Sources & Methods - Clarksons

1 Shipping Intelligence Weekly - Sources , Methods & Definitions Clarkson Research Services 1 February 2015 Sources & Methods for the Shipping Intelligence Weekly These Sources & Methods are part of the Clarksons Quality System registered under BS EN ISO 9002:1994 by BSI. Certificate no. FS 30573. Updated: February 2015 Shipping Intelligence Weekly - Sources , Methods & Definitions Clarkson Research Services 2 February 2015 Shipping Intelligence Weekly (SIW) is published on a Friday (or earlier if public holidays demand) fifty times a year (excluding Easter and Christmas weeks). Dedicated files are updated every week with the latest available data whether its frequency is weekly, monthly or longer. Sources of information are both internal and external. Internal data is gathered from Clarkson Research databases or from H.

2 Clarkson brokers. External data is gathered from a variety of published Sources . All data and infor-mation in this report is as reported up to noon on the date of publication. The data is being continually assessed, and changes may occur to historical time series. All the data in SIW is available through the Shipping Intelligence Network ( ) in Excel compatible time series. Cover ClarkSea Index: The ClarkSea Index is the only published weekly indicator of earnings for all the main commercial vessel types. It is weighted according to the number of vessels in each fleet sector. Clarksons Research collects rates direct from the Clarksons brokers on a daily and weekly basis and these are used to calculate the earnings that go to make up the ClarkSea Index.

3 The sectors in the ClarkSea Index are oil tankers (VLCC, Suezmax, Aframax and clean product carriers), dry bulk carriers (Capesize, Panamax, Handymax and Handysize), gas carriers, and fully cellular containerships. The ClarkSea Index is published in graphical/numerical form on the front page of the Clarksons Shipping Intelligence Weekly (SIW) and as a downloadable time series and graph on SIN Shipping Intelligence Network ( ). 1. Freight Rates (pp. 2-7,9) Spot rates ( ): Currently, information for 97 tanker and 63 bulkcarrier spot voyages (see Annex 2) are collected on a weekly basis and form a database stretching back, in some cases, over 30 years. This is done with the assistance of H. Clarkson & Co. brokers who fill in pro-formas prepared each week by Clarkson Research showing the previous week s rates.

4 Tripcharter rates for four routes for a 180,000 dwt and 172,000 dwt Capesize vessel, four routes for a 74,000 dwt Panamax vessel, nine routes for a 58,000 dwt Supramax vessel, five routes for a 52,000 dwt Supramax vessel, seven routes for a 34,000 dwt and six routes for a 28,000 dwt Handysize vessel, are also collected in this way, and are based on standard Baltic Exchange vessels where appropriate. Best estimates of likely fixing levels are provided where no market fixture is made. Currently, rates are expressed in Worldscale (WS) for tanker voyages; $/tonne for dry cargo spot voyages (historically, some rates were quoted in $/(long) ton); and $/day for dry cargo tripcharters. Spot rates ( ): Spot gas and chemical voyage rates are also collected on a weekly basis with the assis-tance of H. Clarkson & Co.

5 Brokers who fill in pro-formas prepared each week by Clarkson Research showing the previous week s rates. Although some rates have historically been quoted in $/(long) ton, they are all now expressed in $/metric tonne, as is the custom of the trade. Spot rates ( ): Short Sea rates are provided by Shipping & Chartering Ltd in Hull, UK, a sub-sidiary of H. Clarkson & Co. Rates for offshore vessels (in /day) are quoted by H. Clarkson & Co. offshore brokers. Liner market charter rates (in $/day) are provided on a monthly basis by H. Clarkson brokers who fill in pro-formas prepared each month by Clarkson Research showing the previous month s rate. Earnings ( ): Earnings are estimated from voyage freight rates, and expressed in $/day for the voyage. In broad terms, earnings for each route are calculated by taking the total revenue, deducting current bunker costs based on prices at representative regional bunker ports, estimated port costs (after currency adjustments) and total commission and then dividing the result by the number of voyage days.

6 Details of the calculations and their constituent parameters and assumptions are set out in more detail in Annexes 1-4. Shipping Intelligence Weekly - Sources , Methods & Definitions Clarkson Research Services 3 February 2015 Earnings are calculated on the basis of standard ship types (listed in Annex 3). For all crude oil and dry bulk routes, earnings are estimated for a modern and an older standard ship. Earnings for both are cal-culated based on a single freight rate (for modern tonnage). Only earnings based on the most modern vessel are published in full in the SIW. For tankers and bulkers, average earnings for each ship type ( Ave. Earnings ) are averages of the voy-ages earnings for selected routes. The constituent routes of these Average Earnings figures are listed in Annex 4 (b). Certain factors are not accounted for in the earnings calculations.

7 These include: (i) other voyage-related costs. (ii) vessel waiting time at port. (iii) time the vessel is off-hire. Voyage earnings are also collected for the benchmark Arabian Gulf to Japan spot LPG voyage. These rates are quoted in $ 000/month by the brokers, but are converted into $/day for publication on page 6. It is important to note that these earnings calculations are only intended as benchmark indicators of the direction of the market. As such, they should not be taken to represent the precise earnings of specific vessels. However, it is possible discuss tailored statistics; For more information, please contact our Re-search Services team by email at The assumptions and standard ship types used in the voyage earnings calculations are reviewed on a regular basis by Clarkson Research and H. Clarkson brokers, and updates are made available in this document.

8 Comments on these assumptions and the resultant earnings calculation are welcome from users of the data, although it is important to note that the assumptions used in the calculations are just one of a range of possible assumptions, that other Sources of earnings information may use alternative assumptions, and that the use of different assumptions can potentially make a significant difference to the results of earnings calculations. For the tanker, bulk carrier and chemical markets, rates are collected and earnings calculated for routes that are not published in SIW. All this additional data is available through the Shipping Intelligence Network in Excel compatible time series. Baltic Exchange Indices ( ): The daily Baltic Freight Indices published every week are from the preceding Thursday, or from the nearest available date.

9 For details of the Baltic Exchange Indices (BDI, BCI, BPI, BSI, BHSI etc.) see FFA Indications ( ): FFA Indications are as reported by Clarksons Securities Ltd. at the close of business the preceding Thursday, or the nearest available date. Timecharters ( ): Timecharter data is collected in two primary ways: (i) One year, three year and five year tanker rates, expressed in $/day, are collected on a weekly basis for standard ship types. In the dry bulk sector, data is additionally collected for a six month rate as well. The ship types for which rates are collected are specified on page 9 of SIW. Specifications of these ship types are based on guideline standard modern vessels. With respect to timecharter rates, data is collected in the same way as for spot market rates; namely, by requesting brokers to fill in a weekly pro-forma with the latest rate for each ship type or by estimating the likely rate acceptable to an owner in the absence of any fixtures.

10 Capesize and Panamax bulkcarrier timecharter rates are the average of quotations for Atlantic and Pacific delivery, redelivery worldwide. Shipping Intelligence Weekly - Sources , Methods & Definitions Clarkson Research Services 4 February 2015 Timecharter rates are cross checked with the timecharter matrices that both the tanker and bulk carrier broker desks publish each week. 13 timecharter rates are also collected for LPG vessels. These rates are quoted in $ 000/month by the brokers, but are converted into $/day for publication on page 6. (ii) Details of all reported tanker, bulk carrier, containership and gas timecharter fixtures are recorded in the Clarkson Research commercial database. This data is sourced from available published Sources and cross checked with information gathered by H. Clarkson brokers in the course of their business.