FAQ - What is the calculation logic behind each CVE "Rate Type"?

When creating a contract, users can select from three Rate Types for Common Voyage Expenses (CVE).

The screenshot below shows the available options: Per 30 Days, Average Monthly, and Monthly.

And below you can find the methodology each "Rate Type" uses to calculate the final amount:

1. Per 30 days

   • Daily Rate Formula: Rate ÷ 30

   • Example:

     • Rate = USD 1,500

     • Days in Hire = 31

     • Calculation: (1,500 ÷ 30) × 31 = USD 1,550

       

2. Average Monthly

   • Daily Rate Formula:

     • Non-leap year: Rate × (12 ÷ 365)

     • Leap year: Rate × (12 ÷ 366)

   • Example 1 (31 days - non-leap year):

     • Rate = USD 1,500

     • Days in Hire = 31

     • Calculation: 31 × [1,500 × (12 ÷ 365)] ≈ USD 1,528.77

       

   • Example 2 (31 days - leap year):

     • Rate = USD 1,500

     • Days in Hire = 31

     • Calculation: 31 × [1,500 × (12 ÷ 366)] ≈ USD 1,524.59

       

Only for Year 2024, you may disable the leap year calculation using the hidden configuration flag CFGDisable2024LeapYearAvgCVERate

3. Monthly

   • Daily Rate Formula: Rate ÷ Actual Days in the Month

     • e.g. March = 31 days, April = 30 days.

   • Prorating Across Months - CFGAlwaysProrateMonthlyTCRates:

     • The system’s billing behavior depends on the configuration flag CFGAlwaysProrateMonthlyTCRates and whether the hire period exactly matches the number of days in a agiven month.

     • When CFGAlwaysProrateMonthlyTCRates = N

       • Exact Month Match

         • If the invoice period covers exactly the number of days in that month, the system bills a full month at the contract rate.

         • Example:

           • Hire Period: 04 Feb 2023 00:00 GMT – 04 Mar 2023 00:00 GMT

           • February 2023 has 28 days, matching the hire period.

           • CVE Calculation: USD 1,500 (full monthly rate).

             

       • Partial Month (No Exact Match)

         • If the invoice period does not match the number of days in the month, the system prorates the CVE across the months in the period.

         • Example:

           • Hire Period: 01 Feb 2023 00:00 GMT – 04 Mar 2023 00:00 GMT (31 days)

           • February has 28 days, so the period exceeds the month.

           • CVE Calculation: USD 1,645.16, allocated as:(Rate × % of Month A) + (Rate × % of Month B)

             

             

     • When CFGAlwaysProrateMonthlyTCRates = Y

       • The system always prorates the CVE amount based on the exact number of days from each month included in the invoice period—even if the hire period matches the full number of days in a month.

       • Example:

         • Hire Period: 04 Feb 2023 00:00 GMT – 04 Mar 2023 00:00 GMT

         • February 2023 has 28 days, but with the flag set to Y, the system still prorates:

           

           

• For Leap Years, the calculation can occasionally confuse users for the month of February. Please refer to the following article for illustration:Calculation Logic for Monthly CVE Rate Type for Leap vs Non-Leap Years