TCE
Time Charter Equivalent
Meaning
TCE (time charter equivalent) converts a voyage's freight into daily earnings: freight minus voyage costs, divided by the days the voyage takes.
Also written as TCE earnings, Daily earnings
TCE explained
TCE lets owners compare a voyage charter with a time charter, or one voyage with another. Take the gross freight and demurrage, subtract commissions and voyage costs (bunkers, port charges, canal dues, extra insurance), then divide by the total days, including the ballast leg and port time.
Market reports quote TCEs for benchmark routes so owners can see what each trade is earning per day. Because TCE depends on bunker prices, ship speed and consumption, the same freight rate can produce very different TCEs for different ships.
Example
Freight $3.2m less 2.5% commission and $1.1m of bunkers and port costs leaves about $2.02m. Spread over 50 days of ballast, laden and port time, that is a TCE of about $40,400 per day.
Related terms
Freight
Freight is the payment a charterer makes to the owner for carrying cargo under a voyage charter, quoted per tonne, as a lumpsum or in Worldscale.
Worldscale
Worldscale is the index used to price tanker freight: a route's flat rate is WS 100, and fixtures are agreed as a percentage of it, such as WS 60.
Hire
Hire is the payment for a ship under a time charter, normally a fixed amount per day, paid in advance at regular intervals.
Ballast leg
The ballast leg is the empty voyage a tanker makes to reach its next load port, carrying sea water as ballast instead of cargo.
Bunkers
Bunkers are a ship's fuel, mainly very low sulphur fuel oil (VLSFO), high sulphur fuel oil (HSFO) for scrubber-fitted ships, and marine gasoil (MGO).