Maritime Economics & Shipping Finance
Maritime Time Charter Equivalent (TCE) Formula
Convert Lump-Sum or $/MT Spot Voyage Freight into Daily Time Charter Equivalent TCE = (Gross_Freight*(1 - comm) - Bunkers - Port_Dues) / Voyage_Days and Daily Vessel Cash Breakeven Margin.
Standardize spot voyages of any route length onto an apples-to-apples $/day TCE basis!
How does a Panamax shipowner compare a 50-day Brazil-to-China spot grain voyage paying $32.00/MT (where the owner pays all bunker fuel and port/canal charges) against a 1-year Period Time Charter paying $26,000/day (where the charterer pays fuel and port dues)? Shipping analysts convert every spot voyage into Time Charter Equivalent (TCE, $/day): deduct Address & Brokerage Commissions comm_pct from Gross Freight Q_mt * F_mt, subtract Voyage Bunkers C_bunk and Port/Canal Dues C_port (Suez/Panama tolls, tugs, pilotage), and divide Net Voyage Revenue by Total Round-Voyage Days D_voy (ballast leg + laden leg + port days)! Comparing TCE against Daily Vessel OPEX (crew, hull insurance, lubes, maintenance) measures Daily Vessel EBITDA Cash Flow!
Verify on Cargo_Stem Q_mt = 75,000 MT (B2), Spot_Freight_Rate F_mt = $32.00/MT (B3 -> Gross Freight = $2,400,000), Total_Commissions comm_pct = 0.05 (3.75% address + 1.25% broker = 5.0% -> Net Freight = $2,280,000, B4), Voyage_Bunkers C_bunk = $580,000 (B5), Port_and_Canal_Dues C_port = $200,000 (B6), Round_Voyage_Days D_voy = 50 days (B7), and Daily_Vessel_OPEX = $8,500/day (B8): Net Voyage Revenue is 2,280,000 - 580,000 - 200,000 = $1,500,000 (E2); Daily TCE Yield is 1,500,000 / 50 = $30,000.00/day (E3—beating a $26,000/day period charter by +$4,000/day!); Daily Cash Margin over OPEX is $21,500.00/day (E4); and Breakeven Spot Freight Rate (where TCE = Daily OPEX) is (($8,500 * 50) + 580,000 + 200,000) / (75,000 * 0.95) = $16.91/MT (E5)!
| Spot Voyage Metric (75k MT @ $32/MT, 5% Comm, $580k Fuel, $200k Port, 50d) | Formula | Verified Output |
|---|---|---|
| Net Voyage Revenue ($) | Q_mt * F_mt * (1 - comm) - C_bunk - C_port | $1,500,000.00 |
| Time Charter Equivalent TCE ($/day) | Net_Voyage_Revenue / D_voy | $30,000.00 / day |
| Daily Vessel EBITDA Cash Margin | TCE - Daily_Vessel_OPEX | $21,500.00 / day |
| OPEX-Breakeven Freight Rate ($/MT) | (OPEX*D_voy + C_bunk + C_port)/(Q_mt*(1-comm)) | $16.91 / MT |
Daily Time Charter Equivalent (TCE) Formula
Include ballast positioning days inside D_voy—omitting empty ballast steaming days artificially inflates TCE by 30%–50%!
=LET(q_mt, B2, f_rt, B3, cm_p, B4, c_bk, B5, c_pt, B6, d_vy, B7, op_x, B8, IF(OR(q_mt <= 0, f_rt <= 0, cm_p < 0, cm_p >= 1, c_bk < 0, c_pt < 0, d_vy <= 0, op_x < 0), "Invalid Voyage Estimate", ROUND((q_mt * f_rt * (1 - cm_p) - c_bk - c_pt) / d_vy, 2)))OPEX-Breakeven Spot Freight Rate ($/MT) Formula
Solve TCE = Daily_OPEX for F_mt to give chartering desks an instant walk-away floor rate before fixing a fixture!
=IF(ISTEXT(E3), E3, ROUND((B8 * B7 + B5 + B6) / (B2 * (1 - B4)), 2))Try the example
Use the original values or change them to test your understanding.