Voyage Estimation
Voyage Estimation is the commercial calculation used to forecast the financial result of a proposed ship employment. In simple terms, it is a forward-looking profit-and-loss analysis for a particular voyage, Time Charter Trip (TCT), cargo movement, or routing alternative. Shipowners, ship managers, operators, and Shipbrokers use voyage estimation to decide whether a proposed fixture is commercially worthwhile and whether one employment is better than another available opportunity.A proper voyage estimate does not merely add freight income and deduct a few visible expenses. It examines the full movement of the ship from the point where the previous employment ends until the ship reaches the expected position after completion of the proposed voyage. It considers ballast distance, laden distance, port time, cargo intake, bunkers, port disbursements, canal dues, commissions, freight tax, cargo-handling costs, extra insurance, despatch, demurrage expectations, and daily running cost. The purpose is to create a fair daily comparison between different alternatives.
Ship Voyage Estimation is therefore both a calculation and a commercial judgement. It forecasts income and expenditure, but it also tests the likely reliability of the assumptions used. Ships do not operate like fixed machines. Weather, port congestion, tidal restrictions, canal delays, draft limitations, bunker prices, public holidays, berth availability, cargo readiness, and charter-party terms can change the result significantly. Therefore, voyage estimation should aim for disciplined realism rather than false mathematical precision.
The estimate must later be compared with the final voyage result. This comparison is essential because it shows whether the assumptions used by the Shipbroker or ship manager were realistic. Over time, comparing estimates with actual voyage accounts improves judgement, reduces repeated mistakes, and helps the company understand which trades, ports, routes, cargoes, and Charterers are most profitable.
Purpose of Voyage Estimation
The main purpose of Voyage Estimation is to help the Shipowner select the most profitable employment available for the ship. A Shipowner may receive several cargo offers, each with different freight, loading port, discharging port, cargo quantity, laytime, commission, route, bunker requirement, port expenses, and final position. The highest freight rate is not always the best business. A lower freight may produce a better daily return if the voyage is shorter, port expenses are lower, or the ship finishes in a stronger market.Voyage estimation is also used by Charterers. A Charterer may compare different ships to identify the most economical transport solution. The Charterer may consider freight, cargo intake, laytime, demurrage rate, ship speed, port suitability, draft, gear, reliability, and the risk of delay. A ship that appears cheaper may become expensive if it cannot load the full cargo, if it consumes more time in port, or if it creates cargo-handling difficulties.
For Shipbrokers, voyage estimation is an essential skill. Even where modern software is used, a Shipbroker must understand the logic behind the calculation. Software can process figures quickly, but it cannot protect the user from wrong assumptions. If the distance is wrong, if the wrong route is selected, if the cargo intake is exaggerated, if the bunker price is outdated, or if port time is unrealistic, the estimate will produce a misleading result.
Voyage Estimation and Time Charter Trips (TCT)
Voyage Estimation covers both ordinary voyage charters and Time Charter Trips (TCT). A Time Charter Trip may look straightforward because the ship earns daily hire for a defined period. However, the calculation can be more complex than it appears. The ship may have to ballast to the delivery place before the Time Charter begins, and after redelivery the ship may be left in a weak market or may need another ballast voyage to reach a better trading area.For a fair comparison, a Time Charter Trip should be measured from the ship’s actual open position to the realistic post-redelivery position. If only the hire period is counted, the result may look better than it truly is. The ship may earn hire for 60 days but lose time and bunkers before delivery and after redelivery. These additional days and costs must be included if the result is to be compared fairly with a voyage charter alternative.
The same principle applies to voyage charters. The estimate should not normally begin at the loading port unless the ship is already there and available. It should begin where the ship completes discharge of the previous cargo. If the ship must ballast to the next loading port, that ballast leg is part of the commercial decision.
Maritime Geography and Distance Knowledge
Good voyage estimation requires a working knowledge of maritime geography. Digital distance tables and voyage-estimation programs are useful, but a Shipbroker or ship manager should still understand the main world routes, typical distances, canal alternatives, load-line zones, bunker ports, and major trading regions. Without this background, obvious errors may go unnoticed.A practical method is to think in terms of days steamed rather than only nautical miles. For example, a ship steaming at 14 knots covers about 336 nautical miles per day. As a rough guide, that is close to 3 days per 1,000 nautical miles. A Shipbroker who understands this can quickly test whether a distance or software output looks reasonable. If a transatlantic voyage is estimated at an unrealistic number of days, the error can be detected before the estimate is used commercially.
World routes can be divided into regions such as the Atlantic, Pacific, Indian Ocean, Mediterranean, Baltic, Black Sea, Middle East Gulf, Far East, West Africa, East Africa, South America, and North America. Knowing the approximate distances between strategic ports helps the Shipbroker prepare quick first-stage estimates before preparing a detailed calculation.
Load-line zones must also be considered. A ship cannot be loaded to summer marks if the voyage will require entry into a winter zone at the relevant time. Seasonal zones, tropical zones, summer zones, freshwater allowances, port density, draft restrictions, and canal limitations can all affect cargo intake. A voyage estimate that ignores load-line restrictions may overstate cargo quantity and freight income.
Ship Voyage Length
The voyage length should be measured from the place and time where the ship completes discharge of its previous cargo. The first stage is often the Ballast Leg, unless the Shipowner is fortunate enough to secure a new cargo from the same port or nearby area. In tramp shipping, this starting point is important because the ship rarely repeats the same round voyage continuously.Some estimates begin at the loading port and then add a theoretical ballast back to the loading area. This approach may be useful in certain tanker trades where repetitive round voyages are more common. In dry cargo tramp shipping, however, ships usually move from one employment to another according to market opportunities. Therefore, the practical method is to begin from the ship’s current open position and estimate forward to the expected completion position.
Once distances are known, sea time can be calculated from speed. If a ship steams at 13 knots, it covers about 312 nautical miles per day. A 3,120 nautical mile leg would therefore take about 10 days in ideal conditions. In practice, allowance may be required for weather, currents, routing, speed instructions, canal approaches, traffic separation schemes, and slow steaming. Short voyages may require more precise fractional-day calculations, while longer voyages are often rounded conservatively.
Port time is often harder to estimate than sea time. Tanker charter parties may use more standard laytime, such as 72 running hours all purposes, making the first estimate easier. Dry cargo port time varies widely because it depends on cargo quantity, loading rate, discharging rate, Sundays and holidays, notice time, weather, terminal efficiency, shifting, draft surveys, fumigation, hold inspection, and local practice.
Cargo Quantity
Cargo quantity is a central part of voyage estimation because freight income usually depends on the quantity loaded. The starting point is the ship’s total deadweight, normally shown as DWT or summer deadweight. From this figure, the Shipbroker or ship manager must deduct constants, bunkers, fresh water, stores, lubricants, spare parts, crew effects, and any safety surplus required by the Shipowner.Constants are usually not the largest item, but they must be included. For many deep-sea ships above 30,000 DWT, constants may be in the region of a few hundred metric tonnes, depending on ship type and company practice. For smaller ships, multipurpose ships, and ships with special equipment, constants can differ. The correct figure should be taken from ship particulars or previous voyage experience.
After deducting bunkers and constants, the remaining capacity is the ship’s estimated DWCC (Deadweight Cargo Capacity). However, deadweight is only one part of the calculation. The ship must also have enough cubic space to carry the cargo. A heavy cargo such as iron ore may reach draft limits before filling the holds. A light cargo may fill the holds before reaching maximum deadweight.
The Stowage Factor (SF) is therefore essential. The Shipbroker or ship manager divides the ship’s grain or bale capacity by the cargo stowage factor to estimate volume-based cargo capacity. Grain capacity applies to free-flowing cargoes that can fill spaces around frames and structural members. Bale capacity is more relevant to packaged or unitized cargo that leaves more broken stowage.
If several grades of cargo must be separated, the full theoretical capacity may not be usable. Separation, trimming, stability, draft, hold shape, tween-deck overhangs, parcel distribution, and cargo density can all reduce practical intake. The estimate must also consider load-line zones and port draft limits. A ship may be able to load more by deadweight, but it cannot sail overloaded at any stage of the voyage.
Port Time
Port time can be estimated once cargo quantity and loading or discharging rates are known. However, the calculation must reflect the charter-party wording. In dry cargo charter parties, laytime frequently excludes Sundays, holidays, and weather interruptions. Therefore, simply dividing cargo quantity by the loading or discharging rate may understate the actual time in port.Assume a bulk carrier is to load 49,000 metric tonnes at a rate of 3,500 tonnes per PWWD of 24 consecutive hours, SHEX. A simple division gives 14 working days. However, if Sundays and holidays are excluded, the calendar time may be close to three weeks. Notice time, weather delays, berth shifting, draft surveys, hatch opening, and documentation may increase the real port stay further. A professional estimate may therefore allow around 20 days in port for loading where the trade and season justify it.
If the charter party provides SHINC, the allowance may be lower because Sundays and holidays count. However, even under SHINC, unavoidable operational time may remain. The ship may still need to tender Notice of Readiness, wait for pratique, berth, shift, complete surveys, open hatches, and complete documents.
As a general rule, the full time allowance should be included in the voyage estimate unless there is strong trade knowledge showing that the ship will turn around faster. Demurrage should not be assumed as income unless there is a realistic reason to expect it. Similarly, despatch should be allowed where the trade is known for fast loading or discharge and where the charter-party terms make despatch likely.
Some trades are well known for despatch. Sugar trades, certain grain terminals, and highly efficient bulk terminals may load or discharge much faster than the laytime allowed. In such cases, the voyage estimate should use a shorter port time but add a realistic despatch expense. This prevents the estimate from exaggerating profit.
If more than one loading or discharging port is involved, extra time should be allowed for entering, leaving, shifting, pilotage, berthing, unberthing, hatch operations, document handling, and possible waiting. Multiple-port business may offer attractive freight but can consume more time than expected.
Other Delays in Voyage Estimation
Several delays must be considered before finalising the voyage itinerary.Bunker: Bunkering can be quick in some ports and slow in others. If the ship must call at a dedicated bunkering port, the estimate should normally allow at least one day for deviation, arrival, waiting, bunkering, paperwork, and departure. In congested bunker ports, more time may be required.
Canal Transit: Canal passages lengthen the voyage and create cost. For the Suez Canal or Panama Canal, a conservative estimate may allow around two days for waiting, convoy, transit, and associated slow-speed steaming. The actual time depends on traffic, booking, convoy system, weather, and canal authority requirements.
Bad Weather: Bad weather is not always included as a separate allowance, especially in routine estimates. However, if the route, season, or trade makes delay likely, additional time should be considered. North Atlantic winter crossings, monsoon areas, ice regions, cyclone seasons, and exposed ports may require more caution.
Port Congestion: Congestion can be a major hidden cost. A voyage may look profitable on paper but become unattractive if the ship is expected to wait many days for berth. Congestion information should be obtained from agents, market reports, recent fixtures, AIS data, and previous company experience.
Regulatory or Security Delays: Quarantine, customs clearance, sanctions screening, war risk procedures, security checks, port state control, and cargo documentation problems may also affect timing. These should be considered where the trade or region is known for such issues.
Starting the Voyage Estimation
Once the main data are available, the Shipbroker or ship manager can begin the calculation. The broad formula is simple: income minus expenditure. The difficulty is not the arithmetic; the difficulty is identifying every relevant item and using realistic assumptions.Most companies use a standard voyage estimation format. The format may differ by ship type, trade, or company system, but the structure is generally similar. A fixed layout helps prevent omissions. Missing one item, such as canal dues, despatch, extra insurance, address commission, or port costs, can turn an apparently profitable voyage into a loss.
A good voyage estimation process usually follows four stages:
1- The Shipbroker or ship manager preplans the voyage, route, duration, bunker consumption, and itinerary. This gives a clear picture of the proposed movement.
2- The Shipbroker or ship manager calculates cargo intake, considering deadweight, bunkers, constants, stowage factor, cubic capacity, draft, load-line zones, and port restrictions.
3- The Shipbroker or ship manager records all voyage expenses, including bunkers, port disbursements, canal dues, cargo handling, despatch, extra insurance, commissions, taxes, and other costs.
4- The Shipbroker or ship manager calculates income, deducts expenditure, and converts the result into a daily figure for comparison with other opportunities.
Bunker Calculations in Voyage Estimation
Bunker calculation is often the most sensitive part of voyage estimation. Bunker cost may represent a large percentage of total voyage expense, especially on long sea passages. Bunker consumption depends on distance, speed, weather, engine condition, hull fouling, draft, trim, ballast or laden condition, fuel type, auxiliary load, port time, canal transit, and cargo operations.The estimate should distinguish between fuel used at sea and fuel used in port. At sea, the ship may consume VLSFO, HSFO with scrubber arrangements, MGO, or another fuel depending on regulations and machinery. In port, auxiliary engines may consume MGO or another compliant fuel. If ship cranes are used, port consumption may be higher than when shore gear is used.
Canal or narrow-waterway passages may require different fuel assumptions. Some ships may use MGO (Marine Gas Oil) for manoeuvring or canal transit, although modern engine arrangements differ. The ship may steam slowly and consume less fuel per day, but may use more expensive fuel. Therefore, the estimate should separate normal sea consumption from canal or manoeuvring consumption.
Bunker price selection also matters. Remaining onboard bunkers may have a historical cost. New bunkers may be purchased at the next bunker port. If two routes are possible, one route may involve higher distance but cheaper bunkers, while another route may involve shorter distance but higher canal dues and more expensive fuel. The best route cannot be judged by distance alone.
Port Costs, Canal Dues, and Proforma Disbursement Accounts
Port costs cannot easily be estimated without experience. Many shipping companies maintain internal records of previous port calls, including port disbursements, agency fees, pilotage, towage, berth dues, light dues, customs charges, immigration fees, launch hire, shifting charges, garbage removal, and other local expenses. These records are valuable because published tariffs do not always show the full practical cost of a call.The most reliable method is to request a Proforma Disbursement Account (PDA) from the local port agent. The request should include ship particulars, cargo quantity, operation type, expected port stay, draft, tonnage, berth, flag, and any special requirements. The agent can then estimate port charges more accurately.
Canal dues are often based on canal tonnage rather than ordinary gross tonnage. Canal authorities may use their own measurement system, which can produce figures different from normal regulatory tonnage. Canal cost should include not only the toll itself but also agency, tugs, launch, security, inspection, booking, and other related charges where applicable.
Despatch, Demurrage, and Extra Expenses
In voyage estimation, Demurrage should normally be treated cautiously. Unless delay is highly likely and commercially supported by evidence, demurrage should not be included as expected income. A Shipowner who assumes demurrage too easily may overestimate the value of the business.Despatch should be included where the trade is known for fast turnaround and where the charter party provides for despatch. If the ship is likely to load or discharge well within laytime, despatch becomes a real expense. The estimate should calculate whether despatch is based on all time saved or working time saved and whether it applies at loading, discharge, or both ends.
Other expenses may include cargo handling, hold cleaning, tank cleaning, additional war risk premium, breaching INL (Institute Navigating Limits), ice dues, armed guards, security charges, deviation costs, fumigation, extra insurance, draft survey, cargo supervision, and special port requirements. A realistic estimate must include these items where relevant.
Freight Income and Net Freight
Freight income is usually calculated by multiplying cargo intake by the freight rate. This produces Gross Freight. From Gross Freight, the Shipbroker or ship manager deducts commissions, address commission, brokerage, freight tax, and any other percentage-based deductions. The result is Net Freight.For example, if the cargo intake is 30,000 metric tonnes and the freight is USD 25 per tonne, Gross Freight is USD 750,000. If total commission is 5%, the commission deduction is USD 37,500, leaving USD 712,500 before any other deductions. If freight tax applies, it should also be deducted at this stage.
Commission must be handled carefully. The total commission may include brokerage and address commission. Some charter-party clauses state “5% total commission,†while others separate individual brokers and address commission. The estimate must use the same commission basis as the fixture terms.
Gross Daily Profit and Net Daily Profit
The voyage result is calculated by deducting expenses from income. The remaining amount is the voyage surplus or voyage profit before daily running costs. To compare one voyage with another, this surplus is divided by the total number of days required for the operation. The result is the Gross Daily Profit or gross daily return.To obtain Net Daily Profit, the ship’s daily running cost must be deducted. The daily running cost may include crew, insurance, stores, lubes, technical management, maintenance, and sometimes capital cost, depending on company policy. The most important point is consistency. If capital cost is included in one estimate, it should be included in comparable estimates. If it is excluded, it should be excluded consistently.
The daily figure is valuable because it allows different voyages to be compared. A voyage with a larger total profit may not be better if it takes much longer. Conversely, a shorter voyage with a smaller total profit may produce a stronger daily return and leave the ship in a more attractive market.
Tankers Voyage Estimation
Tanker voyage estimation differs from dry cargo estimation in several ways. Many tanker fixtures are based on Worldscale, and standard laytime is often easier to estimate because the scale commonly allows 72 running hours for loading and discharging and 96 hours total in port. However, tanker estimates include special cost items that may not arise in dry cargo voyages.Tankers may consume bunkers for cargo heating, cargo pumping, inert gas systems, tank cleaning, crude oil washing, and other ancillary operations. Heating consumption can be difficult to estimate because it depends on cargo temperature at loading, required carriage temperature, ambient sea and air temperature, tank location, voyage duration, insulation, and heating equipment efficiency.
For cargo heating, the technical department should provide guidance based on previous experience and ship data. Without technical input, the estimate may be little more than guesswork. Pumping and tank cleaning may be easier to estimate, but technical department figures remain preferable.
Tanker estimates must also consider port restrictions, vetting status, heating instructions, cargo compatibility, tank preparation, slop disposal, additional insurance, war risk, piracy risk, canal dues, and bunker availability. A tanker voyage may look attractive on freight but become less profitable if heating, waiting, or tank cleaning costs are underestimated.
Time Charter Voyage Estimation
When Charterers take a ship on a Time Charter Trip (TCT), they often calculate the expected profit in a way similar to a voyage charter. The Time Charterer pays hire and voyage expenses but gains flexibility in using the ship. A Shipowner considering a Time Charter Trip must calculate whether the hire produces a better daily return than available voyage business.If the ship is delivered exactly where the previous employment ends and redelivered exactly where the next employment begins, the calculation is simple. The Shipowner deducts daily running cost and commission from daily hire and obtains the daily result. However, this ideal situation is uncommon.
Problems arise when the ship must ballast before delivery or after redelivery. The Shipowner may have days without hire, while still paying running costs and consuming bunkers. These days must be included in the overall calculation. Otherwise, the Time Charter Trip will be overstated.
To calculate the true result, the Shipowner should gross up total hire earned during the charter period, deduct commission, deduct any expenses incurred before delivery and after redelivery, include running costs for the full period from open position to final comparison point, and divide the resulting surplus by the total days involved. This produces a daily figure comparable with voyage charter alternatives.
If several voyage estimates show similar results, the Shipowner may choose based on market expectation. A short voyage may be preferred if the market is expected to rise. A longer voyage may be preferred if the market is expected to fall. The final position of the ship is also important. A slightly lower return may be acceptable if the ship ends in a strong cargo area or near a planned drydock.
Voyage Estimation Example
This example compares two voyage alternatives for a ship called MV HANDY HANDAN. The Shipowner must decide whether to route the ship through the Suez Canal or via the Cape of Good Hope. The figures below are illustrative and are designed to show the voyage estimation method.MV HANDY HANDAN
2021 Built Cyprus Flag Lloyd’s Register (LR)
15,240 SDWT (Summer Deadweight Tonnage)
8.86 meters Summer Saltwater Draft
5 Holds/5 Weatherdeck Hatches
Flush Tweendecks No 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
Bale: 19,520 cbm (689,350 cft)
Grain: 21,295 cbm (752,030 cft)
LOA: 141 m Beam: 20.45 m
Constant Weights: 150 tonnes
Speed/Consumption
At Sea: 13 knots 18 mtons VLSFO + 1.5 mtons MGO
Port Idle: 1.5 mtons MGO per day
Port Working: 2.5 mtons MGO per day
VLSFO (Very Low Sulphur Fuel Oil)
MGO (Marine Gas Oil)
Bunkers Remaining on Board (ROB): 300 mtons VLSFO and 40 mtons MGO
MV HANDY HANDAN carries a Safety Surplus of 50 mtons VLSFO and 15 mtons MGO at all times. These quantities must be allowed in the cargo intake calculation but should not be costed again in the voyage result.
The Shipowner is considering the following cargo:
A/C Minerals Ltd
Full Cargo Bulk Minerals
Loading Port: 1 sb 1 sp Mauritius
Discharging Port: 1 sb London
Loading Rate: 1,500 mtons PWWD SHEX
Discharging Rate: 750 mtons PWWD SHEX
Freight USD 14.00 per mton
Demurrage USD 2,150 / Half Despatch Laytime Saved Bends
5.5% Total Commission including 3.75% Address Commission
From previous experience, the Shipowner expects actual loading to take about two days, so despatch should be allowed in the estimate. London is expected to be congested, so full laytime should be allowed for discharge.
Required Information for Voyage Estimation
Distances:Pemba/Dar Es Salaam: 475 nm
Dar Es Salaam/Durban: 1,550 nm
Dar Es Salaam/Suez: 3,650 nm
Durban/London: 6,850 nm
Suez/London: 3,200 nm
Suez Canal Transit:
Allow 2 days to bunker and transit the Suez Canal, consuming 7 mtons VLSFO and 7 mtons MGO.
Bunker Prices (USD/pmt):
ROB: VLSFO USD 70 / MGO USD 145
Suez: VLSFO USD 85 / MGO USD 180
Durban: VLSFO USD 85 / MGO USD 325
Port Disbursements (USD):
Dar Es Salaam: 17,500
Durban: 2,500
Suez Canal: 35,000
London: 45,000
Routing via the Suez Canal
MV HANDY HANDAN steams about 312 nautical miles per day at 13 knots. Pemba to Dar Es Salaam is 475 nautical miles, which equals about 1.5 days. Dar Es Salaam to Suez is 3,650 nautical miles, which equals about 12 days. Two days are allowed for the Suez Canal and bunkering. Suez to London is 3,200 nautical miles, which equals about 10 days.The next step is to calculate cargo intake. The ship remains in summer zones and no draft restriction is assumed at the loading port, discharging port, or Suez Canal. Bulk minerals stow about 1.13 to 1.22 cubic metres per tonne. Allowing an additional margin for lost trimming space caused by tween-deck overhangs, the ship has sufficient cubic space. Cargo intake is therefore controlled by deadweight rather than cubic capacity.
The relevant deadweight calculation is based on the maximum bunkers expected onboard when sailing from Dar Es Salaam. The ship has 300 mtons VLSFO and 40 mtons MGO onboard at Pemba. After the short passage and loading period, the estimated cargo intake is:
Summer Deadweight (SDWT): 15,240 mtons
Less VLSFO: 273 mtons
Less MGO: 34 mtons
Less Constant Weights: 150 mtons
Estimated Cargo Intake (DWCC): 14,783 mtons
Loading and discharging are assumed to use shore equipment, so port consumption remains at idle levels. London discharge time is calculated by dividing 14,783 mtons by 750 mtons per day, producing approximately 20 working days. Because discharge is on SHEX terms, a factor of 1.4 is applied to allow for weekends and ordinary non-working time. This gives about 28 calendar days for discharge.
Loading laytime is calculated by dividing 14,783 mtons by the loading rate of 1,500 mtons per day, producing about 10 working days. Actual loading is expected to take only two days. Therefore, about 8 days of despatch should be allowed. Since despatch is half demurrage, the rate is USD 1,075 per day if half of USD 2,150 is used. Using a rounded despatch assumption, the estimate should include approximately USD 8,600 for despatch. If the commercial practice uses a different rounding method or working-time basis, the despatch figure should be adjusted accordingly.
Gross freight is calculated by multiplying cargo quantity by freight rate. After deducting 5.5% total commission, the result is Net Freight. From Net Freight, the Shipowner deducts bunkers, port disbursements, Suez costs, despatch, and other voyage expenses. The balance is the Gross Voyage Surplus. Dividing this surplus by total voyage days produces the Gross Daily Return before daily running cost.
Routing via the Cape of Good Hope
The Cape of Good Hope alternative avoids Suez Canal dues but adds sea distance and bunker consumption. The ship first proceeds from Pemba to Dar Es Salaam and loads. The route then includes Dar Es Salaam to Durban and Durban to London. The Durban to London sea passage is about 6,850 nautical miles, which equals approximately 22 days at 13 knots.Because the ship bunkers at Durban, Durban sailing becomes the restricting point for cargo intake. The ship must not submerge her summer freeboard after taking the bunkers required for the Durban to London leg. The cargo calculation is therefore:
Summer Deadweight: 15,240 mtons
Less Durban/London VLSFO: 396 mtons
Less Safety Surplus VLSFO: 75 mtons
Less Durban/London MGO: 33 mtons
Less Safety Surplus MGO: 15 mtons
Less Constant Weights: 150 mtons
Estimated Cargo Intake (DWCC): 14,571 mtons
The Cape route loads slightly less cargo than the Suez route, but the difference is not large enough to change the discharge laytime materially. Discharge in London is again estimated at about 28 days after applying the SHEX factor.
The Cape route avoids Suez Canal costs but includes Durban expenses and higher steaming time. Bunker prices at Durban and the longer distance must be included. The income is slightly lower because cargo intake is lower. However, the saving in canal costs may more than offset the additional steaming expense, depending on bunker prices and total voyage days.
In the example, the Cape route produces a slightly better Gross Daily Return than the Suez route. The difference is small, but it is commercially meaningful. This demonstrates why voyage estimation must test routing alternatives. The shortest route is not always the most profitable route. Canal dues, bunker price, cargo intake, extra time, and final daily return must all be compared.
Voyage Estimation Time Charter Example
Assume MV HANDY HANDAN is also offered the following Time Charter Trip:Delivery APS Durban
Time Charter Trip (TCT) via safe ports South and East Africa with minerals
Redelivery DOP Izmir
Duration about 60 days, without guarantee
5% Total Commission
Charterer’s Hire Idea Maximum USD 3,000 per day
If the ship completes this trip at Izmir, the Shipowner may need to ballast from Izmir to the London-Continent area to find stronger follow-on employment. This post-redelivery ballast must be considered. The ship is open at Pemba, so the Shipowner must also ballast from Pemba to Durban before delivery.
Pemba to Durban is 1,350 nautical miles, which equals about 4.5 days at 13 knots. Izmir to London is 2,775 nautical miles, which equals about 9 days. Therefore, the additional non-hire steaming time is about 13.5 days. The Time Charter Trip itself is 60 days, giving total days for comparison of 73.5 days.
Income is calculated as USD 3,000 per day less 5% commission for 60 days, giving USD 171,000. The ballast bunker expense for 13.5 days is calculated using the ship’s daily sea consumption and ROB bunker values. VLSFO consumption is 13.5 days x 18 tonnes x USD 70 = USD 17,010. MGO consumption is 13.5 days x 1.5 tonnes x USD 145 = USD 2,936. Total ballast bunker expense is approximately USD 19,946.
Net income after these expenses is about USD 151,054. Dividing by the full 73.5 days gives a daily return of about USD 2,055 before daily running cost. On this basis, the Time Charter Trip does not perform as well as the voyage charter alternatives in the example.
What is Ship Voyage Estimation?
Ship Voyage Estimation is the calculation of the expected profit or loss from a proposed voyage charter or Time Charter Trip. It compares revenue with costs and converts the result into a daily figure that can be compared with other employment. It is a practical decision-making tool used before entering into a chartering commitment.In voyage chartering, there are two main categories of costs:
- Operating Costs: crew, repairs, maintenance, insurance, stores, lubes, management, and other daily ship costs.
- Voyage Costs: bunkers, port dues, dock dues, canal tolls, agency, cargo handling where applicable, extra insurance, and other costs incurred for the specific voyage.
Voyage estimation helps the Shipowner decide whether the proposed freight is sufficient. It also helps during negotiation because the Shipowner can test the minimum acceptable freight level. If the offered freight is below the level required to beat the ship’s alternatives, the Shipowner may reject the business or counter at a higher rate.
Voyage estimation also produces a Time Charter Equivalent (TCE). Time Charter Equivalent (TCE) is the daily return that the ship earns from the voyage after deducting voyage expenses from revenue and dividing by voyage days. It allows voyage charter results to be compared with Time Charter hire rates.
Process of Voyage Estimation
The voyage estimating process considers the following factors:- Cargo and Stowage Factor
- Ship Characteristics
- Time at Sea
- Time at Port (Loading and Discharging Operations)
- Time at Bunkering Port
- Bunker (Fuel) Costs
- Port Costs
- Canal Costs
- Freight Income
- Operating Expenses
- Commissions (Address Commissions and Brokerages)
- TCE (Time Charter Equivalent)
Best Voyage Estimation Software
Voyage estimation can be performed manually, with spreadsheets, or through dedicated voyage estimation software. Manual estimation remains important because it teaches the structure of the calculation and helps users detect errors. Software is valuable because it speeds up repetitive calculations, stores data, compares alternatives, and produces consistent formats.One widely used voyage estimation program is Netpas Estimator, which is designed for tramp shipping and voyage calculation work. Netpas Estimator can assist with voyage, cargo relet, and time charter analysis. It offers tools for estimation analysis, loadable quantity, freight simulation, distance calculation, bunker planning, and saved voyage files. These functions can help Shipbrokers and operators prepare quick and organised voyage estimates.
However, software should not replace commercial judgement. A voyage estimation program depends on the quality of the data entered. The Shipbroker or ship manager must still check distances, port assumptions, bunker prices, cargo intake, load-line zones, commissions, port charges, despatch, demurrage, and final position. A good estimator uses software as a tool, not as a substitute for understanding.
For more information, please check www.netpas.net
Summary
Voyage Estimation is the forecast of income, expenses, time, and daily return for a proposed ship employment. It allows Shipowners, ship managers, operators, and Shipbrokers to compare voyage alternatives, Time Charter Trips, routing options, and market opportunities. A proper estimate begins from the ship’s real open position and includes ballast time, sea time, port time, bunker consumption, cargo intake, commissions, port costs, canal dues, despatch, extra insurance, and final positioning.The calculation must consider maritime geography, distances, load-line zones, port restrictions, stowage factor, draft, cargo quantity, speed, bunker prices, and charter-party terms. Dry cargo estimates require careful treatment of SHEX, SHINC, weather working days, loading rates, discharging rates, notice time, weekends, holidays, and despatch. Tanker estimates require additional attention to Worldscale, cargo heating, pumping, tank cleaning, and ancillary bunker consumption.
The result should be expressed as a daily figure, such as Gross Daily Profit, Net Daily Profit, or Time Charter Equivalent (TCE). This makes it possible to compare different voyages even when the total profit, voyage length, cargo quantity, and routing are different.
Modern voyage estimation software can improve speed and consistency, but the estimator must still understand the manual method. The strongest estimates are produced by combining reliable data, practical market knowledge, technical input, port experience, and disciplined commercial judgement.