Tanker Benchmark Scenarios: Test the Physical Gap

Key takeaways

• Define the reference and actual proposal on compatible units before modelling a gap.
• Keep the physical offer's scope and status explicit.
• Test alignment, weaker pass-through and independent physical movement.
• Treat scenarios as conditional possibilities, not measured correlations.
• Use the result to identify which actual offer evidence the decision needs.

Identify the relationship being assumed

A benchmark can provide useful context for an employment proposal without determining its price. The desk should state how it expects the reference and physical offer to relate and why that expectation is relevant.

If the model simply applies the benchmark's percentage movement to the proposal, it has assumed proportional movement. That assumption should be visible rather than hidden in a spreadsheet formula.

For a real decision, examine comparable offer evidence and the material differences between the reference and the actual employment. Do not infer a stable relationship from one observation or from the convenience of using a familiar benchmark.

The scenarios below test different relationships using invented daily monetary values. They do not describe any actual Baltic route, current market or statistical forecast.

Keep units and commercial scope consistent

The reference and physical proposal must be comparable enough for the displayed gap to have meaning. Do not subtract an index-point value from a daily monetary rate or compare unlike service endpoints as though the difference were purely a price effect.

Where the scope differs, identify that difference before modelling the gap. Some differences may require a separate analysis rather than a numerical adjustment.

The teaching model assumes the physical proposal remains comparable across its scenarios and that a daily rate applies for a fixed modelled period. Those assumptions isolate the reference relationship; they do not establish how a real agreement works.

If the actual programme changes, revise the model rather than attributing every resulting cost movement to benchmark divergence.

Illustrative alignment and divergence scenarios

ILLUSTRATIVE fictional baseline. Use an invented daily monetary reference of USD 20,000 and a physical proposal of USD 22,000 per day. The gap is USD 2,000 per day. Assume a 30-day period with all days payable at the stated physical rate and no other changes in the limited model. Baseline payment is USD 660,000.

In the proportional-rise case, both starting values increase by 10%. In the second case, the reference rises by 10% while the physical proposal remains unchanged. In the third, the reference is unchanged while the physical proposal rises to the stated invented amount.

Relative to baseline, period payment increases by USD 66,000, remains unchanged, or increases by USD 60,000 respectively. The same reference direction does not require the same physical result in these scenarios.

The table does not claim that the cases are equally likely or that any is currently occurring. It exposes the assumption the business makes when it uses a reference to estimate its own commitment.

Interpret the changing gap carefully

A widening or narrowing gap is an observation within the model. It does not identify the cause by itself.

In a real comparison, the gap may reflect differences in timing, actual availability, scope or another relevant commercial condition. Those explanations need evidence. Do not label the difference as an unjustified premium merely because it is larger than before.

Likewise, a gap that closes does not prove the physical proposal has become attractive. The complete programme cost and feasibility still matter. Equality with a reference is not a universal test of commercial value.

The useful question is which conditions could cause the relationship to differ from the planning assumption and whether the desk can obtain better evidence before committing.

Fictional case: the budget assumes automatic pass-through

A fictional tanker charterer uses a daily monetary reference to update an internal employment budget. Its worksheet increases the physical rate by the same percentage whenever the reference rises.

The desk later receives an actual proposal that has moved differently. The first reaction is to treat the counterparty's figure as inconsistent with the market model.

The reviewer identifies the hidden proportional-movement assumption. The desk then compares the proposal's actual opening, duration and scope with the reference and with other available offers. It keeps the benchmark scenario as context while using the physical evidence to assess the commitment.

The budget model may still be useful for planning. It needs a clearly labelled relationship assumption and a divergence scenario, rather than a rule that every actual proposal must obey.

Keep the scenarios commercially coherent

If the physical proposal changes scope, the model should show that change separately. A different delivery position or duration can alter the total payment even where the daily rate is unchanged.

Do not call those effects benchmark divergence without explaining the broader change. The actual proposal is a complete package, and the reference relationship is only one part of its interpretation.

Similarly, a scenario that assumes a lower physical rate must still correspond to a feasible available employment or be labelled hypothetical. An attractive number is not an alternative the business can choose until its commercial status is supported.

Use a small set of scenarios that illuminate the actual decision. Adding many arbitrary rate combinations can obscure the important uncertainty rather than clarify it.

Decide whether probabilities add value

The three cases can be useful without probability weights. They show how the commitment changes if the assumed relationship holds, weakens or fails in a different way.

If the business assigns probabilities, state the evidence or explicitly hypothetical basis. Do not describe judgemental weights as measured statistical likelihoods.

Retain the individual outcomes even when a weighted result is calculated. A manageable average can hide a scenario that materially affects the budget or the ability to serve the programme.

The model should support an authorised commercial decision, not manufacture confidence from unsupported precision.

Use the result to improve the next enquiry

The sensitivity of the decision to the physical gap can guide evidence gathering. If the preferred action changes across plausible cases, obtain comparable current proposals and clarify the material scope differences.

If the decision remains the same across the supported range, further refinement of the benchmark mapping may be less urgent than another unresolved operational condition. Keep the uncertainty visible even when it is not decisive.

The final recommendation should state which physical proposal is supported now, how the benchmark informs the view and what evidence would change the choice. That is more useful than presenting one benchmark-derived rate as though it were an available offer.

Common mistakes

One mistake is forcing physical offers to move proportionally with a benchmark without identifying that assumption. Another is subtracting unlike units or scopes and calling the result a meaningful premium.

A third error is treating a zero gap as proof of good value. Finally, do not assign scenario probabilities merely to make a conditional exercise look like a precise forecast.

Where Zeaclub fits

Zeaclub provides a multi-party shared workspace for owners, charterers, brokers and port agents.

Zeaclub offers digitalised procedures across the voyage workflow.

Explore Zeaclub

Explore Zeaclub