Overview
The route desk and trading desk may view the same cargo through different models. One focuses on the vessel programme; the other focuses on the expected sale result. A useful destination comparison reconciles those views so that management understands what would actually change if it selected an alternative.
Key takeaways
- Define the commercial boundary of each destination option before comparing value.
- Separate quoted sale terms from internal estimates and unconfirmed assumptions.
- Include receiving access and review status in the main decision view.
- Identify which costs are incremental and which belong to the existing programme.
- Preserve the decision window and fallback for each alternative.
Define the transaction at each destination
For each option, record the intended buyer, delivery proposition, receiving arrangement and programme reference. Identify what is agreed and what remains an indication or internal assumption.
A destination market is not the same as a sale that the business can conclude. The desk needs a scoped proposition from the relevant counterparty before it treats a headline value as transaction evidence.
Likewise, a terminal name is not a complete access arrangement. Ask the responsible commercial source what authority and confirmation support the proposed use, and route technical questions through the appropriate reviewers.
Where agreement wording determines obligations, check the current text and obtain authorised commercial or legal review. The comparison should not silently assume that transport, receiving or delivery responsibilities are the same across different sale propositions.
Write the boundary in ordinary language. A reader should be able to understand what the business would buy, sell and arrange under each option without tracing every contract reference before seeing the basic comparison.
Reconcile the transport and sales models
Ask the trading and chartering teams to identify the inputs they share. The cargo quantity basis, timing proposition and receiving reference should align where they describe the same scenario.
Then identify inputs that serve different purposes. A planning cargo quantity may differ from the basis used in a commercial settlement estimate. A vessel employment assumption may extend beyond the cargo's principal movement. These differences need explanation rather than automatic equalisation.
Use a common scenario identifier across the models. If the route desk updates the destination or timing assumption, the sales model should show whether it has incorporated that revision.
| Comparison area | Question for reconciliation | Evidence to retain |
|---|---|---|
| Sales proposition | What value is actually offered and on what basis? | Counterparty indication or agreed terms |
| Cargo quantity | Which quantity expression supports the model? | Responsible source and stated unit |
| Transport | What programme and employment assumptions are included? | Scoped estimate and offer references |
| Receiving access | What commercial arrangement is available? | Authorised confirmation and conditions |
| Review status | What remains necessary to use the option? | Named decision owners and responses |
| Timing | Which decision point controls the choice? | Agreed or clearly labelled planning deadline |
| Fallback | What remains available if the option does not close? | Defined alternative and its limitations |
This reconciliation is often more valuable than adding another decimal place to an estimated destination result.
Separate incremental costs from existing commitments
A route change should show what changes relative to the current programme. Costs already incurred or committed may remain relevant to the total trade result while not being avoidable through the destination choice.
Ask the responsible parties to identify the actual treatment of each component. Do not assume that changing destination removes a charge or that every cost in the alternative estimate is additional to the base case.
A clear bridge begins with the current proposition and lists the changes required by the alternative. It can then reconcile to the complete alternative total. This prevents the analyst from adding a new transport estimate on top of a base amount that already includes the same scope.
Where a cost remains uncertain, describe its status and seek the evidence that could change the decision. A broad contingency should not hide a missing commercial agreement or an unconfirmed receiving arrangement.
Keep any contractual recovery or adjustment separate from the economic estimate. The fact that a cost changes does not determine who bears it under the relevant agreements.
Consider the quality of the option
Two destination results can look similar while offering different levels of readiness. One may have a defined counterparty and completed relevant responses. Another may rely on a provisional sale indication and a receiving question that has not yet been answered.
Show those dependencies beside the estimated value. Do not assign an arbitrary premium to uncertainty unless the business has a clear method and purpose for doing so.
Identify the next irreversible commitment. Management should know when selecting the alternative would release the base option or create a new obligation. The appropriate parties should explain those consequences through the authorised process.
An option that cannot be completed within its decision window may still be useful for future planning. Record why it was not used so the team can improve the timing of evidence collection rather than simply labelling the destination unattractive.
Fictional case: a stronger sale on a different boundary
A fictional LNG trader compares two destination opportunities. The second shows a stronger sales value, and the initial note recommends changing the programme. The transport estimate is copied from the base case because the analyst expects the difference to be modest.
A joint review finds that the second proposition includes a different receiving responsibility and a later vessel employment assumption. Its commercial access confirmation is also still open. The two displayed values therefore do not describe the same boundary.
The teams rebuild the comparison with a common scenario reference. They obtain a revised transport estimate, clarify the receiving obligation and show the unresolved access question beside the sales indication.
Management can now decide whether the potential advantage justifies further work before the base option's decision point. The analysis does not predetermine the answer. It ensures that the apparent improvement is not simply the result of leaving part of the alternative's obligation outside the model.
Record the choice and its triggers
The final note should state the selected destination proposition, evidence supporting it and conditions that remain. Identify what new information would justify reopening the decision.
Keep the other alternatives with their limitations. If the selected option changes later, the team needs to know whether an earlier alternative is still available or merely historical.
After the decision, reconcile the authorised instructions across trading, chartering and receiving contacts. A preferred destination in an internal model does not itself amend the active commercial programme.
A later review should examine whether the comparison used consistent boundaries and timely evidence, not only whether the outcome proved favourable. That is how the business improves the quality of repeated destination decisions.
Common mistakes
Comparing headline sales values without aligning obligations can make an alternative appear better because part of its scope is missing.
Another mistake is to combine a revised sales scenario with an unchanged transport estimate that describes the old programme.
Finally, avoid treating a destination opportunity as executable before receiving access and relevant reviews are sufficiently defined. Show readiness beside economics.
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Educational information only; not legal, financial or trading advice. Contract wording and applicable rules control. Verify current requirements and obtain qualified advice before acting.
Frequently asked questions
Must every destination have a firm sale offer?
Not during initial screening. Label indications and internal assumptions clearly, then obtain the evidence appropriate to the commitment decision as the shortlist develops.
Can an uncertain option still be preferred?
An authorised decision maker may prefer to develop it further. The recommendation should state the dependencies and avoid presenting the option as already available on unconditional terms.
How should shared costs be handled?
Identify which costs change under the alternative and reconcile the full scenario total. Avoid subtracting or adding components without checking whether their scope overlaps the base estimate.
What makes the decision record useful later?
It should preserve the scenario boundary, evidence available, unresolved conditions and reason for the choice. That allows the team to review its process without relying solely on hindsight.