Simplified standard voyage calculation for a Panamax vessel 

(by Henrik Falck, Project Manager - Eastern Europe Tschudi Shipping Company AS)


Please find enclosed a copy of a simplified standard voyage calculation for a Panamax vessel loading coal in Hampton Roads (US East Coast) to Rotterdam. This is a common market business and the rates are reported by various shipbrokers on a more or less daily basis. At the same time the shipbrokers report the various rates in the various markets on a timecharter equivalent basis.(see enclosure)

In my enclosed Excel-example you see that a rate of usd 12 per ton equates to usd 7 724 per day in timecharter equivalent.

If I, acting as a ship-owner, see from the market reports that the current rate from H.Roads to Rotterdam is usd 12 per ton and I also see that the current timecharter market is usd 7 500 per day, then the conclusion would be to do this business on so called voyage basis (usd/ton) as I will be making usd 224 extra per day (7 724- 7 500) times 31 days = usd 6 944. However, if I decide to do this on a voyage basis I also bear the risk for delays (bad weather, port congestions etc) and then you see that the extra gain equals roughly one day delay. If I take the voyage result in the enclosed example of usd 239 450 and divide it by 32 days in stead of 31 days I end up with a timecharter equivalent of usd 7 483 per day.

The above example is to show you how you calculate a rate expressed in usd/ton into a timecharter (equivalent) and likewise if you have a timecharter rate you can calculate backwards to get the rate expressed in usd per ton.

If you follow me this far we can go to the Pevek example;

As a relevant example of the shipping market expressed in timecharter equivalents for Panamax vessels on a global scale we can typically see;

                Atlantic                                usd 7 500 per day

                Atlantic to Pacific             usd 15 000 per day

                Pacific                                  usd 7 500 per day

                Pacific to Atlantic             usd 1 000 per day

The Atlantic market is described above and you can do the same calculations for the Pacific (Australia to Japan etc).

It is the combination of Atlantic/Pacific which is interesting, either the Northern Sea Route or the Suez/Panama canal.

Choosing Suez/Panama: on a timecharter basis I will do 50 days out at usd 15 000 per day and 50 days back at usd 1 000 per day, giving an average of usd 8 000 per day.

Choosing the NSR both ways I calculate as follows;

What is the last reported rate from Kirkenes to China for iron ore going through Suez? It is usd 29 per ton and this equates to a timecharter equivalent of usd 15 000 for 50 day.

Hence I use usd 29 per ton and go through the NSR. This gives me a timecharter equivalent of usd 32 000 per day for 30 days.  

No rates are reported from Pevek to the Continent as there is no trade today. This gives the shipowner many options;

1. Since it is the same distance as from Hampton Roads to the Continent and Hampton Roads probably will be the closest competitor I can offer the potential coal mine in Pevek a similar rate, i.e. usd 12 per ton. If I put this figure into may calculation I get a timecharter result of minus usd 7 600 per day (from China via Pevek to the Continent) but my average will be (32 000 * 30 + (-7 600 * 30))/ 60 =usd 12 200, - more than 50% higher than my Suez/Panama alternative described above. (described in presentation)

2. I am satisfied by getting the same average return as the Suez/Panama alternative,i.e. usd 8 000 per day. This gives me a ton rate of usd 8,5 or 30% lower than the rate from Hampton Roads to the Continent. (described in presentation)

3. Being out in the Far East I know that I only get usd 1 000 per day coming back to the Atlantic so I use this figure and calculate backwards through the NSR. Then I arrive at usd 14,5 per ton and the average round trip will be usd 32 000 * 30)+ usd (1 000 * 30/60= 16 500, - more than 100% higher than the Suez/Panama alternative.(not described in the presentation)

4. If you are really sharp you will see that alternative 2 is not very realistic since the ship-owner will be better off going back via Suez/Panama for usd 1 000 per day. 32 000 * 30 + 1 000 *50/80= an average of usd 12 000 for 80 days. A realistic figure will be closer to alternative 1. How come that the owners will accept the same rate for the same distance while they have to pay for the NSR fee going from Pevek? The reason is that the owner going from Pevek will calculate a day cost of usd 1 000 while the owner going to Hampton Roads will have to calculate a day rate of usd 7 500.


There are obvious savings to be made by using the NSR especially if there is cargo to be picked up west-bound. For (large) vessels carrying dry cargo any loading port between Provideniya and Murmansk will be of interest and the freight rates going west will be low as the ship-owners will automatically calculate this as their cheap backhaul cargo.