Voyage Estimate

This is taken into the calculation of the voyage estimate which in its turn will calculate the voyage costs which will be those expenses directly resulting from undertaking that voyage such as bunker fuel and port expenses.  The voyage estimate will also provide an estimate of how many days the voyage will occupy, never forgetting to add any distance which may have to be covered in ballast in order to reach the first loading place.  The distance involved divided by the ship’s average speed will tell how many days at sea and the ship’s fuel consumption will indicate how much fuel will be used at sea; remember that the ship uses far less fuel when stationary in port.  The rates of loading and discharge will provide an idea of the number of days in port but experience of the trade will make this part of the estimate more accurate. One now has a total daily cost figure and an estimated number of days which, multiplied by each other, gives the total estimated expenses for that particular voyage.  The anticipated rate of freight times the number of tonnes (less commissions and any loading/discharging costs) will provide a total income for the voyage which one always hopes will exceed the costs by a substantial amount as this is the gross profit. Several voyage estimates might be carried out to compare one piece of business with another before entering into serious negotiations.  The outcome of one particular voyage is not the only factor to be considered as one has to have regard to whether the ship will finish up in a place where nearby following business is available or whether a long ballast run may be necessary to get to where business can be found. This is not the end of the accounting dialogue between managers and owners because the actual financial outcome of the voyage has to be provided to be compared with the original estimate.  It is only in this way can a bank of experience be compiled so that future voyage estimates are more accurate than mere guesses.