Worldscale: what does it actually measure?

Worldscale is the dominant system for setting freight rates in ocean-tanker shipping. Its structure is hampered by administrative rigidity which easily disguises the effects of rate changes and complicates the comparison of rates between vessel size segments. The angle is the charterer's, and the shipowner is left to his/her own devices. The sparseness of spot rates between ports (not regions) and the individuality of flat rates due to varying port charges, make functional generalizations between Worldscale (WS) and time charter equivalents (TCE) hazardous. The publishing of rate parameters for all ship segments and possibly port charges for each port would substantially upgrade the value of the system.     

Operative strategy in tanker (dirty) shipping

Tanker (dirty) operational areas are identified with the help of itineraries and their profitability is estimated with time charter equivalent (TCE, $/day). The level is heavily influenced by the way waiting between cargo cycles is handled. Four alternatives are tried, planned (‘optimal’), simulated and two observed ones, with no or all-inclusive waiting. The choice of alternative is unlikely to upset area ranking seriously. Observed itineraries without waiting are selected. Small vessel size leads to fragmented markets and much variation in TCE. Endemic tonnage oversupply in the Far East depresses TCE in the Panamax, Aframax and Suezmax (PAS) segments. The barrier effect of canals is visible. The Worldscale system pays for port time which raises the paydays/ballastdays ratio and makes itineraries consisting of short cargo cycles attractive. Worldwide itineraries give mediocre TCEs.     

A static theory of dry bulk freight rates by route

Trade flows subjected to a major upheaval are followed by a reorganized freight rate structure. Rate functions developed under the old regime are unlikely to perform well because they are implicitly based on the circulation of tonnage which no longer applies, for example fronthauls and backhauls. A gravity-type static model capable of estimating route-specific rate levels from trade matrix data is developed and tested with historical data. The rates are in index form which makes it possible to integrate data from several ship size segments (large capesize, small capesize, panamax, handysize) and years.     

The geographical foundations of tanker (dirty) shipping

A simulation model of individual ship movements demonstrates that distance-weighted regional imbalances of tonnage supply and demand are powerful estimators of tanker rates that are converted to approximate time charter equivalents. Statistical fit is acceptable to good when cargo cycles (ballast–load–cargo–discharge) are the units of observation, either individually or aggregated by region. Up to 30–40% higher average time charter equivalent is possible in an outstanding year, such as in 2004, when consistent use is made of this feature.     

Worldscale: what does it actually measure?

Worldscale is the dominant system for setting freight rates in ocean-tanker shipping. Its structure is hampered by administrative rigidity which easily disguises the effects of rate changes and complicates the comparison of rates between vessel size segments. The angle is the charterer's, and the shipowner is left to his/her own devices. The sparseness of spot rates between ports (not regions) and the individuality of flat rates due to varying port charges, make functional generalizations between Worldscale (WS) and time charter equivalents (TCE) hazardous. The publishing of rate parameters for all ship segments and possibly port charges for each port would substantially upgrade the value of the system.