Detailed knowledge of voyage estimates including cargo calculations

Detailed knowledge of voyage estimates including cargo calculations

Estimated travel

The purpose of voyage estimation is for two reasons as discussed below. This exercise is to estimate both revenue and the expenses to get the profit (loss) in that voyage.
In any commercial business operation, one must estimate the costs involved in an operation, so that one can charge a reasonable price for one’s services. In the chartering business the process of determining the earnings of a vessel before she seeks employment to transport cargo from Point A to Point B is called voyage estimating. 
In a ship budget estimates are the cost estimated to be incurred by the ship to perform the voyage or for a period-monthly/quarterly/yearly. The purpose of voyage estimates is to make a budget for the cost involved in running a ship for a voyage or more than one voyage as the case may be. At the end of the voyage, the estimated/budgeted figures are compared with the actual cost to get the variation between the two.
A complete budget analysis is done before the commencement of a financial year in such a way monthly/quarterly/yearly estimates including all the costs, considering the ship as a profit center the admin and the management cost will be apportioned with the other ships in the fleet. 

Ship Operating Costs and related Budgeting

It may be worthwhile to have a clear understanding of the kind of “costs” with which a ship owner is involved for the owning and operating of a ship.

The three broad categories of the “costs” with which a ship is involved are:-

(i) Capital costs (roughly around 5% of the gross-costs): All of these are the owner’s responsibility.

These are “fixed costs” associated with the ship’s purchase. In this, the other costs involved are, (a)pre-delivery costs; (b) loan repayments; (c) payments of interest to banks or, mortgages if applicable. Depreciation to be accounted form; (d)payments related to leasing charges; (e) payment of initial registration fees; (f) certain taxes; and, (g) any bareboat charter-hire that may be payable.

(ii) Voyage costs (roughly around 45% of the gross-costs): Handling these costs is the responsibility of the ship’s commercial operator. All of these costs are the charterer’s liability, if we are to assume that the ship has been let out on a time charter.

These are “variable costs” which are obviously involved with the commercial engagement of the ship. In this the costs involved are, (a) bunker costs(around 75%); (b) dues related to ports and canals; (c) charges on account of pilotage; (d) charges related to the hiring of tugs, if needed; (e) fees charged by the various agencies; (f) costs related to loading / discharging of the vessel; and,

(iii)Operating Costs (roughly around 45% of the gross-costs): Handling these costs is the responsibility of the ship owner or manager.

These are the semi-variable costs which are categorised in-between capital and voyage costs. In this the costs involved are, (a) crewing costs(around 40%); (b) dues related to storing, including lubricants(around 25%); (c) charges incurred on account of insurance of the ship(usually around 10%; 65% towards Hull and Machinery and around 35% towards P & I); (d) costs related to the maintenance of the ship, as needed(around 15%, obviously depending on her age and the way she has been treated); (e) fees charged by the administration(around 10 %); (f) costs related to loading / discharging(i.e. cargo handling costs) of the vessel , including cargo claims. This cost is usually taken as a separate head.

The operating costs as indicated below in tabular form, are usually used for budget estimates, and, the monthly reports normally reflect these:-