FAQ - Explanation of Bunkers on Consumption
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On the Bunkers tab of a Time Charter (TC), a Bunkers on Consumption check box appears only for TC Out contracts.
Time Charter Out
As the TC owner for TC Out contracts, you know the delivery and redelivery quantity and price. As a result, on the TC Out Bunkers tab, you can select Bunkers on Consumption to calculate delivery and redelivery adjustments.
Check box cleared (by default)
In the TC Out contract, the initial bunkers and prices outlined on the Bunkers tab are contractual agreements between the Operator and TCO Charterer. The price outlined in the contract is usually different than the price of the bunker inventory.
When Bunkers on Consumption is cleared, the bunker inventory (based on average) is overwritten by the delivery bunkers. The final bunker inventory at the end of the voyage will be based on the redelivery bunkers.
This can cause massive swings in the P&L if there are considerable price differences between the bunker inventory before the time charter out, and the bunker inventory after the TC Out voyage bunkers were redelivered at the contractual price.
Check box selected
When you select Bunker on Consumption, the bunkers consumed during the voyage calculate based on the bunker inventory prices. The only adjustment on the P&L will be based on the difference between the delivery and redelivery bunker quantities and pricing.
(In order to not swing the P&L, the bunkers on consumption adjustment is only calculated once the Z port has been actualized).