Background

The ship industry includes all forms of shipping, particularly larger ships such as oil tankers, bulk, chemical and cryogenic ships.  Such ships:   

• Are technically simple, although liquid natural gas (LNG) tankers require specialist metallurgy and refrigeration systems
• Contain significant equipment and material which may need to be imported
• May be financed as a bare boat charter, essentially a lease usually from the shipbuilder to the operator;
• Generate revenues from voyage charters or time charters. On a voyage charter all costs are paid for by the owner. On a time charter the charterer pays for voyage costs such as port costs, bunker fuels and canal transit dues; 
• Are relatively easy to finance if the ships are dedicated to a project on a long-term charter, not otherwise
• Are subject to operating costs mainly consisting of the fuel (usually marine diesel).
• Are dry docked at regular intervals, usually every two to three years during which time the ships incur the costs of dry docking and do not generate any revenues.  The length and cost of the dry docking may increase over the life of the ship.
• Are registered in a country where taxes are low or non-existent and where regulations allow ships to be manned by foreign and usually cheaper labour (flags of convenience such as Panama or Liberia).
• Are subject to little or no taxation calculations.
• Usually carry load in one direction only (except for cruise ships, container ships, general cargo, ferries)

How Promoter handles Shipping Projects

Promoter handles the following type of ships:

• Crude Oil tankers (ULCC, VLCC, SuezMax, Aframax, Panamax)
• Product Tankers (MR1, MR2, LR1, LR2)
• LNG (liquefied natural gas)
• LPG/Ammonia/Ethylene
• Methanol Tankers
• Bulk Carriers (Panamax, Capesize)
• RoRo (roll on roll off)
• General Cargo (bulk break)

It takes into account the dry docking costs and loss of earnings.
The user places key coordinates so that Promoter can illustrate the shipping route. 

Promoter uses this model for determining the fixed and variable (distance related) shipping costs. These figures are used in models for projects which produce a product (as opposed to a service). They determine shipping costs to different markets and hence the net back price for each market at the factory gate.

Typical Project Cash Flows

A ship typically has to be dry docked every two to three years for major maintenance.  This reduces the revenues for the appropriate period and increases the costs.  The cash flows are typically as above.  The length and cost of the dry docking may increase over the life of the ship. 

The main operating cost is typically the fuel (usually marine diesel).

The ship is sold for scrap at the end of its life.