Voyage Cost: Fuel

How to calculate fuel cost during an ocean voyage is described below. This article is part of an ongoing series on voyage cash flow analysis (VCF).

Jordan Taylor

Published in

Shipping Intel

4 min readJun 19, 2024

Introduction

Fuel costs account for roughly one-half of overall voyage costs and generally the highest cost item during a voyage (Stopford, 2009, p. 233).

Fuel consumption is a function of the speed of the vessel: the faster a vessel travels the more fuel the vessel consumes. Within bulk charter parties speed is typically expressed as economical or full-speed. It is up to the vessel owner to reasonably comply with contract requirements.

For this article, we explore costs involving traditional low-speed diesels using intermediate fuel oil. Dual-fuel or alternative fuel still account for a fraction of the total global fleet (Rystad Energy, 2024) and may be addressed in a later article.

Fuel Consumption Factors

Fuel consumption is impacted by several factors:

Speed.
Hull shape. For example a bulbous bow can account for up to 15% of fuel savings (Szelangiewicz et al., 2021).
Hull condition. For example biofouling.
Whether the vessel is full of cargo (laden) or empty of cargo (ballast).
Seasonal and tidal currents.
Age of vessel.

Other considerations are many. If a vessel is contractually obligated to use economical speed, it may upwardly adjust RPMs to make an predetermined ETA. Similarly, in order for a vessel to tender ahead of other vessels the economical vessel may switch to full-speed to arrive at port and then drift awaiting berth.

There are innumerable technical considerations and too much to list. Type of power-plant, propeller size and shape, and environmental considerations such as water temperature are some examples.

Simplified Formula

Per Stopford’s 3rd Edition Maritime Economics (p. 234) fuel consumption formula can be expressed as so:

“F is the actual fuel consumption (tons/day), S is the actual speed, F* is the design fuel consumption, and S* is the design speed. The exponent a has a value of about 3 for diesel and about 2 for steam turbines.” (p. 234)

The following table describes the fuel consumption for a Panamax Bulker (p. 235):

Example

A Panamax bulker wishes to transit from Houston, Texas, U.S.A. to Guayaquil, Ecuador. What is the total bunker cost?

Using the ShippingIntel (SI) operations chatbot, the query

*houston guayaquil

results in a total of 2,284 nautical miles. At an economical 12 knots, the total transit time is roughly eight (8) days.

Alternatively, SI’s SDK:

curl -X POST https://www.shippingintel.com/api/calculate_distance -d "port1=Houston" -d "port2=Guayaquil"

Next, calculate or obtain the intermediate fuel oil bunker price ex-Houston. Using SI’s operator ampersand (&) we find the current bunker price is $526 per metric ton (PMT).

We now have the following:

Transit time: eight (8) days.
Bunker price: $526 PMT.
Economical consumption: 19 mt/day.

Total cost for a Panamax transiting from Houston to Guayaquil is USD $80,000 (work: 8 days X $526 PMT X 19).

Conclusion

Calculations can increase in complexity should a vessel engage in multiple legs on a voyage with different cargoes, and especially if the vessel is required to bunker on one of the legs. This is a key function of a vessel operator: when to bunker and, based on price or prospects, when not to.

When calculating voyage cash flow, fuel cost is a key consideration.

For further reading consult Chapter 6 of Martin Stopford’s Maritime Economics 3rd Edition § 6.3 & § 6.7.

References

Gaffuri, J. (2021). Eurostat/Searoute: Compute shortest maritime routes between ports. GitHub. Retrieved August 20, 2023, from https://github.com/eurostat/searoute

Halili, G. (2022). Searoute. Retrieved August 15, 2023, from https://pypi.org/project/searoute/

LNG remains top choice for dual-fueled vessels in shipping. (2024, April 16). Rystad Energy. Retrieved June 18, 2024, from https://www.rystadenergy.com/news/lng-shipping

Shipping Intel. (2024). Operations Software. shippingintel.com

Stopford, M. (2009). Maritime Economics (3rd ed.). Routledge.

Szelangiewicz, T., Abramowski, T., Żelazny, K., & Sugalski, K. (2021). Reduction of resistance, fuel consumption and GHG emissions. Energies, 14(7). https://doi.org/10.3390/en14071837