Net Freight

In voyage estimations, it is better to allow full time because a calculation thus arranged will show the most pessimistic result. Psychologically, it would be better to underestimate if there is any uncertainty during operations. Other expenditures may include cargo-handling expenses and extra insurance premium such as breaching Institute Navigating Limits (INL). WRI (War Risk Insurance) is also included in voyage estimations if the ship is trading to an area which is surrounded by the risk of warlike actions. Calculating the cargo intake and multiplying cargo intake quantity by the rate of freight is obtainable by this process. This amount 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 (ILOW). Furthermore, it is possible that shipowners pay despatch money to charterers, if the trade is such that the ship is turned around at the port much faster than the laytime allows. After all these deductions from Gross Freight, result figure is called Net Freight.

Now provided with all the figures, voyage 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.

In order to calculate the Net Daily Profit, it will be necessary to incorporate the Daily Running Costs which is different for every ship. Estimator will not be concerned as to how that Daily Running Costs is made up but will simply want a lumpsum per day. Shipowner decides whether or not the capital costs are included in Daily Running Costs figure but, whether Daily Running Costs are included or not, it is vital to be consistent.