VLCC Fuel Sensitivity for a Changed Delivery Plan

Overview

For a crude desk considering a revised destination or itinerary, the useful output is a transparent incremental comparison. It should reveal which input drives the result and which assumptions need confirmation.

Key takeaways

• Compare the changed employment against a defined base voyage.
• Keep different fuel categories separate where the model requires them.
• Use owner-supplied voyage assumptions rather than generic ship figures.
• Do not equate modelled fuel expense with an agreed freight adjustment.

Define the change being tested

Begin with the commercial proposal: an alternative receiver, an additional delivery, or another specified itinerary. Describe the base voyage and the revised voyage in the same terms. A model is difficult to interpret if one case covers only passage while the other includes additional parts of the employment.

Ask the owner or authorised source which quantity assumptions are relevant to the comparison. The analyst should not infer vessel performance from the VLCC category or create operating directions to support a desired result.

Identify whether the question concerns the owner's estimated expense, the charterer's contractual exposure, or the cargo desk's decision between alternatives. Those questions may use related inputs but require different conclusions. State the intended use at the top of the worksheet.

For example, an expense sensitivity might justify asking for clarification of a revised quote. It does not prove that the quote must change by exactly the modelled amount. Other commercial features and the actual agreement still need consideration.

Preserve the fuel basis and source

For each modelled category, record the assumed quantity, price basis, currency, location where relevant, and information date. Do not compare a delivered quotation with an assessment on a different basis without explaining the distinction.

Fuel suitability and compliance are separate technical matters. IMO describes fuel sulphur controls within MARPOL Annex VI. See its fuel sulphur overview.

The commercial analyst should obtain the relevant fuel assumptions from qualified sources. A lower price is not a reason to substitute a different product in the model without confirming that the comparison remains meaningful for the intended vessel and employment.

Keep confirmed inputs separate from scenarios. A price stress is an analytical assumption, while an actual quotation is evidence with its own validity and conditions. Labelling both simply fuel price can make the model appear more certain than it is.

Calculate the incremental example transparently

The example below uses invented quantities and prices solely to demonstrate a two-category calculation. It is not a VLCC performance estimate, a current bunker quotation, or an agreed adjustment mechanism.

ILLUSTRATIVE: fictional change in modelled fuel expense

The base case assumes 800 tonnes of category A at USD 500 per tonne and 50 tonnes of category B at USD 700 per tonne. Its expense is 800 × 500 + 50 × 700 = USD 435,000.

The changed delivery plan assumes 900 tonnes of category A and 60 tonnes of category B at the same fictional prices. Expense becomes USD 492,000, an increase of USD 57,000.

A separate price scenario uses USD 550 per tonne for A and USD 735 per tonne for B. Applying those prices to the changed quantities produces USD 539,100. The additional price effect on that revised plan is USD 47,100; the total difference from the original base is USD 104,100.

Keeping the categories separate shows why a single average price can obscure the change. The quantities and price movements need not have the same relative effect across categories. The supporting calculation record retains every input and formula.

Interpret the result as a decision aid

The first comparison isolates the changed quantity assumptions. The second adds a price scenario to the revised plan. This sequence helps the team see whether the commercial concern comes mainly from the proposed employment or from price uncertainty.

Do not describe the combined result as a forecast unless the inputs actually support that use. A sensitivity is a conditional statement: if these assumptions hold, the arithmetic produces this expense. It does not assign a likelihood to the assumptions.

Ask whether the result could change the route decision. If the cargo desk would choose the same receiver across reasonable supported scenarios, the next priority may be acceptance or receiving readiness. If the decision changes easily, better input evidence may be valuable before commitment.

Keep wider cargo economics outside the fuel subtotal. A different receiver may change sale value or delivery timing, but those inputs belong to the responsible cargo and finance teams. Show their relationship in the overall recommendation without labelling them owner-quoted fuel cost.

Fictional case: a destination change is assessed too narrowly

A fictional crude trader asks an owner to consider another discharge destination for a VLCC cargo. An internal analyst estimates a fuel difference using one blended price and proposes using it as the complete commercial adjustment.

The chartering manager asks for the scope of the owner's revised employment and separates the modelled categories. The team then distinguishes the expense sensitivity from the owner's actual commercial response and the receiver's own readiness conditions.

The revised paper does not claim that the owner must accept the spreadsheet result. It uses the calculation to frame questions about the assumptions, while the contracting team checks the current text of the proposed agreement and relevant clarifications.

The trader can now assess the alternative on a coherent basis. The fuel model contributes evidence about one driver without displacing the broader commercial decision.

Record model ownership and revision triggers

Assign a person to maintain the model and identify who can authorise its use in an approval paper. An unowned spreadsheet can remain in circulation after the route or price basis has changed.

Save the input source, scenario purpose, and version with the result. If the owner revises a quantity assumption, update every affected calculation rather than adjusting only the headline total. This preserves traceability and reduces hidden inconsistencies.

The recommendation should identify the next action: seek a revised input, clarify the adjustment basis, compare another destination, or proceed on an accepted scenario. A sensitivity without an action can add apparent sophistication while leaving the decision unchanged and unexplained.

After the voyage, compare the model's intended purpose with its actual use. If colleagues treated an illustrative expense as a contractual amount, improve labelling and handover before adding more numerical detail to future models.

Common mistakes

Using a generic VLCC quantity assumption as if it described the nominated vessel weakens the analysis. Another mistake is mixing different model boundaries between the base and revised cases.

Avoid treating the lowest available fuel price as automatically applicable. The product and supply basis must be relevant to the comparison and supported by qualified input.

Do not present a calculated expense difference as an entitlement under the freight agreement. Check the current text and obtain the appropriate commercial or legal interpretation.

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.

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