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Alternate terms and abbreviations are sometimes applied to shipping concepts; this section includes terms that are used in the Veson IMOS Platform (IMOS).
Address Commission (ADCOMM): A fee paid by the owner to the charterer or the charterer's designee. It may be a rebate on the freight for hire or a discount for frequent business or for not using an agent.
Agent: A business entity handling details, such as paperwork and port expenses, for another shipping business entity.
American Tanker Rate Schedule (ATRS): A publication of tanker Freight Rates from the Association of Ship Brokers and Agents. Each route has a flat rate based on a prototype vessel; counterparties agree on a percentage of the rate. Similar to World Scale.
API Gravity: A measure, from the American Petroleum Institute, of the relative density of petroleum liquids. A liquid with an API gravity greater than 10 floats on water. A liquid with a greater API gravity is less dense than and floats on one with a lesser API gravity.
At-the-Money (ATM): The situation in which an option's strike price equals the price of the underlying security.
Average Method (AVE): The default Bunker Calculation Method. The weighted average bunker cost multiplied by the amount consumed in the voyage.
Back-To-Back Charter: A charter in which a disponent owner charters out a vessel on terms that are the same (except for rate and similar variables that he controls) as the terms under which the vessel was chartered to him.
Ballast: Material such as seawater placed in a vessel that is empty of cargo, for stability. The vessel is then in ballast, as opposed to laden.
Ballast Bonus: A lumpsum payment for a vessel traveling in ballast to reach a loading port or a delivery port under a charter.
Baltic Index: A daily measure of shipping costs for different routes and vessels of different sizes, used for trading and settling contracts. It is issued by the Baltic Exchange, and Trading clients can subscribe to a feed into Market Data.
Barge: In the Veson IMOS Platform, barges are represented as vessels with Type Code Barge.
BBL: Abbreviation for Barrel.
Beam: The width of a vessel at its widest point.
Beaufort Scale: A scale expressing wind force at sea. Good weather is typically defined as < 4 or 5; above that point, the data is ignored for calculating performance.
0: Calm; < 1 knot
1: Light air; 1–3 knots
2: Light breeze; 4–6 knots
3: Gentle breeze; 7–10 knots
4: Moderate breeze; 11–16 knots
5: Fresh breeze; 17–21 knots
6: Strong breeze; 22–27 knots
7: Moderate gale; 28–33 knots
8: Fresh gale; 34–40 knots
9: Strong gale; 41–47 knots
10: Whole gale; 48–55 knots
11: Storm; 56–65 knots
12: Hurricane; > 65 knots
Berth: The specific place in a port where a vessel is to load and/or discharge.
Bill of Lading (BL): A written receipt issued by a vessel's Captain or a Shipping department that states that cargo has been placed onboard. It includes the type of cargo, the amount, and the terms for shipping.
Black (1976): A modified version of the Black-Scholes model that enables option pricing on future contracts. It is available on the Trading Profile.
Black-Scholes: A model typically used to price European options.
Boat: A synonym for an inland tug. In the Veson IMOS Platform, boats are represented as vessels with Type Code Boat.
Broker: A business entity working between an owner and a charterer to arrange for a vessel to charter and/or cargo to ship.
Brokerage: See Commission.
Bulk Cargo: A homogenous cargo, such as coal or grain, that is stowed loose, not in a container.
(Noun) The fuel used on a vessel, or the tank or compartment for storing fuel.
(Verb) To acquire fuel or load fuel into a vessel's bunkers for its own use (not as cargo). Also known as stem.
Bunker Calculation Method: A method of valuing the fuel onboard a vessel, so that its cost can be allocated to the voyage in which it is used. It is selected in the Voyage Manager. See AVE, FIFO, LIFO, and TBM.
Bunker Surcharge: An Extra Freight Term; a way for an owner to make up for an increase in bunker prices.
Cabling, Victualling, and Entertainment (CVE): See Gratuities.
Cargo: The goods being carried on a vessel.
Cargo COA: A long-term sale contract on a Voyage Charter basis; the other side of a VC In COA.
Charter Party (CP): A contract between a vessel owner and a charterer that lists all the terms of their agreement.
Charterer: A business entity getting control of a vessel from another party.
Clearinghouse: A business entity that clears and settles financial accounts.
Consecutive Voyage Charter (CVC): A type of a voyage charter where a vessel is contracted for several consecutive voyages.
Contract of Affreightment (COA): A contract for a grouping of cargoes. A long-term agreement or grouping mechanism for a series of cargo liftings in what might be different vessels. See Cargo COA and VC In COA.
Combination Carrier: See Ore-Bulk-Oil Carrier.
Commission: A fee for services performed by a broker, also known as brokerage. It is paid by the owner because it is always assumed that business is being brought to the ship. Broker commission is usually 1.25%:
For a Voyage Charter, of the freight and, in most cases, of deadfreight and demurrage.
For a Time Charter, of the hire.
Cubic Capacity: Each vessel has two cubic capacities:
Grain Cubic Capacity: The maximum space available for bulk cargo, measured in cubic feet or cubic meters. Bulk cargo flows in between the frames and beams.
Bale Cubic Capacity: The available space for bagged cargoes, or a general cargo of mixed commodities, measured in cubic feet. Hand-stowed cargo goes to the inside of the frames or to the underside of the beams, not to the skin of the ship.
An example from an actual 25,650 TDW bulk carrier:
Grain Cubic: 1,135,900 in holds
138,537 in wing tanks
Bale Cubic: 1,090,500 total
Cubic Feet (ft3) and Cubic Meters (m3): Units of measure for volume, typically associated with cargo.
CTMS: Abbreviation for Custody-Transfer Measurement System.
Daily Rate: Payment for a Time Charter: an amount per day, as opposed to a Freight Rate. It covers crew and maintenance, but not fuel.
Daughter Ship or Daughter Vessel: See Lightering Service Vessel.
Daughter Voyage: The voyage of a Lightering Service Vessel.
Deadfreight: Freight payable by a charterer to cover cargo loaded below the amount agreed upon in the contract. Also, an Extra Freight Term: A specific (usually full value) rate for cargo loaded below that agreed-upon amount.
Deadweight (DWT): The amount of mass or weight in tons that a ship can carry, including cargo, fuel, stores, fresh water, and crew.
Deadweight Cargo Capacity: The weight-carrying capacity of a vessel, expressed in long tons or metric tons, for a particular voyage, after allowance for fuel, water, stores, and crew, at a particular draft and water density.
Deadweight Scale: A scale on which are plotted the deadweight capacities corresponding to the various drafts of water between light and loaded displacements. This scale is usually included with the vessel's Capacity plan. Also known as Displacement Scale.
Debunkering: The process of offloading bunker fuel from a ship. See Debunkering Workflow.
Delivery (DEL): The delivery of a vessel to a charterer at the beginning of a Time Charter.
Displacement Scale: See Deadweight Scale.
Demurrage (DEM): The money a voyage charterer must pay to the owner for a delay in loading and/or discharging cargo after laytime has expired.
Derivative: A financial instrument, such as an FFA, whose value changes based on the value of underlying assets.
Despatch (DES): The money an owner must pay to a voyage charterer if the ship completes loading or discharging before the laytime has expired. Tankers do not do despatch.
Displacement: The weight of a ship and everything it contains, which is the same as the weight of the water it displaces.
Disponent Owner: A business entity that has control of a vessel's operation through charter or agreement, without owning the vessel.
Draft: The distance between the waterline and the bottom of a vessel. It is measured vertically to the lowest part of the hull, propellers, or other projecting point.
ECA: Abbreviation for Emission Control Area.
Estimate: See Voyage Estimate.
Estimated Time of Arrival (ETA): A vessel's estimated time of arrival to a port.
Estimated Time of Departure (ETD): A vessel's estimated time of departure from a port.
ETC: Abbreviation for Estimated Time of Completion.
ETR: Abbreviation for Estimated Time of Readiness.
Extra Freight Terms: Extra charges related to freight, such as those for Deadfreight or Overage/Additional Cargo charges.
First In First Out (FIFO): A Bunker Calculation Method that treats bunkers as an asset and depletes the first asset before going on to the next. This is the most accurate method.
Fixture: The representation of the full contract that fixes a voyage and a cargo (Voyage Fixture for a Voyage Charter, or Time Charter In or Out Fixture); the completed negotiation that results in a charter party.
Free Discharge (FD): The charterer or receiver pays for the discharging of the cargo.
Free In and Out (FIO): The charterer or shipper/receiver pays for the loading and discharging of the cargo.
Free In and Out Stowed (FIOS): The same as FIO, except that when nonbulk commodities (such as bagged cargo, generals, or scrap metal) are loaded, the additional cost of stowing is included.
Free In and Out Trimmed (FIOT): The same as FIO, except that when grain, ore, coal, and other similar bulk commodities are carried, the trimming cost (the cost to level the cargo either by machinery or by hand) is included. Frequently now, the agreed trimming is spout trimming, which limits the loader's obligation to what can be done by the loading device itself. Any trimming beyond that would be for the vessel's account.
Free Onboard (FOB): An export sales term under which the seller is responsible for placing the goods on board a vessel at the port of shipment named in the sales contract.
Freight: The amount of money payable to a vessel owner for the capacity/space for carrying cargo from one port to another under a Voyage Charter, Bill of Lading, booking note, or Contract of Affreightment. Contrary to how it might be thought of outside the shipping industry, freight does not refer to the cargo.
Freight Forward Agreement (FFA): A financial instrument used to buy or sell the price of freight on a forward basis. It is settled with cash, with the price based on the Baltic index. Owners and charterers buy forward to protect against a rising market and sell forward to protect against a falling market.
Freight Rate: Payment for a Voyage Charter. An amount per unit of measure (MT, m3, BBL), as opposed to a Daily Rate.
Freight Scale Table: A Rate Table created in the Data Center for use on Cargo COAs and Cargoes.
Freight Type: The type of payment:
F: Freight Rate
W: World Scale
D: Daily Rate
E: Equipment Daily Rate
Fridays and Holidays Excepted/Excluded (FHEX): A Laytime Term. Fridays and Holidays are Excepted (Excluded) from laytime.
Fuel: The most common grades of fuel oil are IFO (intermediate fuel oil) 180 CST and IFO 380 CST, both used as propulsion fuel in motor ships; and Bunker C, mainly used on steam turbine-driven large-size tankers. Also, MDO (marine diesel oil), used for the auxiliaries of motor ships (or sometimes as propulsion fuel in smaller vessels).
GCU: Abbreviation for Gas Combustion Unit.
Gratuities: Extra money given to the Captain of the vessel in cash, and thus taken off the bill; also known as CVE.
Head Fixture: A Time Charter contract for an owned vessel. Its Contract Type is Own Vessel.
Hire: The basic compensation to be paid to a vessel owner by a charterer for a Time Charter.
ILOHC: Abbreviation for In Lieu of Hold Cleaning.
In-the-Money (ITM): The situation in which an option has some intrinsic value; the position is profitable.
For a call option, the strike price is lower than the price of the underlying security.
For a put option, the strike price is higher than the price of the underlying security.
Intermediate Fuel Oil (IFO): A Fuel/Lube Type.
Jetty: A walkway or other structure that extends from shore out into a body of water.
Knot: A unit of speed; one nautical mile per hour.
Laden: Refers to a vessel with cargo on board, as opposed to in ballast.
Last In First Out (LIFO): A Bunker Calculation Method that defers revenues, so you can maximize expenses currently and defray savings until later, for a tax advantage.
Laycan: The window of arrival time; the Veson IMOS Platform default is 15 days. Laycan also determines when you can cancel a contract: if the vessel is on time, but the cargo is not ready, the vessel can cancel and pick up a different load.
Layday: The period of time during which the owner must tender the ship for loading. The charterer is not obliged to accept Notice of Readiness before the commencement of laydays. The charterer may cancel the charter if the ship does not tender prior to the expiration of laydays (which is called the canceling date).
Laytime: The amount of time allowed at a port for loading and/or discharging.
Laytime Non-Reversible: When laytime is non-reversible, any despatch earned or demurrage incurred at the load or discharge port is payable there, and time saved at one port cannot be used to offset time lost at the other.
Laytime Reversible: An option given to the charterer to add together the time allowed for loading and discharging. The effect is the same as specifying a total time to cover both operations.
Laytime Saved: The time saved to the ship from the completion of loading/discharging to the expiration of laytime, excluding any NOR time and periods excepted (excluded) from laytime.
Laytime Term: A Charter Party term that describes when ports are open for loading and discharging.
Leg: The part of a voyage from one port to the next port.
Length Overall (LOA): Length overall of a vessel.
Lift: A single movement of cargo off an STBL. Several lifts are required to fully lighter an STBL.
Lifting: A voyage of a single cargo created from a COA.
Lighter: A general name for a broad, usually flat-bottomed barge, frequently used in loading or discharging a larger vessel at anchor.
Lightering: The act of discharging cargo into a lighter or barge offshore, usually so that the vessel that has been lightered can get into a shallow berth. See the Lightering module.
Lightering Area: See Lightering Port.
Lightering Job: A subcontract for an individual Lightering Service Vessel.
Lightering Port: An offshore location where an STBL moors and undergoes lightering. Also known as a Lightering Area or a Lightering Zone.
Lightering Service Vessel: A vessel that performs lightering for an STBL. Also known as a Daughter Ship or a Daughter Vessel.
Lightering Support Contract: A contract for a company’s Lightering Support Vessels. Also known as a Work Boat Contract.
Lightering Support Job: A subcontract for an individual Lightering Support Vessel’s services. Also known as a Work Boat Job.
Lightering Support Vessel: A ship that accompanies Lightering Service Vessels to help with a lightering operation. Activities include mooring ships together, hooking up pipes, and other lightering operation support. Also known as a Work Boat.
Lightering Zone: See Lightering Port.
Liner: A vessel with a published, relatively fixed schedule between load and discharge ports, as opposed to a tramp.
Long-Term TC: A Time Charter Contract Type covering a long enough period of time that it requires special accounting, as opposed to a Trip TC or a Period TC.
Margin: The money a trader has on account with a clearinghouse as collateral.
Mark to Market (M2M): To assign a value based on the current market price.
Master Lightering Contract: A contract for a company’s Lightering Service Vessels.
Max Lift Quantity: The maximum quantity a vessel can lift in the port in the voyage that has the most restrictive deadweight and draft limits. In the Veson IMOS Platform, this amount can be calculated based on the density of the cargo, the vessel's deadweight, and the weight of bunkers and everything on the vessel.
Marine Diesel Oil (MDO): A Fuel/Lube Type.
Marine Gas Oil (MGO): A Fuel/Lube Type.
Min/Max: A minimum and maximum weight range. An owner might warrant that a vessel can carry cargo weight within this range; the charterer might agree to supply a cargo within this range. Also used to describe a cargo quantity without tolerance, for example, Min/Max 28,350 MT.
Mooring Master: Captain of a Lightering Service or Support Vessel.
More or Less Owner's Option (MOLOO): An Option Type, in which the charter party will have a stated contract quantity to load/discharge, for example, 50,000 MT on a Panamax, basis 10% more or less owner's option. This means that although the contracted quantity is 50,000 MT, the owner is aware that by the time his vessel comes to load the cargo, it may not be able to load 50,000 MT. On the other hand, he may be able to load a little more. Before arriving at the loading port, the ship's Captain will declare what quantity his ship is actually able to load. This declared, or nominated, quantity must fall within that 10% range.
If the vessel cannot load the minimum, or the cargo owner comes with less than the minimum 45,000 MT, then deadfreight is due.
If either party goes over the maximum, then overage is calculated on the freight, which is essentially a rebate for the additional cargo loaded beyond the maximum (55,000 MT, in this case).
Mother Ship or Mother Vessel: See STBL.
Mother Voyage: The voyage of an STBL.
Metric Ton (MT): A unit of measure for weight, typically associated with cargo.
NBOG: Abbreviation for Natural Boil-Off Gas.
Notice of Readiness (NOR): A notice that the Captain must present to the charterer stating that the vessel is ready to load or discharge. The following conditions must be met:
The vessel must be at the place of loading or discharge as set forth in the charter party, or as near as it can safely get.
The vessel must be fully prepared to load or to discharge immediately.
Laydays commence from the moment the Notice of Readiness has been accepted by the charterer, unless (as is usually the case) stipulations to the contrary have been included in the charter. Under most grain Charter Parties, Notice of Readiness to load must be accompanied by a certificate issued by a competent surveyor stating that the vessel is ready to load in all holds.
OBQ: Abbreviation for Onboard Quantity.
Option Type: Cargo Tolerance Option Type, the option in the Charter Party that states the minimum/maximum load/discharge quantity for a cargo and/or which business entity has the right to declare it. If the vessel cannot load the minimum, or if the cargo owner has less than the minimum, then deadfreight is due. If either party goes over the maximum, then overage is calculated on the freight, which is essentially a rebate for the additional cargo loaded.
Ore-Bulk-Oil Carrier (OBO): A vessel designed to carry wet and/or dry cargoes, also known as a combination carrier. They were developed to be flexible enough to vary their cargo and to reduce ballast voyages.
Out-of-the-Money (OTM): The situation in which an option has no intrinsic value; the position is not profitable. It may have extrinsic, or time, value.
For a call option, the strike price is higher than the price of the underlying security.
For a put option, the strike price is lower than the price of the underlying security.
Outturn Weight: The delivered weight of the cargo, which is determined after discharge. Some minor loss of weight due to cargo sticking to the holds is inevitable for bulk cargoes.
Overage: Cargo loaded above the specified amount. Also, an Extra Freight Term: A specific (lower) rate for cargo loaded above the specified amount.
OVTO: A Voyage Charter Out.
Own Voyage (OV*): A voyage you are running for yourself (OVOV or TCOV), not chartering out.
Owned Vessel: A vessel you own, not a chartered vessel.
Owner: A business entity with control of a vessel.
Payment Type: Called Invoice Type on the Freight Invoice, these are the Payment Types:
Normal (default): A regularly scheduled payment for a specific period of time, such as every 15 days.
Special: A payment outside the regular schedule. Period-based costs, such as the Time Charter Hire, cannot be allocated this way. If the contract has no more Period payments remaining, the Invoice Type defaults to Special.
Incremental: A payment for which a sort of reconciliation of accounts is performed. All amounts due since the beginning of the Time Charter contract are calculated, and all payments made are subtracted. The net difference then shows as the payment due. This payment method can be used either for every payment or once at the end of the Time Charter to ensure that the accounts are correct.
Period TC: A Time Charter Contract Type covering more than one voyage, but not long enough to require special accounting, as opposed to a Trip TC or a Long-Term TC.
Pool: A number of vessels that owners group together for the purpose of negotiating better rates than they could individually, thus reducing their risk and exposure in the market.
Pooling Class: A category for vessels, based on deadweight and the number of holds, cranes, and hatches.
Port: A protected area within which ships are loaded with and/or discharged of cargo.
Port Charges: A general term that includes charges and dues of every nature assessed against the vessel or its cargo in a port. It usually includes harbor dues, tug boat charges, pilotage fees, custom house fees, consular fees, wharfage, dockage on the vessel, etc.
Quay: Pronounced "key." A wharf or jetty where vessels are loaded and unloaded.
Rebill: Expenses to be billed back to the vessel owner.
Redelivery (REDEL): The return of a vessel to the owner at the end of a Time Charter.
Relet (RELT): A voyage for which you Voyage Charter In a vessel and then Voyage Charter it Out. As an intermediary, you both pay and receive a Freight Rate.
Reliq: Abbreviation for Reliquefaction.
Remaining Onboard (ROB): Usually referring to bunkers remaining onboard.
Reverse Lightering: Offshore loading of cargo onto an STBL. See Lightering.
Reverse Top-Off: A situation in which cargo is loaded at a single port and offloaded at multiple discharge ports with varied rates. See Top-Off.
RO/RO: Abbreviation for Roll On Roll Off, a type of vessel.
Ship to Be Lightered (STBL): A vessel that needs lightering to discharge or load cargo. Such ships are too large to come into port (for example, VLCCs and ULCCs). Also known as a Mother Ship or a Mother Vessel.
Settlement: Trades are marked to market every day, to give a better estimate of value, and the clearinghouse credits or debits the trader's account daily, until the settlement date, when the final payment is made.
Sundays and Holidays Excepted/Excluded (SHEX): A Laytime Term. Sundays and Holidays are Excepted/Excluded from laytime.
Sundays and Holidays Included (SHINC): A Laytime Term. Sundays and Holidays are Included in laytime.
(Vessel) In both dry cargo and tanker chartering, a vessel that is immediately available for employment.
(Voyage) A Voyage Charter In.
Statement of Facts (SOF): A list of port activities and the times they occurred, agreed on by the ship's Captain and the Agent, that is used for the laytime calculation.
Stem: To take on bunkers. See Bunker.
Stowage Factor: The number of ft3 actually occupied by one ton of a commodity, including an allowance for broken stowage. The stowage factor depends upon the type of goods being carried.
Target Date: The date by which you would like to have a Demurrage Claim completed. In the Veson IMOS Platform, it is calculated as Time Bar Date − Target Days.
Target Days: Used to calculate the Target Date.
Tramper Business Method (TBM): A Bunker Calculation Method, in which you buy all the inventory at the beginning of the voyage and sell it all at the end, so you know the exact cost for the voyage. In the Veson IMOS Platform, the consumption is calculated. You might use this method for a Time Charter In or Out that is delivered and redelivered with the same amount, or to override all values.
TBN: Abbreviation for To Be Named/Nominated.
Terms: Values, set up in the Data Center, that can be selected in fields throughout IMOS.
Time Bar Date: The date by which a Demurrage Claim must be made. In the Veson IMOS Platform, it is calculated as Demurrage-Triggering Activity Date (such as PE or HF port activity at a specific port) + Time Bar Days.
Time Bar Days: Used to calculate the Time Bar Date.
Time Charter (TC): A charter for a period of time (like renting a car), as opposed to a Voyage Charter. A Time Charter contract specifies the length of time plus any optional days, daily rate, other expenses, delivery and redelivery dates, and how to handle bunkers on delivery and redelivery. See Time Charter In and Time Charter Out.
Time Charter Equivalent (TCE or TC Equiv): The cost of an equivalent Time Charter.
Time Charter In (TC In): A Time Charter contract between a charterer (IMOS user) and an owner to use a vessel for a certain length of time.
Time Charter Out (TC Out): A Time Charter contract between an owner (IMOS user) and a charterer to let out a vessel for a certain length of time.
Top-Off: A situation in which a cargo is loaded at multiple ports with varied rates and offloaded at a single discharge port. See Reverse Top-Off.
Tow: A combination of one boat and one or more barges that are working, at least temporarily, as a unit (formerly Inland Unit). Thus, it is a tow that goes on a voyage, not an individual boat or barge. In the Veson IMOS Platform, tows are represented as vessels with Type Code Tow.
Tons per Centimeter (TPC) or Tons per Inch (TPI): The number of tons loaded for each centimeter/inch the vessel goes down in the water.
Tramp: A vessel with no regular schedule or itinerary whose owner sends it to find the most lucrative employment, as opposed to a liner.
Transshipment: A transshipment voyage moves cargo to an intermediate location before the final discharge port. The purpose of transshipment can be to change modes of transportation, consolidate small shipments, or deconsolidate large shipments.
Trip TC: A Time Charter Contract Type covering a very short time, usually one voyage, as opposed to a Period TC or a Long-Term TC.
Turn Time: Extra hours allowed for steaming into the berth after NOR is tendered and before laytime commences (used for bulkers, not for tankers).
Turnbull Wakeman (1991): A model typically used to price Asian options. It is available on the Trading Profile.
Underlying: The financial instrument on whose performance this derivative's value is based.
Unwind: To take a trade back to a zero position, by selling an amount equivalent to what you bought or buying an amount equivalent to what you sold (for example, to buy & then sell December @ $100/day).
VC In COA: A long-term purchase contract on a Voyage Charter basis; the other side of a Cargo COA.
Very Large Crude Carrier (VLCC): Very large crude (oil) carrier, about 160,000 tons deadweight.
VOY: Abbreviation for Voyage.
Voyage Charter (VC): A charter for a voyage (like taking a taxi), with payment at a certain Freight Rate, as opposed to a Time Charter. A Voyage Charter In is a Spot voyage; a Voyage Charter Out is an OVTO.
Voyage Estimate: An estimate of the profit and loss for a voyage that includes as much information as possible about cargoes, ports, bunkers, income, and expenses.
Weather Working Day: A working day or part of a working day during which it is or would be possible to load or discharge cargo without interference from weather. If weather interference occurs, the period is excluded from laytime.
Working Day: A day on which work is normally done at a particular port.
Work Boat: See Lightering Support Vessel.
Work Boat Contract: See Lightering Support Contract.
Work Boat Job: See Lightering Support Job.
World Scale (WS): A publication of tanker Freight Rates from the Worldscale Association. Each route has a yearly flat rate based on a standard vessel; counterparties agree on a percentage of the rate. Similar to ATRS.