Voyage estimation is the commercial calculation used to decide whether a cargo is worth fixing and at what freight. A useful estimate begins with the vessel’s actual open position, not the load port, and follows the ship through ballast, loading, laden passage, discharge and any realistic waiting or transit time. The objective is simple: turn freight, time and voyage costs into a daily earning that can be compared with other employment.
The most important point is that a cargo does not have one universal TCE. The same fixture can produce a very different result for two ships because their open positions, ballast distances, bunker ROB, consumption, port restrictions and next-position value are different.
What Is Voyage Estimation in Shipping?
Voyage estimation is a pre-fixture calculation used to estimate the commercial result of employing a vessel on a specific cargo. It brings together revenue, duration and voyage-specific expenses so the chartering or operations desk can compare one employment opportunity with another.
The basic logic is the same across dry bulk, tanker and other tramp-shipping markets even though individual trades use different freight conventions and cost lines. For current dry-bulk market context, Tide Signal’s Baltic Dry Index 2026 analysis tracks the latest BDI, Capesize, Panamax, C3 and C5 signals that can influence the freight assumptions used in a voyage estimate. The estimate should answer four questions:
- How much freight will the voyage earn?
- How much time will the vessel be committed?
- What costs belong to the voyage?
- What daily earning does the voyage produce?
The Baltic Exchange Guide to Market Benchmarks uses the same commercial structure for published TCE calculations: freight income is reduced by voyage costs and the result is divided by total voyage duration.
Why the Vessel’s Open Position Comes First
A common mistake is to start the estimate at the load port. Commercially, the vessel starts earning or losing time from where she is actually open.
If a ship finishes discharge in Rotterdam and the next cargo loads in Santos, the ballast leg to Brazil belongs in the calculation. A second vessel already open in Brazil may look at the same cargo, the same freight and the same load/discharge ports and still produce a much higher TCE simply because the ballast exposure is smaller.
The correct starting question is not “what does this cargo pay?” It is “what does this cargo pay this ship from this position on this date?”
Before calculating anything, establish:
- the vessel’s expected open port, area and date;
- the practical ballast route to the load port;
- ballast and laden speed/consumption assumptions;
- cargo intake and draft limitations;
- fuel ROB and likely bunker stem;
- the commercial position after discharge.
Contract structure also changes the economics. Tide Signal’s Types of Charter Parties in Shipping explains how voyage and time charters allocate bunker and voyage-cost responsibility differently, subject to the actual fixture terms.
Voyage Estimation Formula
A voyage estimate is easier to audit when it is built in stages.
Gross freight
Gross Freight = Cargo Quantity × Freight Rate
If the fixture is lumpsum, the agreed lump sum becomes the revenue basis. If tanker freight is quoted on Worldscale, the applicable flat rate and WS percentage must first be converted into actual freight revenue.
Net freight
Net Freight = Gross Freight − Applicable Commissions
Voyage costs
Voyage Costs = Bunkers + Port Costs + Canal/Transit + Agency + Other Voyage-Specific Costs
Voyage contribution
Voyage Contribution = Net Freight − Voyage Costs
Time Charter Equivalent
TCE = Voyage Contribution ÷ Total Commercial Voyage Days
TCE is a comparison measure. It is not the vessel owner’s final accounting profit because vessel OPEX, financing, depreciation and wider asset costs sit outside the basic voyage calculation unless the company chooses to include them separately.
Calculating Voyage Duration Properly
The sea-time formula is straightforward:
Sea Days = Distance (NM) ÷ Speed (knots) ÷ 24
The commercial duration is broader:
Total Voyage Days = Ballast Sea Days + Laden Sea Days + Loading + Discharge + Waiting + Shifting + Transit Time
Tide Signal’s Voyage ETA Calculator is useful for calculating the sea-time leg from distance and speed. Port and waiting assumptions must then be added separately.
This distinction matters because contractual laytime is not automatically the same as expected port time. A charterparty can allow a certain number of laytime hours while the desk expects shorter or longer actual port occupancy because of berth access, congestion, weather, tidal restrictions or cargo performance.
For the contractual framework, see Tide Signal’s guides to Notice of Readiness and Laycan in Shipping.
Bunker Consumption and Cost
Bunkers are often the largest variable voyage expense and one of the fastest ways for an apparently attractive estimate to weaken.
Fuel Quantity = (Ballast Days × Ballast Consumption) + (Laden Days × Laden Consumption) + (Port Days × Port Consumption)
Bunker Cost = Σ (Fuel Grade Quantity × Fuel Grade Price)
Real estimates should distinguish ballast, laden and port consumption where the vessel’s performance data justify it. ROB also matters: fuel consumed during the voyage and fuel purchased for the voyage are not always the same cash-flow number.
The IMO’s GreenVoyage2050 speed-management guidance explains why fuel demand changes non-linearly with speed. The IMO’s weather-routing guidance also notes that wind, waves and currents alter the power required to maintain speed.
For current fuel-market context, Tide Signal’s Bunker Fuel Shortage 2026 analysis shows how quickly bunker-price assumptions can move voyage economics.
Port, Canal and Other Voyage Costs
Port and transit costs should be entered from current, vessel-specific information wherever possible. A previous voyage’s disbursement is useful as a reference, not as a guarantee.
Depending on the trade and fixture, the estimate may include:
- port dues and berth charges;
- pilotage and towage;
- agency;
- mooring and unmooring;
- canal and transit charges;
- anchorage or shifting costs;
- cargo-related charges for the owner’s account;
- ice, security or war-risk costs;
- emissions-related costs where applicable;
- other voyage-specific expenses.
Political and security risk belongs in the estimate when it creates a direct cost. Tide Signal’s War Risk Premiums in Shipping explains how insurance and security exposure can become a voyage-economics variable.
Freight Revenue and Commissions
For a conventional dry-bulk voyage quoted in dollars per tonne:
Gross Freight = Lifted Cargo × Freight Rate
The important word is lifted. If draft, stowage or terminal restrictions reduce cargo intake, using the headline nomination can overstate revenue.
Commissions should be taken from the actual fixture terms. Broker commission, address commission and any other agreed deduction can materially affect the net freight, particularly on large cargoes.
The Voyage Margin Calculator can be used to test freight, commissions, bunker cost and break-even. The quality of the output still depends on the assumptions entered.
What TCE Actually Tells the Chartering Desk
Time Charter Equivalent converts the result of a voyage into a daily earning so different employment options can be compared on a common basis.
TCE = (Gross Freight − Commissions − Voyage Costs) ÷ Total Voyage Days
The Baltic Exchange TCE calculator follows this market-benchmark logic and exposes the underlying freight, bunker, port and transit inputs.
A $1.75 million freight may look better than a smaller fixture in absolute terms, but if it ties up the vessel for much longer it can produce a lower daily return.
Worked Voyage Estimation Example
The following example uses a 70,000 mt dry-bulk cargo and transparent assumptions. The numbers are illustrative rather than a market quotation.
| Input | Assumption | Commercial purpose |
|---|---|---|
| Cargo | 70,000 mt | Revenue basis |
| Freight | $25.00/mt | Gross freight rate |
| Commission | 3.75% | Deduction from freight |
| Ballast distance | 2,500 nm | Open position to load port |
| Laden distance | 6,500 nm | Load to discharge |
| Speed | 13.0 kn | Illustrative average |
| Sea consumption | 28.0 mt/day | Illustrative combined sea fuel |
| Port consumption | 4.0 mt/day | Illustrative port fuel |
| Port time | 6.0 days | Combined load/discharge/waiting assumption |
| Bunker price | $650/mt | Illustrative blended price |
| Port costs | $180,000 | Combined disbursements |
| Canal/transit | $120,000 | Route-specific transit cost |
| Other costs | $25,000 | Other voyage-specific items |
1. Gross freight
70,000 mt × $25.00/mt = $1,750,000
2. Commission
$1,750,000 × 3.75% = $65,625
3. Sea days
(2,500 + 6,500) nm ÷ 13.0 kn ÷ 24 = 28.85 days
4. Fuel and bunker cost
(28.85 × 28.0) + (6.0 × 4.0) = 831.7 mt
831.7 mt × $650/mt = $540,600
5. Voyage costs
$540,600 + $180,000 + $120,000 + $25,000 = $865,600
6. Voyage contribution
$1,750,000 − $65,625 − $865,600 = $818,775
7. TCE
$818,775 ÷ 34.85 days = $23,497/day
The resulting $23,497/day is not automatically attractive or unattractive. It has to be compared with alternative cargoes, the prevailing time-charter market, the ship’s charter-in cost if applicable, the discharge position and the reliability of the assumptions behind the estimate.
Sensitivity Analysis
A voyage estimate should be tested against the assumptions most likely to move. A marginal fixture can change materially with a relatively small change in fuel price, freight or port time.
| Scenario | Indicative TCE | Change |
|---|---|---|
| Base case | $23,497/day | — |
| Bunker price +$100/mt | $21,110/day | $-2,387/day |
| Two extra port days | $22,080/day | $-1,417/day |
| Freight +$1/mt | $25,430/day | +$1,933/day |
Break-Even Freight
Break-even freight can mean different things depending on what the desk wants to cover.
Voyage-cost break-even
Break-even Freight = Voyage Costs ÷ [Cargo × (1 − Commission Rate)]
In the example, that equals approximately $12.85/mt. At that rate, net freight covers voyage expenses but provides no contribution toward vessel OPEX or wider ownership costs.
Cash break-even including vessel OPEX
If an illustrative vessel OPEX of $8,500/day is added for the 34.85-day voyage, the corresponding cash break-even rises to approximately $17.24/mt.
That figure is only an illustration. Actual OPEX varies significantly by vessel, age, management, insurance, crewing and maintenance profile.
Voyage Estimation for Tankers and Worldscale
The same commercial logic applies to tankers, but the freight input is often quoted on Worldscale rather than directly in dollars per tonne.
The applicable Worldscale flat rate and negotiated WS percentage are converted into actual freight revenue. Commissions and voyage costs are then deducted and the result is divided by total voyage duration.
Tanker estimates may also need additional assumptions for:
- cargo heating;
- tank cleaning;
- STS operations;
- vetting and terminal acceptance;
- war-risk costs;
- sanctions exposure;
- canal or chokepoint routing;
- waiting at sensitive loading areas.
Tide Signal’s Ship-to-Ship Operations guide covers the operational requirements behind STS transfers, while the $25 Million VLCC Voyage article shows how route risk can change tanker economics.
Voyage Estimation, TCE and Voyage Margin Are Not the Same Thing
| Measure | What it answers |
|---|---|
| Voyage estimation | What does this specific employment look like commercially? |
| Voyage contribution | How much remains after commissions and voyage-specific costs? |
| TCE | What is that contribution worth per commercial day? |
| Owner profit | What remains after vessel OPEX and wider asset costs? |
Common Voyage Estimation Mistakes
- Starting at the load port and ignoring ballast time and fuel.
- Using theoretical cargo intake instead of the quantity the vessel can actually lift.
- Using one consumption figure for ballast, laden and port conditions.
- Ignoring ROB and treating all voyage fuel as newly purchased.
- Using laytime as expected port time without considering actual operating conditions.
- Forgetting waiting or shifting time.
- Using stale port or canal costs.
- Applying the wrong commission basis.
- Treating TCE as final profit.
- Ignoring the value of the vessel’s discharge position.
- Ignoring sanctions, insurance or route-risk costs.
- Trusting the spreadsheet more than the assumptions.
Positioning Value After Discharge
Two voyages can produce similar TCEs but leave the vessel in very different markets.
A slightly lower immediate TCE may still be attractive if the ship finishes in a stronger loading area with better next-cargo prospects. The opposite is also true: a high TCE can lose some of its appeal if the vessel finishes in a weak area and requires a long ballast to the next employment.
This is where voyage estimation becomes commercial judgement rather than arithmetic alone.
Always ask what the vessel looks like after discharge: position, date, ROB, next cargo market and likely ballast requirement all have value.
Pre-Fixture Voyage Estimation Checklist
Frequently Asked Questions
What is voyage estimation in shipping?
Voyage estimation is the pre-fixture calculation used to estimate freight revenue, voyage costs, commercial duration, voyage contribution and daily TCE for a specific vessel and cargo.
What is the basic voyage estimation formula?
Gross freight is reduced by commissions and voyage-specific expenses. The resulting contribution is divided by total commercial voyage days to calculate TCE.
How are sea days calculated?
Distance in nautical miles is divided by average speed in knots and then by 24. Ballast and laden legs should be calculated separately when their performance assumptions differ.
What costs belong in a voyage estimate?
Typical voyage-specific costs include bunkers, ports, canals, agency, waiting or shifting assumptions, war-risk or ice costs and other expenses that fall to the owner under the relevant fixture.
Is TCE the same as profit?
No. TCE is a daily voyage-earning measure. Vessel OPEX, financing and wider asset costs are separate unless included in an additional internal profitability calculation.
Why does ballast matter?
Because the vessel consumes time and fuel before reaching the load port. A long ballast can materially reduce the TCE of an otherwise attractive cargo.
Should laytime be used as port time?
Not automatically. Laytime is a contractual allowance. The estimate should use the desk’s best operational expectation for how long the ship will actually spend in port.
How does bunker price affect voyage estimation?
Bunker price directly changes voyage cost. On long or fuel-intensive voyages, even a modest price movement can materially change the TCE and minimum acceptable freight.
Can voyage estimation be used for tankers?
Yes. Tanker estimates use the same structure, although freight may be quoted on Worldscale and additional costs may arise from heating, STS, vetting, sanctions or route risk.
