Worldwide Tanker Nominal Freight Scale - "Worldscale"
What is worldscale
“Freight” is the remuneration payable by the charterers to the owners for the performance of the contract . It may be called charter party freight in the contract.
"Worldscale" is the code name for the “New Worldwide Tanker Nominal Freight Scale”, published by the Worldscale Association (London) Limited and the Worldscale Association (NYC) Inc., which are controlled by panels of leading tanker brokers in London and New York City respectively.
Because an oil cargo may be bought and sold many times whilst aboard a tanker at sea, the cargo owner requires great flexibility in his choice of discharge options. If tanker fixtures were priced in the same way as dry cargo fixtures the shipowner would have to calculate a different freight rate for each discharge port that the charterers may opt for. Worldscale avoids this problem in that it provides a set of nominal rates designed to provide roughly the same daily income irrespective of the place of discharge.
Worldscale is a schedule of nominal tanker freight rates used as a standard of reference by means of which rates for all voyages and market levels in the crude and oil products tanker trades can be readily compared and judged. This is aimed at making the business of fixing tankers simpler, quicker and more flexible.
Worldscale is based on an average vessel with average costs earning an average rate. It works on the basis that, using the realistic costs of operating an imaginary standard tanker of “average” size on an “average” 15,000- mile round voyage, the break-even freight rate for that ship on that route can be calculated. This “Worldscale Flat” rate is calculated in US dollars per metric ton of cargo carried on a standard loaded voyage between a loading port and a discharge port with a ballasted return voyage.
The freight rate actually negotiated in a fixture, using the Worldscale Flat rate as a basis for negotiation, is called the “Worldscale Freight Rate”. This negotiated rate will depend on the strength of the market and will be quoted in market reports in Worldscale points in the way outlined above.
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