What is address commission and why is it deducted?

Address commission is a percentage of hire the owner pays back to the charterer (or the charterer's in-house broker), historically a return to the charterer for fixing the ship. It reduces the net hire the charterer actually bears, so TCOE deducts it from gross hire.

Why express costs as a per-day figure?

A per-ship-day operating expense lets you compare a time charter directly against a voyage charter or spot fixture on a like-for-like basis. Whatever the cost structure, reducing everything to cost per day shows which employment is cheaper to run.

Are bunkers part of TCOE on a time charter?

Yes. On a time charter the charterer pays for bunkers and port costs while the owner covers crew, maintenance, and insurance through hire. TCOE adds the charterer-borne bunker and port costs to net hire to show the true all-in daily cost.

How is the per-day figure calculated?

Net hire is gross hire times voyage days, less the address commission on that hire. Add total bunkers, port costs, and other expenses to get the all-in voyage cost, then divide by voyage days. The result is the all-in TCOE per ship-day.

Does TCOE include cargo and freight?

No. TCOE is a cost measure only — what it costs to operate the ship per day. Revenue from freight or sub-let hire is compared against TCOE separately to judge whether a fixture is profitable. This tool computes the cost side.

Time Charter Operating Expense (TCOE) Calculator

To compare a time charter against a voyage or spot fixture you need them on the same basis: cost per ship-day. The time-charter operating expense, or TCOE, reduces hire, bunkers, port costs, and other expenses — net of broker commission — to a single all-in daily figure.

How it works

Gross hire is reduced by the address commission to net hire, then all charterer-borne voyage costs are added and the total is spread over the voyage days:

net_hire_per_day = hire_per_day × (1 − address_commission%)
voyage_net_hire  = net_hire_per_day × voyage_days
total_voyage_cost = voyage_net_hire + bunkers + port_costs + other
tcoe_per_day      = total_voyage_cost / voyage_days

On a time charter the charterer pays bunkers and port costs while hire covers the owner’s crew, maintenance, and insurance, so all of these belong in the all-in daily cost.

Example and tips

A ship hired at 18,000/day with 3.75 percent address commission has a net hire of 17,325/day. Over a 20-day voyage that is 346,500. Add 250,000 of bunkers, 40,000 of port costs, and 10,000 of other expenses for a 646,500 total, giving a TCOE of about 32,325 per ship-day. Compare that against the daily revenue the employment earns to judge the fixture. Keep the commission rate and any brokerage exactly as fixed in the charter party, and make sure bunker and port figures cover the whole voyage.