Maritime Economics
What the exam tests
Maritime Economics tests shipping markets, freight and charter rates, cost structures, shipping cycles and simple voyage economics. It rewards candidates who can separate revenue from profit and identify which costs are fixed, voyage-related or capital-related.
Core rules
- Demand for sea transport is derived from trade; short-run supply is inelastic because ships take time to build, convert or scrap.
- Voyage costs include bunkers, port dues, canal dues and cargo-handling costs as allocated. Operating costs include crew, insurance, maintenance and stores. Capital costs include interest and depreciation.
- Time charter equivalent (TCE) converts a voyage result into a daily earnings figure: TCE = (voyage revenue − voyage costs) / voyage days.
- Laytime is allowed loading or discharging time; demurrage compensates the owner for delay beyond laytime; despatch may reward faster completion.
- Larger ships lower unit transport cost but depend on port draft, cargo base and canal limits. Speed reduction cuts fuel use sharply but adds transit time.
Worked example
A voyage earns USD 500,000 freight. Voyage costs are USD 200,000 for bunkers, port and canal. The round voyage takes 20 days. TCE = (500,000 − 200,000) / 20 = USD 15,000 per day. If the owner’s daily operating and capital cost is USD 12,000, the voyage contributes about USD 3,000 per day before taxes and risk. A higher freight rate or shorter port time improves TCE; higher bunker prices reduce it.
Traps
Do not call freight profit. Do not include capital costs in voyage costs when calculating TCE unless the question defines it that way. Check whether days are voyage days or calendar days. Demurrage is not the same as freight. Do not ignore ballast voyages and repositioning.