez Canal to London should

take about 10 steaming days.

The one remaining entry for the 'itinerary' section is that of port time in London but, since we are to work on a

daily discharge rate in London (for which we must "allow full laytime") we must first calculate the quantity of

cargo on board. To do that we should consider load-line zones and any port limitations en route.

Fortunately, the ship will be in summer zones throughout the voyage so that this exercise does not have to

anticipate the discussion of Load Line Zones which will be dealt with in a later lesson.

The ship's draft fully laden is still within the limits of the Suez Canal and there is adequate depth of water at both

loading and discharging ports. Consequently there are no restricting factors affecting the quantity of cargo to be

loaded apart from those of the ship itself, its cubic capacity and deadweight.

Bulk sugar stows around 1.13 to 1.22 cubic metres per tonne (40 to 43 cu.ft). Allowing for an increase to this

figure for loss of trimming spaces, as a result of tweendeck overhangs, of an extra 10 percent as compared with

a bulkcarrier, the cubic space available should still be more than adequate. 21295 cubic metres divided by 1.34

(1.22 + 10%) = 15900 tonnes approximately.

Therefore, cargo intake can be based on the maximum deadweight available on sailing from Mauritius - i.e. to

summer marks - less constant weights and bunkers.

Constant weights are known. Bunkers require further calculation.

You will note that the longest voyage leg is that from Mauritius to the Suez Canal - some 12 days - and we can

thus estimate that the vessel will have maximum bunkers on board at the commencement of that part of her

voyage. In fact, we are told that the ship has 300 tonnes fuel oil and 40 tonnes diesel oil remaining on board when sailing from Madagascar. Thus from the vessel's summer deadweight must be deducted an allowance for

bunkers and constant weights calculated to remain on board when sailing from Madagascar to that stage of the

voyage. Thus:

Summer Deadweight: 15,240 mtonnes

less: f/o 300 - 27 = 273

d/o 40 - 6 (2+4) = 34

150 457

151

Estimated Cargo: 14,783

(Ref d/o: 4 refers to port consumption in Port Louis)

Note 1: The 300 tonnes f/o and 40 d/o includes the allowance for safety surplus.

Note 2: Sugar is loaded mechanically at Mauritius by shore equipment. Therefore, the ship's port consumption

will not be increased to 2.5 tonnes daily, which would be the case if her own gear was used. Discharging at

Silvertown will also be by shore equipment, the vessel's gear remaining idle.

We now have an estimated cargo figure (well within the stowage capacity of the cargo compartments) and can

divide this figure - 14783 tonnes - by 750 tonnes (the daily discharge rate at Silvertown) in order to calculate

days for discharge. Thus 14783/750 = 20 days (19.7 days). But we are told discharge takes place on SHEX

terms, and must, therefore, build in time lost for weekends and holidays. A "magic" figure that can be used in

normal circumstances is the factor of 1.4, (that is 2 days lost for every 5 worked) a figure that provides an

approximate "rule of thumb" estimate for SHEX terms. Therefore: 20 days x 1.4 = 28 days on full laytime at

Silvertown - which figure can now be entered to complete Section 1 - the Itinerary.

We have now accomplished two parts of our estimate. The Voyage Itinerary and Bunker Consumption as Part 1,

and the Cargo Calculation as Part 2.

3. The third stage is where all voyage expenses are tabulated. For inclusion in this section are the bunker costs:


We are told that the vessel has on board 300 tonnes fuel oil and 40 tonnes diesel oil at the commencement of the

voyage, and these bunkers are to be costed at $70 and $145 per tonne respectively. It is relatively simple to

calculate the total voyage bunker requirements. The balance required - 130 tonnes f/o and 48 tonnes d/o - must

be taken at Suez and costed accordingly.

The estimated disbursements at Mauritius, Suez Canal and London should be entered; which brings us to the one

remaining expense - despatch.

To calculate despatch, one should take the estimated cargo – 14,783 tonnes - and divide same by the loading rate of 1500 tonnes daily. You will be left with almost 10 days. Loading will take approximately 2 days, and this

can be deducted, to leave 8 days. Should the vessel arrive and load in midweek, then this will be the figure on

which to base despatch. If, however, loading takes place over a weekend, time loading might not count (if it

were, for example, SHEX EIU). The question does not refer to this aspect and also fails to state if despatch is to

be calculated on the basis of "all time saved" or on "working time saved". Let us suppose the latter and, in the

final analysis allow 8 days for despatch at Mauritius. This can be costed as follows:

Demurrage Rate £2150 halved = £1025 Despatch

Rate £1025 x 1.50 (exchange rate) = US$1612

$1612 x 8 days = US$12896

4. It is now simply a matter in this fourth and final stage of calculating the income and the estimated result. We

are told the freight rate is £14 per tonne which (at the exchange rate of US$1.50 to £1.00) equates to $21.

Thus: 14,783 tonnes cargo @ $21 per tonne less 5.5% total commission leaves us with a nett freight of

$293,369. From this must be deducted the total expenses of $156,886, leaving a Gross Voyage Surplus of

$136,483.

This latter figure is then divided by the estimated number of days required to perform the voyage - see the itinerary in Stage 1 - and we have a return of $2,437 gross daily (i.e. before the application of daily vessel

running costs). We are not told about running costs in the question, so there is no need to mention them. If, on

the other hand, running costs were featured, it is a task of seconds to deduct daily running costs from the gross

daily income so as to arrive at the net daily income.

So, voyage alternative one is completed. Let us now turn to the second part of the question - the voyage via

Durban and the Cape of Good Hope.

Again, this must be tackled in strict sequence.

1+2 Itinerary: We have already calculated Madagascar to Mauritius and port time there. We are told the

distances from Port Louis to Durban and from Durban, via the Cape of Good Hope, to London (Silvertown), and

can base time and consumption on this information. We are, therefore, left once more with the problem of

estimating port time in London. In order to do this we must again first calculate cargo intake.

The sea distance from Durban to London is by far the longest of any leg in either voyage alternative - some 22

days at 13 knots, weather permitting. Thus it follows that bunkers remaining on board at the commencement of

this leg will be greater than for any other leg and will consequently affect the maximum cargo quantity which can

be allowed on board at that point. So although the vessel can load more cargo than would be required at Mauritius, we must remember always that her summer freeboard must not be submerged at any stage of the

journey. If she loaded to her full marks at Mauritius she would be overloaded when taking on necessary bunkers

at Durban.

So Durban sailing on summer marks is the restricting factor in this part of the estimate. Durban is located in a

permanent summer loadline zone so, as in the first alternative, since she would then proceed to London in either

summer or tropical zones, there are no restricting factors of this nature. So we can calculate:

Summer Deadweight: 15240 mtonnes

less f/o 396 (Durban/London)

75 (Safety Surplus)

d/o 33 (Durban/London)

15 (Safety Surplus)


519

c/w 150 669

Estimated Cargo: 14571

Thus a smaller cargo than if proceeding via the Suez Canal, but the difference is marginal and will not affect time

needed to discharge on full laytime in London:

14571/750 x 1.4 = 27.20 days, say 28 days

3. Port and transit expenses are similar to the first alternative, except that Suez Canal tolls are avoided but,

instead, Durban calling costs are included.

Despatch is also similar, the difference in the cargo loaded making only minor effect.

Obviously, the additional steaming time is reflected in extra bunker consumption. Once again the 300 tonnes

fuel oil and 40 tonnes diesel oil remaining on board at the commencement of the voyage must be costed at $70

and $145 per tonne respectively. But to this must be added the balance of fuel oil and diesel required to reach

London at the Durban prices of $85 and $325 respectively.

Thus, estimated total expenses for this second alternative - $138,726.

4. The smaller cargo reflects a marginally lower income of $289,162, but this is offset by these reduced cargo

expenses to leave an increased gross voyage surplus of $150,436. This voyage, however, will take longer than

the route via the Suez Canal. Nevertheless, the net result still works out more profitably via the Cape by an

increased $100 a day, or so, on the gross daily income - $150,435/59 = $2550 (as against $2437).

Do not make the error, having done all the work, of failing to answer the question. You are asked to advise the

shipowner of the most profitable route. So tell him. Or rather, tell the examiner.

Some of you at this stage looking back at the several pages of calculations required to answer this question

might feel a little apprehensive. Don't. You must appreciate that these are paragraphs explaining how to do the

estimate. In an exam you are required to answer a question - not provide pages of explanatory notes. You can

see for yourself in the worked examples in the Appendices that the actual answers are much less labour intensive

- even allowing for a note or two in addition to the plain calculations should you wish to point something out to

the examiner.

So let us try one other example to give you additional confidence. Only this time we will concentrate on a

timecharter calculation.

Let us assume that our owner has other business proposed to him for the same vessel, the details being as

follows:

"Delivery APS DURBAN

T/C Trip via safe ports South & East Africa

with generals, small parcels, ore etc.

Redelivery DOP PIRAEUS

Duration about 60 days, without guarantee

LINERTIME C/P

5% Total Commission

Charterer is willing to pay maximum $3000 daily."

If the vessel performs this voyage, the owner would probably need to ballast after Piraeus to North West Europe

(UK/Continent) to seek the next cargo.

Is this time charter alternative a better proposition than the sugar voyage?


Guidance:

Distances: TOAMASINA/DURBAN 1350 miles

PIRAEUS/LONDON 2775 miles

With a time charter calculation, there remains the need to bring the vessel's income back to a common factor -

i.e. the Gross Daily Return - so that fair comparison can be made with a voyage charter alternative, as well as

other time charter trips. To achieve this, brokerages and commissions must be taken into account. Allowances

have to be made where necessary for time and voyage expenses incurred from the start point of the exercise

through to the commencement of the time charter, and again, from the completion of the time charter through to

the end of the estimated voyage.

Taking the above example, the starting point is clearly Toamasina. That is where the ship will be open and from

where she can proceed either to Mauritius to load sugar, or ballast to Durban to deliver on to time charter. The

sugar cargo finishes in London and, for a tweendecker such as this, the owner will doubtless try to fix outwards

from the UK or the Continent. The Mediterranean market is usually weaker for tweendeckers than is the

Continent market. We are told our owner decides that, if fixing the time charter trip from Durban to Piraeus, he

will probably be faced with an unprofitable ballast passage from Piraeus to the Continent which must be taken

into account.

Thus we have another adjustment to perform following redelivery in Piraeus.

To assist us we are told the distances from Toamasina to Durban and, at 13 knots we can calculate that this will

take 4½ days (1350/ 312). The distance from Piraeus to London (a convenient position on which to complete the

estimate) is 2775 miles equating to a steaming distance of 9 days. Thus a total extra steaming of 13.5 days.

We also need to know the approximate duration of the timecharter trip, and are told in the question "about 60

days".

Thus, we can calculate:

Income: 60 days x $3000 less 5% = $171,000

Expenses:

Days

f/o: 13.5 x 18 (tonnes daily) x $ 70 per tonne = $17010

d/o: 13.5 x 1.5 x $145 = $ 2937

$19947

Result:

$171,000 less $19947 = $151,053

$151,053/ 73.5 days overall (60 + 13.5) = $2055 daily

Answer: The time charter trip alternative is not a better proposition than the sugar.

ASSIGNMENT NINE

After completing this lesson please attempt the following question and submit your answer to your Course Tutor.

From the information given below, calculate the daily profit (or loss) shown for these proposed voyages.

*********************** "TUTOR PILOT" has safely reached London and is discharging her cargo of sugar. The owner has entered the

freight market seeking following business and is considering two alternatives. Both are back to the Indian Ocean

- one a timecharter trip and the other a voyage charter. In both cases the owner asks you to calculate the gross

daily return based on repositioning the vessel in Port Louis, Mauritius for another sugar cargo following

completion discharge of the outward cargo.

Alternative One:

A time charter trip of around 60 days duration @ $3500 daily, 5% total commission, basis delivery APS

HAMBURG, with redelivery DOP safe port BAY OF BENGAL, intention CHITTAGONG.

Alternative Two:


A voyage charter with bagged and drummed general goods, and a few TEUs on deck. Loading HAMBURG and

ANTWERP, discharging COLOMBO. The cargo will be light stowing so there will be no deadweight restrictions on

cargo or bunker intake, and the vessel will refuel in Hamburg for the entire voyage through to Port Louis. Freight

rate $300,000 lumpsum with 5% total commission 15 days All Purpose SHEX bends. Ship's gear will be used

throughout.

You will require the following information: Miles

1) Distances:

LONDON/HAMBURG 400

HAMBURG/ANTWERP 400

ANTWERP/SUEZ CANAL 3280

SUEZ CANAL/COLOMBO 3400

COLOMBO/PORT LOUIS 2100

CHITTAGONG/PORT LOUIS 3250

2) Suez Canal Transit:

Allow 2 days for the canal transit, consuming 7 tonnes each of fuel and diesel oil.

3) Bunkers:

Remaining On Board at:

London f/o 50 d/o 15 tonnes

Chittagong Chittagong 400 50

Prices per tonne:

London $85 $325

Chittagong 80 175

Hamburg 65 160

4) Disbursements:

HAMBURG $15,000

ANTWERP 15,000

SUEZ CANAL 35,000

COLOMBO 15,000

(N.B. The ship's details are shown in at the beginning of the worked examples in the lesson.

Which of these two alternatives shows the greatest return on a daily basis?

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