Introduction
This feature addresses the business need to calculate the future TCE rates in $/day for tanker routes published by market data providers in $/ton. After the rates are calculated, these routes can be used within IMOS to price Tanker Time Charter contracts based on a floating index and/or as an exposure mark-to-market calculation in the Trading & Risk module.
Setup
Go to the Data Center and select Settings. Type CFGEnableEstimateTradeRoutePricing into the search bar, and set the value to Y. This enables you to link a custom trade route to a benchmark estimate and use the TCE calculation in the Estimate as the trade route price.
Voyage Estimate
Within an Estimate, right-click the cargo line and select CP Terms Details.
Within the CP Terms Details, you can now select a Trade Route rather than using a static value and use the market data value for that trade route. When you select F (Freight Rate) as the Freight Type, all $/ton trade routes are available. When you select W (Worldscale), the combination of $/ton and Worldscale routes are available for selection.
When you use a Trade Route symbol, the rates can not be edited and the value is the latest spot rate stored in IMOS.
Note: Selecting the Trade Route opens a Basis Date dialog. Entering a basis date uses the spot value of the route from that day for all future periods.
Note the change in Net Daily TCE value on the Estimate P&L. Save the Estimate as a Benchmark Estimate so that it can be used with a custom route as detailed in the next section.
Trade Routes
With the setting CFGEnableEstimateTradeRoutePricing turned on, a custom trade route can be linked to the Net Daily TCE calculation from a Benchmark Estimate.
Go to the Market Data Trade Routes section through either the Data Center or Trading workspace. Within your desired index grouping, select the Add New Row option at the bottom of the table to create a new trade route. You can now mark this route as tied to an Estimate by selecting the Estimate checkbox and then selecting the appropriate Benchmark Estimate from the drop-down menu.
For a route linked to an Estimate, IMOS calculates the route value for each future month. It looks up the forward rates of the market data symbols used in the Estimate, such as the trade route and bunker symbols, and applies them to the Estimate's Net Daily TCE calculation, (Revenue − Expenses) / Total Days. For example, an Estimate that uses TD20, TD20$ and SPO180FO produces TCE rates for October, November, December and later months, not only the current spot TCE.
Time Charter Contracts
The custom trade route can now be used as any other trade route in IMOS. Specifically for a Tanker TC Contract, it can be used to price the contract’s hire rate as an Unpriced Component:
It can also be used as the mark-to-market route in the Exposure tab:
When you view this contract in the Trading & Risk module, the contract rate and the market rate for future periods should now use the calculated future TCE rate from the Voyage Estimate, with the underlying cargo freight rate tied to the future rates published in the system for those symbols.