WORLDSCALE

New Worldwide Tanker Nominal

Freight Scale
Structure and Uses

Worldscale Association (London)

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Introduction
Standard cost for carrying oil between ports on
standard vessel to standard formula
NOMINAL basis to standardise format and
application
Incorporates all costs, directly where possible
Otherwise by Fixed or Variable Differentials or
Charterers Account
Clear instructions as to basis
Neutral to market, run by non-profit, non-
shareholding, middle-man structures
Worldscale Association (London)
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Freight Scales - History

Concept of freight schedules is more than

60 years old
Originated in WW2 by UK and US
governments
Abiding principal is that Owners should
receive the same net daily revenue
irrespective of voyage performed

Worldscale Association (London)

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Structure of Worldscale

Based around nominal trading voyages of

a notional standard vessel.
Definitions of terms used, assumptions
made and any specific applications.
Calculations based on the costs involved in
the Standard Vessel performing a round
voyage on the target voyage.

Worldscale Association (London)

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Structure of Worldscale

Structured to give the same net daily

returns for the standard vessel regardless
of voyage performed at 100% of the
nominal freight rate.
Produced by two non-profit making
organisations ensuring independence from
external bias and narrow market views.

Worldscale Association (London)

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Worldscale Association (London)
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Simpson, Spence & Young Limited
H. Clarkson & Company Limited
Galbraiths Limited
E.A.Gibson Shipbrokers Limited
Braemar Seascope Limited
ACM Shipping Limited

Worldscale Association (London)

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Worldscale Association (NYC) Inc

McQuilling Brokerage Partners Inc

Mallory Jones Lynch Flynn & Associates
Inc
Odin Marine
Poten & Partners Inc
Charles R. Weber Company
Dietz & Associates Inc
Worldscale Association (London)
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WORLDSCALE Basics 1

Constitutes an Index of Reference Rates with common

calculation factors
Expressed in USD per Tonne of Cargo Carried
Updated in January each year for changes to bunker
prices, port charges and exchange rates
Worldscale book contains 50,000 rates and web-site
has over 300,000 rates
Further rates available from the Associations
Available on annual subscription basis only

Worldscale Association (London)

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WORLDSCALE Basics 2
Amendments published when significant
changes occur to port charges and are effective
from a specified date
Actual market rates are expressed as a
percentage of the published rates by common
agreement of users
Market rates are determined by negotiation
between the owner and charterer

Worldscale Association (London)

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Why use a freight scale?
Standard of Reference Standardised format
Ease of conducting Market Index System
business Common
Geographical options Understanding of
included terminology
Applies to different cargo Financial risk
types
reduction
Faster response to
quotations
Freight invoicing
simplified

Worldscale Association (London)

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Reasons to use - Physical

Standard reference system

Provides market index system
Freight payment mechanism
Negotiating tool
Settlement tool

Worldscale Association (London)

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Reasons to use - Other

Statistical - Market Analysis

- Comparative Trends
Fiscal - AFRA Output
- Transfer Pricing
- Contract Pricing
Freight Futures Settlement Rates

Worldscale Association (London)

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Subscribers to Worldscale
2010 2011 2012 2013 2014
London 722 727 728 722 691*
New 181 182 175 173 165*
York

Includes: Owners, Charterers, Traders, Oil Companies,

Government departments, Banks, Futures traders,
Lawyers, P&I companies, etc, etc
Worldscale Association (London)
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Market Penetration Spot Fixtures

2010 2011 2012 2013 2014

Non 2241 2462 2844 2777 862*
WS
WS 11405 12234 13017 13962 3929*

% WS 84 83 82 83 82*

Source: Clarkson Research

Worldscale Association (London)
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ECA Bunkers Current Basis

Reflect additional cost of Low

Sulphur/Gasoil in ECAs
Cost calculated as a per mile value for
each mile steamed in an ECA (Laden &
Ballast)
Miles steamed negotiable and includes
laden and ballast miles.

Worldscale Association (London)

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ECA Bunkers - Options
Nothing in Scale fully negotiable
Change base fuel to MGO if enough usage
worldwide not sufficient coverage currently
Uplift in flat rates based on ECA mileages not
currently technically feasible in software system
potential upgrade planned for 2016
Fixed Differential System to cover actual usage
at local bunker rates allows possibility of
change if rapid price change on introduction of
new ECA zones current option

Worldscale Association (London)

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Bunker Prices - General
Current system adopted in revamp of scale in 1980s to
increase transparency in relation to bunker prices
Requested by INTERTANKO, amongst others
Replaced opaque system of average price per voyage of
50% of regional prices at first load and first discharge
ports on voyage
Partially solved time lag of data gathering when biannual
publication as data used was for two periods prior to
current one
Single price published in the Schedule to allow
negotiations regarding price changes for current voyages

Worldscale Association (London)

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Drawbacks due to the loss of Worldscale

No Standard of Reference No Standardised format

Ease of conducting
business reduced
Geographical options
unspecified
Different approach for
different cargo types
Speed of response to
quotations reduced
No Market Index System
Common Understanding
of terminology lost
Financial risk increased
Freight invoicing less
simple
Market monitoring less
transparent

Worldscale Association (London)

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