Overview
Start by making the calculation reproducible. More decimal places cannot compensate for an omitted ballast leg, an outdated port-cost assumption or a freight indication based on another cargo quantity.
Key takeaways
- State where the model begins and ends.
- Separate contractual inputs, operational forecasts and scenario assumptions.
- Label all teaching figures as illustrative.
- Show which excluded costs prevent the result from representing final profit.
Define the earnings question first
An owner comparing voyage employment and a charterer estimating transport expenditure may use some of the same inputs while answering different questions. Name the perspective and intended decision at the top of the worksheet.
For an owner's daily voyage comparison, identify the revenue and voyage deductions, then divide the resulting balance by the relevant duration. The Baltic Exchange benchmark guide describes a time-charter-equivalent approach based on freight, specified costs and voyage duration. Your actual model still needs its own documented conventions.
Do not call the result net profit unless the model genuinely includes every cost needed for that definition. Ownership, financing and other expenses may sit outside a voyage comparison. Say what is included instead of relying on a broad label.
Draw the model boundary
Write the start event and end event in plain language. The model might begin at a defined opening position and finish after the proposed employment, but the appropriate boundary depends on the decision.
Then divide time into the activities that fall inside that boundary. Separate positioning, laden passage, expected port activity and any other relevant period. This makes an omitted leg easier to identify and allows the reviewer to test a delay without rewriting the base itinerary.
Apply the same boundary when comparing alternatives. If one estimate begins at the loading port and another includes the passage to reach it, the daily results describe different scopes. The correction belongs in the assumptions before the figures are ranked.
Establish the revenue basis
Record the cargo quantity used, the freight basis and the status of the commercial indication. Distinguish an agreed term from a preliminary market enquiry. Where quantity or destination options remain open, state which option the estimate assumes.
Identify commissions and other deductions according to the actual commercial basis being modelled. Do not assume that an amount appearing in a previous fixture automatically applies to the current enquiry. Keep the source reference beside the input.
Avoid adding uncertain claims or recoveries to base revenue merely because they may become available. If they need to be explored, show them as a separate scenario with a clear explanation of what would have to be established.
Assign a source and owner to each cost
Fuel, port expenses and other voyage costs should carry a source, timestamp and responsible reviewer. The source can be a current quotation, an operational estimate or a labelled assumption, but the categories should remain distinguishable.
A fuel estimate requires a consistent quantity and price basis. A port allowance needs a defined scope, including the call and services it covers. If a cost may change with cargo quantity or time, record that relationship rather than leaving it as an unexplained fixed amount.
Ask what is excluded. An apparently complete cost list can still omit a service assumed to be included elsewhere. Resolve overlaps and gaps before drawing conclusions from the daily earnings result.
Work through a fully illustrative case
ILLUSTRATIVE — invented teaching inputs; not market data.
Assume cargo of 40,000 tonnes, freight of 22 USD per tonne, commission of 2.5%, fuel of 400 tonnes at 600 USD per tonne, port expenses of 90,000 USD and other voyage expenses of 18,000 USD. Duration is 22 sea days + 6 port days + 2 positioning days = 30 days.
| Calculation | Illustrative result |
|---|---|
| Gross freight = 40,000 × 22 | 880,000 USD |
| Commission = 880,000 × 0.025 | 22,000 USD |
| Fuel = 400 × 600 | 240,000 USD |
| Voyage contribution = 880,000 − 22,000 − 240,000 − 90,000 − 18,000 | 510,000 USD |
| Daily voyage earnings = 510,000 ÷ 30 | 17,000 USD per day |
This simplified contribution excludes ownership, financing and other expenses not listed above.
The example is deliberately simple. Its purpose is to show the path from inputs to a daily result, not to quote a market rate or represent a particular ship's economics. The selected expense categories and duration must not be copied into a real estimate without review.
The most useful check is whether another analyst can reproduce the result and explain each input. If they can reproduce the arithmetic but not the source of the fuel allowance or voyage duration, the model is mechanically clear but commercially incomplete.
Use an evidence-quality checklist
| Input group | Question for the reviewer | Evidence to retain |
|---|---|---|
| Revenue | Does this describe the current cargo and commercial basis? | Current instruction, offer or agreement reference |
| Quantity | Is the assumption within the relevant stated basis? | Cargo instruction and option record |
| Fuel | Are quantity, grade and price assumptions compatible? | Technical estimate and dated price basis |
| Port costs | Which calls and services are included? | Estimate or quotation with exclusions |
| Other expenses | Are allocations and exclusions explicit? | Source and modelling explanation |
| Duration | Are all in-scope activities represented? | Itinerary and forecast references |
The table supports review rather than awarding a false numerical confidence score. A single unresolved input can matter more than several complete low-impact fields.
Separate the base case from sensitivities
Once the base case has a clear identity, create alternative cases by changing specified inputs. Keep all other assumptions fixed unless the scenario explains why they change together. This makes the effect understandable.
For example, longer waiting can increase duration and relevant expenses. Changing only the duration may be appropriate for a narrow test, but the limitation should be stated. Do not present a partial sensitivity as a complete forecast of the delayed voyage.
Retain a change log identifying who altered the assumption and why. A later reviewer should not have to compare spreadsheet cells manually to discover that the preferred option uses a different fuel basis.
Prepare the approval note
Use the note to explain the decision, not merely to repeat the output:
- State the employment being assessed and the calculation boundary.
- Present the base result with its principal assumptions.
- Identify the unresolved inputs most likely to change the conclusion.
- Show the relevant sensitivity rather than every possible scenario.
- Record the decision-maker and the next confirmation required.
A recommendation can remain conditional. Saying that an option appears preferable subject to a named confirmation is more useful than removing the uncertainty to make the approval note look decisive.
Common mistakes
Avoid combining gross revenue from one version with costs from another. Do not compare a daily earnings estimate with a freight-per-tonne indication as though the units were interchangeable. Do not describe the illustrative example as a current fixture opportunity.
Another error is changing a model after approval without preserving the approved version. Keep the original decision basis and the later update so the operational team knows which assumptions have changed.
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
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
Which inputs matter most in a voyage earnings model?
Revenue, voyage expenses and duration define the result, but their importance depends on uncertainty and scale. Review the assumptions capable of changing the actual decision.
Can an earnings estimate use provisional information?
Yes, if it is labelled and its implications are tested. Provisional inputs should not be presented as confirmed contract terms or current market observations.
Does daily voyage earnings equal final profit?
Not necessarily. State the included deductions and excluded expenses. A limited voyage comparison should not imply that it covers the owner's complete financial result.
What should happen when an input changes after approval?
Preserve the approved version, record the change and obtain the required reassessment. The importance of the change depends on its effect on the decision and agreed authority.