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Hi. I am a shipping company director, transport academic, author, family man and all round nice guy. I have worked as shipbroker, shipowner, freight trader and bulk charterer, in senior positions, with some of the largest and most disrespected (joke) companies in the world. Ask my advice on all things shipping and you will receive my blunt and always honest answer. Hang around to learn more about chartering and ship broker salaries, chartering and ship broker jobs, chartering and shipbroker recruitment agencies, cheap freight, maritime education, chartering and ship broker qualifications, become a ship broker, tips on how to be a successful bulk shipping executive, philosophy, Zen and the art of shipbroking, and much more. Yours The Virtual Shipbroker (recently proclaimed the guru of shipbroking) Copyright © 2009-17 by Virtualshipbroker

Sunday, October 7, 2012

Time charter equivalent


Hi All - sorry for my Slackness - been on a family vacation. Lots of sun, surf and seafood....

For all those who have sent me messages I am wading through those now. Expect a reply soon

otherwise here is a good post from a reader




Excellent blog - will definitely get the ebooks - in the meantime, can you define clarify the terms "Worldscale" and "Time Charter Equivalent" and how shipping companies derive/arrive at these figures when they report their financial results.....?



Hi - Worldscale is a tanker ship term. Not my gig! Basically its a way of pricing the ships. Time charter equivalent refers to price of a ship on a daily basis. So if a ship charged say 50 bucks per metric tonne to carry 50,000 mt of coal - that will have some kind of time charter equivalent - whihc means an equivalent daily rate which could be for example USD 10,000 per day.

There is no way you can figure out if the Time charter equivalent rates are kosher without knowing how to do a voyage calculation and without having all the cargo and ship details. So bottom line is you need to accept what the reports are telling you.

Hope this helps - and yes do buy my books! Keeps my children in food and clothing for another week.

VS


 

5 comments:

  1. basically Worldscale is just a huge table of flat freight rates between all tanker terminals worldwide. Having applied WS rate you will get same Time Charter Equivalent for any combination of ports in a round voyage.

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  2. Worldscale is the tanker industry’s standard for calculating freight rates. The basic idea behind Worldscale is to facilitate the process for those involved in a maritime trade. The WS rate is a predetermined rate for each specific voyage by the Worldscale Association. In order to obtain these rates, one must subscribed to the Worldscale Association. You will receive a hardcopy as well as an online password to obtain these rates. Rates change once a year.

    Now, although the rates are supplied only once a year, that doesn’t mean that this is the rate the owners will do business on. It would be ludicrous to do business in November on a rate provided in January. The rate supplied by association is called the Worldscale 100. You should interpret the 100 as 100%. It means that the rate in the book/website is the rate necessary to return a specific amount of $$$. (12,000 – this is the standard used for all worldscale 100 rates) In short, they use a specific sized vessel with a certain amount of cargo in order to standardize the rates. That’s why some rates might by 155 and others 20. The association takes in consideration that vessel sizes will differ as well cargo size and the many other variables involved in a vessel voyage. The WS100 is found by using this formula:
    DAILY HIRE = (VOYAGE REVENUE – VOYAGE COSTS) / VOYAGE DAYS

    When you are looking at reports which discuss rates, the number provided isn’t the actual rate but is actual a percentage of the worldscale 100. Therefore, if you see WS 55, that does not mean that the rate is 55. What that means is that it is 55% of the worldscale 100, which you will obtain from either the hardcopy or online webpage provided by the Worldscale Association. I would get into more detail, but I'm about to leave the office to watch the yankee game. Here are two equations used to find these rates.

    DAILY HIRE (TCE) = {Cargo Quantity (MT) x Worldscale freight rate - Voyage Costs (voyage, fuel, canal etc)} / ROUND TRIP DAYS

    Hope this helps.

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  3. Seems Interesting and useful, as im new to this industry i couldn't understand whats that daily hire(TCE) means by whether no.of days or cost calculation in the formula.

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  4. Hello Ahamed

    Thats why I wrote the books - check them out when you get a chance

    vs

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